1Q is OUT!

SkunK Note:  The information above is a quote out of the 1Q.  If is Greenshift management's narrative of the 1st Quarter and specifically - their Plan of Operation.  I typically post that information first from any Q or K.  It gives Greenshift's perspective.  After all isn't that one of the reasons we read any information from the company - to get their perspective?  As investors our perspective is by definition different.  How different?  We will never know unless we start out by reading the company's perspective.  My comments are in blue and normally come later. 

Plan of Operations

We have entered into license agreements with ethanol producers corresponding to more than 2.3 billion gallons per year (“BGY”) of ethanol production at full production capacity. Revenue for the quarter ended March 31, 2012 was $3.0 million as compared to $2.7 million from the same period last year (net of the impact of non-recurring transactions in which we sold our remaining production facilities during the first quarter of 2011 (the “YA Corn Oil Transaction”)). We incurred a net loss during the first three months of 2012 of about $700,000, as compared to a net loss of about $522,000 in the first quarter of 2011 net of the impact of YA Corn Oil Transaction.

Approximately $1.7 million in expenses incurred during the first quarter of 2012 were non-cash and included about $580,000 in accrued interest expense, about $150,000 in expenses associated with the change in value of the Company’s conversion liabilities, and about $400,000 in accrued royalty expense incurred in connection with our increased corn oil production during the quarter. Another $600,000 of the non-cash expenses incurred during the first quarter of 2012 related to increased legal costs incurred mostly as a result of our ongoing litigation for patent infringement. We have entered into a modified contingency-based agreement with Cantor Colburn, LLP, our lead counsel in our infringement litigation, pursuant to which we are only required to pay $50,000 per month in cash. Accordingly, most of the increased legal costs incurred during the quarter were non-cash.

Moving forward, we will continue to work with our licensees to maximize the benefits and minimize the costs of recovering as much corn oil as possible. We will also remain focused on winning new business and increasing our licensed penetration. To do so, we will continue to provide exceptional services, the highest-performing systems packages available, and access to new technologies for further gains in licensee profitability and competitive advantage. We will continue to expand our patent portfolio. We have many additional patents pending and we will remain committed to developing new technologies to further enhance the profitability of our licensees. And, we will stay the course in our ongoing infringement litigation but plan to expand our efforts to aggressively prosecute any entity, manager or other person infringing or inducing infringement of our technologies – all with a view towards enhancing and protecting the significant competitive advantage of our licensees.

Our financial performance for the balance of 2012 and beyond can be expected to be most significantly impacted by the rate at which our existing and new licensees commence production, the amount of corn oil that our licensees produce, the market price for that corn oil, the extent to which we collect reasonable royalties, and the costs incurred in our ongoing litigation for infringement of our patents. In addition, future results may be improved by the impact of event-driven systems integration contracts as we continue to receive significant interest for our engineering and other services in connection with the design, construction, integration and modification of corn oil extraction systems and other new systems for existing and prospective licensees. We are currently party to a number of such agreements which can be expected to contribute to revenue during 2012.

We expect to continue incurring substantial costs in connection with our ongoing litigation for infringement of our patented corn oil extraction technologies. These costs increased during the second half of 2011 and are expected to continue to increase through 2012 in advance of trial, and as we expand our litigation to protect the competitive advantage of our licensees by prosecuting additional producers and other parties infringing our patents. These expenses may delay or otherwise adversely affect our ability to achieve our profitability and debt reduction goals. We hope to eventually eliminate our litigation expense, but we must and will take all necessary steps to bring infringement of our patents to an end. We have reserved cash for this purpose.

Here it is!

SkunK

As of May 15, 2012, there were 29,373,071 shares of common stock outstanding.