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   Non-Tech$2 or higher gas - Can ethanol make a comeback?

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To: richardred who wrote (922)3/26/2006 8:31:48 PM
From: Ish
   of 2800
<<I assume,the low snowfall this year couldn't have helped te water table that much either.>>

No but it sure as hell helped building.

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From: richardred3/26/2006 9:06:22 PM
   of 2800
Gas Prices Jump Nearly 15 Cents Per Gallon
Sunday March 26, 7:51 pm ET
Nationwide, Retail Gas Prices Climb Average of Nearly 15 Cents in Past Two Weeks, Survey Says

CAMARILLO, Calif. (AP) -- Retail gas prices across the country climbed an average of nearly 15 cents in the past two weeks, according to a survey released Sunday.

The weighted average price for all three grades increased to $2.52 a gallon by Friday, according to Trilby Lundberg, who publishes the semimonthly Lundberg Survey of 7,000 gas stations in the country.

Gas prices are 40 cents higher than they were a year ago.

Self-serve regular averaged $2.49 a gallon nationwide in the latest survey. Mid-grade cost $2.59 a gallon while the price for premium was $2.69.

Among stations surveyed, the lowest average price in the country for regular unleaded was in Salt Lake City, at $2.25 a gallon. The most costly was in Honolulu, where drivers paid $2.80 a gallon.

Lundberg Survey:

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To: richardred who wrote (924)3/26/2006 9:09:14 PM
From: richardred
   of 2800
Oil hovers near 7-week high after break above $64
Sunday March 26, 7:47 pm ET

SINGAPORE (Reuters) - Oil prices hovered near a seven-week high on Monday, pausing after renewed concerns over Nigerian production had helped drive prices above $64 a barrel and out of a narrow month-long trading range.

U.S. light crude for May delivery (CLc1) was up 2 cents at $64.28 a barrel in the first minutes of ACCESS electronic trade, still near Friday's $64.75 peak, the highest since February 7.

Prices gained 35 cents on Friday as dealers fretted over the potential for a longer-lasting outage in Nigeria, where Italy's Eni joined other producers in shutting in output and declaring force majeure as a result of militant attacks.

A pipeline blast has shut in 75,000 bpd of Eni's 200,000 bpd Brass River exports, but on Thursday the company said that it could be repaired within a week, if all went well.

At the weekend Nigerian militants said they had killed three soldiers in a remote area close to a major natural gas plant and threatened to carry out more attacks amid the months-long campaign of violence against the OPEC member's oil industry.

Oil prices rose about $1.50 or 2.4 percent in volatile trading last week, boosted by the expiry of the April contract and a surprise mid-week draw in U.S. crude inventories.

That rally helped it break out of the $60-$64 band that has trapped prices since mid-February, and could spur additional technical buying, dealers said.

OPEC meanwhile continued to pump near full throttle, although some members were growing anxious about swelling inventories in the United States, which eased last week but still remain near their highest in seven years ahead of the weak spring season.

"I have concerns about stocks building, the second and third quarter, and demand and supply, but we should wait and see," Qatar's energy minister Abdullah al-Attiyah told Reuters.

In China, the government raised retail fuel prices by 3-5 percent at the weekend, the first increase in eight months but too modest to derail a recovery in oil demand growth from the world's second-largest consumer, analysts said. (nSP153)

Speculators have scaled back their bets that oil prices will fall, according to regulatory data on Friday that showed non-commercial crude oil traders had trimmed net short positions to 6,337 lots in the week ended March 21 from 15,258.(nN24581519)

But other players also appeared to be closing out long positions with open interest in the market falling 51,729 lots to 928,551 lots, the CFTC data showed.

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To: richardred who wrote (925)3/31/2006 6:15:16 AM
From: elmatador
   of 2800
Ethanol fuels a heated debate Australia could be left far behind in a bio-fuel revolution.

31 March 2006

James Stanford

Australia could be left far behind in a bio-fuel revolution.

A surge in the use of clean-burning ethanol in the United States and Brazil has led the ethanol push.

Ethanol can be made from wheat, sugar cane and corn.

Carmakers in the US and Brazil have built vehicles that safely run on ethanol or petrol, the car's engine automatically adapting to the fuel mix.

General Motors will build 400,000 vehicles in the US this year that can run on E85, a fuel that is 85 per cent ethanol and 15 per cent petrol. Several brands in Brazil sell models that can run on 100 per cent ethanol.

At present, petrol retailers in Australia are allowed to sell fuel with a maximum content of 10 per cent ethanol which is generally cheaper than petrol.

Ten per cent is the maximum ethanol content that most new cars sold here can run on with no risk of mechanical problems.

Most older models can't run on fuel containing ethanol because it can damage some of the non-metal engine components.

Cars with Flex engines in the US and Brazil have upgraded fuel lines and injectors, special sensors and a new engine control unit to monitor and adapt to the mix of petrol and ethanol being used.
The US government is pushing ethanol use because it is renewable, reduces the country's reliance on the Middle East for oil and creates a viable industry for its corn farmers.

Australia is in no place to take advantage of the green fuels, for several reasons.

Only three ethanol factories operate in Australia. Several more would be needed to meet increased demand.

Ethanol suppliers claim big oil retailers are reluctant to include 10 per cent of ethanol in their petrol, despite strong encouragement from the Federal Government, let alone offer fuel mixes of 85 per cent ethanol in the future.

The lobby group representing the car companies in Australia, the Federal Chamber of Automotive Industries, dismisses the push for ethanol as hysteria and says hybrid engines are a better option.

"We need to be clear about the hysteria going on in the US and other places — ethanol is not the solution," FCAI chief executive Peter Sturrock says.

There is also debate about the advantages of ethanol fuel. Ethanol is a cleaner-burning fuel than petrol, releasing fewer greenhouse gasses, but critics claim the ethanol production process creates emissions and other environmental problems, such as sugar cane run-off damaging the Great Barrier Reef.

Ethanol backers say far worse pollution is emitted in the production process of petrol.

Whatever the environmental benefit, ethanol is good news for Australian wheat farmers and cane farmers, giving them extra work. Queensland premier Peter Beattie is going in to bat for farmers in his state by pushing ethanol as an affordable green fuel which, unlike petrol, is renewable.

"It's about people being able to get reasonably priced fuel. It's a fact the car industry has to accept," Beattie says.

"The truth is that the world cannot rely on oil indefinitely."

GreenFleet Australia chief executive Henry O'Cleary is a supporter of green fuels as an additive, but doesn't believe ethanol will be used in large volumes here.

"I think the way we will go is to use 10 per cent bio-fuels used as an (fuel) extender," O'Cleary says.

He says making a large proportion of our fuel from sugar and wheat could have follow-on effects, such as raising the prices of both.

"It raises a lot of questions like whether or not we should use our arable land to feed people or to fuel our cars."

The executive director of Renewable Fuels Australia, Bob Gordon, says the ethanol benefits are clear.

"The scientific evidence from government laboratories in the US and elsewhere shows ethanol and biodiesel offer a substantial reduction in greenhouse emissions and exhaust emissions, both of which represent a significant health risk," Gordon says.

"Ethanol is cheaper to produce and it's renewable. You use oil and it's gone."

GM Holden president Denny Mooney is optimistic ethanol could be a fuel of the future. His company builds Commodores for export to Brazil that can use up to 25 per cent ethanol, and he says producing a Flex-engined car would not cost too much.

He says the Government and investors would need to ensure there was a good supply of ethanol and that the demand was there.

"If they say they want bio-fuel, we can do it. We know how to do it," Mooney says.

"I think ethanol is a great alternative. It all depends on how it is made, but it can have the big advantage of being commercially viable. Then there are the environmental benefits."

He says ethanol could gain further momentum in Australia if petrol prices were to rise.

"If oil goes above $US70 a barrel you will find a lot of entrepreneurs will be prepared to invest in its production."

He says the ethanol industry in the US gained a lot of momentum because the government rewarded car companies with tax credits for producing the green cars. There is no such break for ethanol Flex vehicles in Australia.


Ethanol is a flammable alcohol that can be made from crops such as sugar cane, wheat and corn.

About 90 per cent of Australia's ethanol is produced from wheat. The rest is from sugar cane.

It works in a similar way to petrol in regular combustion engines, but is cleaner burning.

Carmakers in the US and South America build cars that can run on 100 per cent ethanol, or a mix of petrol and ethanol. These are known as flex, or flexible-fuel, vehicles.

The engines have special fuel lines and fuel injectors to protect against corrosion of non-metallic parts and a special engine control unit.

Some Australian fuel companies now sell petrol containing 10 per cent ethanol.

Almost all new cars can safely run on a 10 per cent ethanol blended fuel, but many older cars are unsuitable. Check with your carmaker before using blended fuel.

Petrol retailers must label petrol that contains ethanol.

Ethanol is most popular in Brazil and is gaining momentum in the US.

An ethanol-powered GM pickup is used as a pace car in the Craftsman Truck oval racing series.



Produces fewer greenhouse gases than petrol

Improves the power and torque of the engine

Reduces the reliance on unstable countries for imported oil

Completely renewable

Supports crop farmers

Generally cheaper to produce


Reduced fuel economy by about 25 per cent

Added cost for car companies to alter the engines

Impact on environment during ethanol production

Not suitable for older vehicles. New cars currently can use only 10 per cent blend

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To: elmatador who wrote (926)3/31/2006 10:36:52 AM
From: richardred
   of 2800
IPO market eyes ethanol
Aventine, VeraSun to go public
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By Steve Gelsi, MarketWatch
Last Update: 9:04 AM ET Mar 31, 2006

NEW YORK (MarketWatch) -- Ethanol producers VeraSun Energy and Aventine Renewable Energy Inc. both filed to raise a total of $200 million as alternative energy makes its way into the market for initial public offerings.
Brookings, S.D.-based VeraSun filed to raise $250 million as the larger of the two deals after inking pacts in February with both General Motors (GM :
General Motors Corporation

Ethanol already amounts to about 3% of the nation's gas supply in the form of a blended component that serves as an octane enhancer, a clean-air additive and a renewable fuel resource.
The IPOs follow President George Bush's support for the use of ethanol in motor vehicles in his State of the Union address.
"We believe that domestic fuel refining shortages will result in greater demand for ethanol," said VeraSun, which lists itself as the second-largest ethanol producer in the U.S.
Ethanol is a type of alcohol produced in the U.S. mostly from corn.
VeraSun operates two plants in South Dakota and Iowa and is building a third in Iowa.
The company plans to use IPO proceeds to build two more plants in Iowa and Minnesota, even as U.S. car makers roll out more flexible-fuel vehicles able to burn ethanol.
As of the end of the 2005 model year, six million flexible-fuel vehicles capable of accepting VE85 ethanol were in use in the U.S.
VeraSun reported net income of $253,000 and revenue of $236 million in 2005, compared to net income of $14.8 million and revenue of $194 million in the prior year.
VeraSun plans to trade on the New York Stock Exchange under the symbol VSE.
Morgan Stanley, Lehman Brothers and A.G. Edwards are underwriters of the IPO.
Shareholders of VeraSun include Eos Partners L.P., Bluestem Funds and Donald Endres, 45, chief executive officer and director of the company.
Endres, a South Dakota entrepreneur, founded payment-card firm Special Teams, Inc. and served as its president and general manager until it was sold to the American Express Company (AXP :
American Express Company
News , chart, profile, more
Last: 52.53+0.40+0.77%
10:11am 03/31/2006
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Sponsored by:
AXP52.53, +0.40, +0.8% ) in 1995.
Endres became a principal investor and board member of CoEv, Inc., which merged with Tyco International Ltd. (TYC :
Tyco International Ltd.
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Sponsored by:
TYC27.22, -0.09, -0.3% ) in 2000.
He also co-founded and served as principal investor and chief executive officer of, Inc., an internet payments system company, which merged with CyberSource Corp. (CYBS :
cybersource corp com
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Sponsored by:
CYBS11.26, +0.30, +2.7% ) in 2000.
Aventine linked to Morgan Stanley
Aventine Renewable Energy Holdings Inc., which operates ethanol plants in Illinois and Nebraska, plans to raise up to $50 million in its IPO.
No underwriter has yet been listed in IPO, which will trade on the New York Stock Exchange under the ticker AVR.
Aventine reported net income of $32 million on revenue of $935 million in 2005, up from net income of $29 million and revenue of $859 million in 2004.
On Dec. 30, the company raised $256 million in a private offering of 21 million shares at $13 a share.
Metalmark, a private-equity firm established by former principals of Morgan Stanley (MS :
morgan stanley com new
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Sponsored by:
MS64.13, +0.51, +0.8% ) Capital Partners, owns about 40% of the company.
"Metalmark is expected to make new private-equity investments across a broad range of industries, including its focus sectors of healthcare, energy and natural resources, financial services and industrials," the Aventine IPO prospectus said. End of Story

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To: richardred who wrote (927)3/31/2006 10:41:25 AM
From: richardred
   of 2800
IMO-This will be well received. VeraSun unlike PEIX is profitable already. I will be watching this one with great interest.

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To: richardred who wrote (928)3/31/2006 11:33:36 AM
From: richardred
   of 2800
Pacific Ethanol says Gates deal closing delayed
Fri Mar 31, 2006 11:29 AM ET

NEW YORK, March 31 (Reuters) - Pacific Ethanol Inc. (PEIX.O: Quote, Profile, Research), which is building an ethanol production facility in California, on Friday said it will be delayed in filing its annual report due to delays completing its audit.

The company also said it will not close on Friday on the sale of $84 million in preferred stock to Bill Gates's investment vehicle Cascade Investment LLC, as had been planned. The company said it is still working with Cascade on closing the deal and hopes to do so by mid-April.

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From: richardred3/31/2006 12:38:28 PM
   of 2800


Annual Report


This Managements Discussion and Analysis or Plan of Operation contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as may, will, should, anticipate, believe, expect, plan, future, intend, could, estimate, predict, hope, potential, continue, or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including, but not limited to, the matters discussed in this report under the caption Risk Factors. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report.


On February 2, 2005, we completed a so-called reverse merger transaction, in which we caused Zen Acquisition, a Delaware corporation and a newly-created, wholly-owned subsidiary of Zen, to be merged with and into Old Xethanol. As a result of the merger, Old Xethanol became a wholly owned subsidiary of Zen and changed its name to Xethanol BioEnergy, Inc.

Prior to the merger, Zen was a company that manufactured pottery kilns. We discontinued these activities simultaneously with the merger by the sale of that business to Zen Zachariah Pool III, our previous principal stockholder and succeeded to the business of Old Xethanol as our sole line of business going forward. Old Xethanol was formed in January 2000 and began its ethanol production operations in September 2003. Following the merger, Zen reincorporated from the State of Colorado to the State of Delaware and changed its corporate name to Xethanol Corporation. Upon the closing of the merger, the directors and management of Old Xethanol became the directors and management of our company.

The merger was accounted for as a recapitalization of Old Xethanol (or a reverse merger), since the former stockholders of Old Xethanol now own a majority of the outstanding shares of our common stock as a result of the merger. Old Xethanol was deemed to be the acquiror in the reverse merger and, consequently, the assets and liabilities and the historical operations that are reflected in our financial statements are those of Old Xethanol and are recorded at the historical cost basis of Old Xethanol.

Plan of Operation

Our expected revenue model is based on the sale of ethanol and a related co-product called xylitol. Xylitol is a natural sweetener that was approved by the FDA in the 1960s for use in foods and beverages, including chewing gums, candies, toothpastes and diabetic regimens. Xylitol is a co-product derived from biomass-to-ethanol production.

At the present time, we own two ethanol plants in Iowa - Xethanol BioFuels in Blairstown and Permeate Refining in Hopkinton. We also own several proprietary bio-extraction, bio-separation and bio-fermentation technologies that are targeted at reducing costs throughout the entire ethanol production process as well as enabling the conversion of biomass to ethanol and xylitol.

Xethanol BioFuels was acquired in November 2004 as an idled plant. During the first six months of 2005, this facility underwent substantial refurbishment and became operational in July 2005. This is a corn-based operation with an initial production capacity of 5.5 millions gallons of ethanol per year. After initial discussions with The Harris Group, our owners engineering firm, we are now evaluating contactor proposals to increase the plant production capacity to 25 million gallons and at the same time optimize efficiency. The BioFuels facility is located on a 25 acre site with ample space for expansion.

Permeate Refining was initially designed to process waste starches and sugars and has a production capacity of 1.6 million gallons of ethanol per year. In April 2005, we temporarily ceased operations at the Permeate Refining plant in order to refurbish the facility and evaluate strategic alternatives. We are currently evaluating a project to convert Permeate into one of the first US commercial cellulosic biomass to ethanol facilities. We are pursuing a plan combining steam gun explosion technology with our proprietary Virginia Tech fermentation technology. Under this plan, Permeate production capacity could be increased significantly with enhanced operating efficiency.

We sell the ethanol from our Xethanol BioFuels plant under an exclusive marketing agreement with Aventine Renewable Energy, Inc. Aventine is the second largest marketer of ethanol in the United States and purchases all of Xethanol BioFuels ethanol production under a renewable three-year off-take agreement. Sales are made at market prices less the costs of transportation and Aventines marketing commission. Distillers wet grains that are produced as a by-product at BioFuels are sold through a local merchandising agent.

Results of Operations

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Net Loss. We had net losses of $11,377,075 and $2,570,918 for the years ended December 31, 2005 and 2004, respectively. These losses are not comparable given our significant activity during 2005 as compared to 2004, including the refurbishment and opening of Xethanol BioFuels, the reverse merger, the concurrent private offering, the senior secured notes financing, the establishment of a corporate office and organizational infrastructure and the write-off of intangible assets and goodwill. During these periods, operations were financed through various equity and debt private financing transactions.

Sales. Net sales for the year ended December 31, 2005 were $4,342,927 as compared to $465,048 for the year ended December 31, 2004. During 2004, net sales were attributable solely to our Permeate operations. We sold approximately 295,000 gallons of ethanol at an average price of $1.58 per gallon. Sales prices ranged during the year between $1.14 and $1.88. Net sales during 2005 reflect operations at Permeate from January 1, 2005 to March 31, 2005 which generated approximately $99,000 and at BioFuels from July 1, 2005 through December 31, 2005 which generated the balance. BioFuels sold approximately 2.44 million gallons of ethanol at average selling price of $1.60. Sales of DWGs contributed an additional $339,000 to total sales.

Cost of Sales. Cost of sales for the year ended December 31, 2005 were $4,891,230 compared to $507,181 for the year ended December 31, 2004. Higher cost of sales in 2005 relates to the higher level of sales during 2005. The cost of sales during 2005 reflect start-up production inefficiencies at BioFuels, inefficiencies driven by a lack of economies of scale while we slowly increased production to plant capacity and high prices of energy, especially natural gas.

Operating Expenses. Operating expenses were $6,558,308 for the year ended December 31, 2005 as compared to $2,357,190 for the year ended December 31, 2004.

The increase in operating expenses of $4,201,118 is due principally to 1) increased expenses of approximately $3,295,000 attributable to the creation of our corporate headquarters office, 2) increased expenses of approximately $860,000 related to start-up expenses at the Xethanol BioFuels facility from January 1, 2005 until its opening on July 1, 2005, 3) increase in amortization expense of approximately $137,000 resulting from licenses acquired during 2005, and 4) various expenses including depreciation related to Permeate Refining that are included in operating expenses in 2005 but were included in cost of sales in 2004.

The increase in expenses related to our corporate office is directly related to the growth of the company necessitating the development of a corporate infrastructure to support our growth, capital needs and our change to a public corporation. Accordingly, included in the $3,295,000 increase attributable to our corporate office is 1) approximately $1,955,000 of compensation expense related to our management team and directors and resulting from the hiring of a new CFO and Vice President of Operations as well as the election of four new independent directors to our Board, 2) approximately $822,000 related to services provided by outside advisors, consultants and agents for services ranging from investor relations, public relations, business development and capital raising, 3) approximately $235,000 related to legal and auditing fees,
4) approximately $151,000 related to offices expense including rent, and 5) $78,000 related to travel and entertainment.

Approximately $2,377,000 or 72% of the total corporate office increase was the result of non-cash compensation in the form of stock, warrants and options.

Write-off on Intangible Assets and Goodwill. At December 31, 2005, the Company charged $3,635,416 to expense, representing the unamortized cost of acquiring its license agreements, after considering the uncertainties surrounding the timing of their commercialization. The Company also wrote off the $205,000 in goodwill associated with its acquisition of Permeate. Management continues to believe that its portfolio of technologies as well as its ongoing research and development arrangements with the governmental and academic institutions from which we acquired the licensed technologies is an integral part of the Companys growth strategy.

Interest Expense. Interest expense was $659,030 for the year ended December 31, 2005 as compared to $208,340 for the year ended December 31, 2004. The increase of $450,690 is mainly attributable to senior secured royalty notes issued during 2005 which was partially offset by the bank note payable assumed in October 2004 in connection with the acquisition of BioFuels and subsequently refinanced by the royalty notes in January 2005.

Organizational Expense. In connection with the reverse merger, we paid $300,000 to the former owners of Zen to repurchase 8,200,000 shares of their Zen common stock which were then cancelled at the closing of the reverse merger. This payment was recorded for accounting purposes as an organizational expense.

Other Income. Other income was $255,226 for the year ended December 31, 2005 as compared to $33,385 for the year ended December 31, 2004. Included in Other income during 2005 is $132,000 in cash and stock received from the settlement of the DDS Technologies legal action.

Liquidity and Capital Resources

At December 31, 2005, we had a cash balance of $802,664.

During the year end December 31, 2005, we used net cash of $5,930,449 for operating activities. Additional cash of $999,913 was used to purchase property and equipment. Cash used for operating and investing was offset by net cash proceeds of $3,572,817 raised from our private offering, $6,600,000 of proceeds raised from the issuance of the senior secured royalty notes net of the repayment of the $3,000,000 note payable and $450,000 received in the acquisition of Xylose Technologies, Inc. Net cash increased during the year by $689,192.

On October 18, 2005, we entered into a common stock purchase agreement with Fusion Capital Fund II, LLC, pursuant to which Fusion Capital agreed, under certain conditions, to purchase on each trading day $40,000 of our common stock up to an aggregate of $20 million over a 25-month period, subject to earlier termination at our discretion. We may also, in our discretion, elect to sell more of our common stock to Fusion Capital than the minimum daily amount. The purchase price of the shares of common stock will be equal to a price based upon the future market price of the common stock without any fixed discount to the market price. Fusion Capital does not have the right or the obligation to purchase shares of our common stock in the event that the price of our common stock is less than $2.00. Fusion may not purchase shares under the Purchase Agreement if Fusion would beneficially own more than 9.9% of the Companys common stock outstanding at the time of the purchase by Fusion. We filed a registration statement with the SEC to register under the Securities Act the resale of the shares of our common stock which we may issue to Fusion Capital under the common stock purchase agreement, which registration statement was declared effective by the SEC on December 28, 2005. We began selling shares of common stock to Fusion Capital under the common stock purchase agreement on January 3, 2006.

As of March 17, 2006, we had a cash balance of $3,334,571 and had raised $3,534,009 from the sale of our shares to Fusion Capital and $408,000 from the exercise of shareholder warrants. Based upon our current financial condition, cash forecast and operating plan, management believes that it has adequate cash resources to sustain its operations through the end of the year. However, our continued existence is dependent upon several factors, including the ability to generate cash flow from the sale of our product through improved margins and expanding sales and (2) the ability to continue to draw down under the Fusion Capital transaction which is contingent on our stock price being above $2.00. Until such time as we can rely on sufficient revenues generated from operations, we will continue to seek additional sources of financing through private offerings of our securities. Accordingly, if we fail to obtain additional financing or are unable to draw down funds under the Fusion Capital transaction, we will be required to substantially reduce and defer payments of operating expenses. We cannot assure you that we will be successful in obtaining any additional financing.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies that we follow are set forth in Note 2 to our financial statements as included in this report. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.

Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123R Share Based Payment. This statement is a revision of SFAS No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123R addresses all forms of share based payment (SBP) awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. Under SFAS No. 123R, SBP awards result in a cost that will be measured at fair value on the awards grant date, based on the estimated number of awards that are expected to vest. This statement is effective for public entities that file as small business issuers, as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. We adopted this pronouncement during the first quarter of 2005.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets
- An Amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS No. 153 on its effective date did not have a material effect on the Companys consolidated financial statements.

In March 2005, the FASB issued Financial Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations - an Interpretation of FASB Statement No. 143, which specifies the accounting treatment for obligations associated with the sale or disposal of an asset when there are legal requirements attendant to such a disposition. The Company adopted this pronouncement in 2005, as required, but there was no impact as there are no legal obligations associated with the future sale or disposal of any assets.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections A Replacement of APB Opinion No. 20 and SFAS Statement No. 3. SFAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle by requiring retrospective application to prior periods financial statements of the change in accounting principle, unless it is impracticable to do so. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not expect the adoption of SFAS No. 154 to have any impact on our consolidated financial statements.

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To: richardred who wrote (930)3/31/2006 1:14:51 PM
From: goldworldnet
   of 2800
Thanks for the pm. I didn't know about this thread.

* * *

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From: whynag4/1/2006 12:29:30 AM
   of 2800
Hi Richard......
Any particular reason why GTL Resources was omitted
from your header, since it also is a pure play?
we spoke about it often enough before you posted
all those references???

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