Micro-Cap Review Spring 2010

UCORE’S BOKAN MINE Largest U.S. Heavy

Rare Earth Deposit:Critical to American Clean Energy

Quarter 2 • 2010 microcapreview.com

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MICRO-CAP REVIEWInvesting in the Green EconomyBy Todd Pitcher [6] Geothermal Energy-Heating UpBy Larry Turel [37] Jatropha’s Place in the Biofuels RaceBy Lissa Swihart [44]

Tax Benefits of Green Energy ProjectsBy Robert Green [66]

Special Green Issue

neah power. always onTM.

22118 20th Ave SE Suite 142

Bothell WA 98021

Phone: 425-424-3324

Fax: 425-483-8454

Neah Power Systems Patented, award winning, disruptive, fuel cell technology with prior investments of ~ $40M from Intel Capital, Novellus Systems, Office of Naval Research, etc. The Company has a world-wide distribution network in place, and is offering direct methanol fuel cell and other renewable energy solutions for consumers, industrial and military applications.

www.neahpower.com (NPWZ.OB)

Startup of the Year

Top 100 Young Innovators

Patented, award-winning technology Multiple US and international patents, highly awarded technology

Neah Infinity eLTM

•  25W, 50W, 100W, 8 hr systems

•  Customizable power and output specifications

•  Unique non-air breathing capability

50

Product offerings Contact [email protected] for more information.

Neah Custom eLTM

•  Custom integrated solutions

•  Customizable power and output specifications

•  Unique non-air breathing capability

Neah Hot & ColdTM

•  1.5T, 3T, and 5T heating and cooling

•  Off the grid or on-grid capable

Neah Remote Area Power Supplies (RAPS)TM

•  1.5kW, 3kW, 10kW+ systems

•  Hybrid solar / fuel cell / storage systems

•  Mini- to large scale renewable energy deployments

www.microcapreview.com Micro-Cap Review Magazine 3

E D I T O R I A L

This Publication is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any com-modities or securities herein named. Micro-Cap Review Magazine and its employees are not, nor do they claim to be registered investment advisors or bro-ker/dealers. This magazine contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 relating to companies’ future operating results that are subject to certain risks that could cause results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements. This publication undertakes no obligation to update these forward-looking statements. Micro-Cap Review Magazine, its owners, employees, their families and associates may have investments in companies featured within this publication and may elect to sell these investments or purchase additional investments in these companies at any time. However, the policy of our editorial staff is to avoid any pre-publication trading of featured stocks or sales until the release date of the magazine. In order to be in full compliance with the Securities Act of 1933, Section 17(b), where the publisher has received payment for advertisement/advertorial of a security, the amount and type of consideration will be fully disclosed. All information about the Company contained within an advertisement/advertorial has been furnished by the respective Company and the publisher has not made any independent verifications of such information and makes no implied or express warranties on the information provided. Readers should perform their own due diligence before investing in any securities mentioned. Investing in securities is speculative and carries a high degree of risk. All MicroCap Review Disclaimers apply http://www.microcapreview.com/disclaimer.php before investing view www.sec.gov/investors

Here in this issue is our long awaited

coverage of the green sector of the

micro-cap market. The green sec-

tor covers an array of topics, including job cre-

ation, water conservation, alternative energy

projects, political initiatives, new inventions,

economic growth, saving the planet, pollution

reduction, energy-saving products, tax incen-

tives, and so on and so forth. Hopefully we have

brought you, our readers, the most compelling

articles filled with information compiled by

our staff and contributing writers operating in

the micro-cap space. It is fascinating to see the

new companies sprouting worldwide, making

the financial community all abuzz with new

ideas, new products, and new technologies.

We have made a concerted effort to gather

a diverse cross-section of the green space,

including legal and accounting issues, govern-

ment initiatives, samples of companies and

their future prospects. As publishers we recog-

nize our responsibility to help save the planet;

therefore, we have digitized this issue to save

paper and have created a cyber distribution

system to more than 35 million green-energy

aware individuals, along with our readership

base that includes thousands of FINRA mem-

bers, investment bankers, stockbrokers, high

net worth individuals, and money managers

worldwide. Today’s new “green” micro-cap

emerging growth companies may be tomor-

row’s large-cap multi-billion dollar household

names. Please read this issue online or in hard

copy and share with friends and colleagues.

Some information is brand new and is writ-

ten by experts who have all contributed this

information for our mutual benefit.

Green companies remind me of biotech

companies when they first came into the

scene; cloning, gene splicing, and DNA were

new terms. Perhaps readers may remem-

ber some of those names, such as Amgen,

Genentech, and Biosphere. They started in

exactly the same way as today’s green com-

panies, as micro-cap companies. The green

market potential is even larger than the bio-

tech industry. The green sector reaches far

beyond the biotech sector, even as we know it

today. The green sector touches every phase

of life, including the biotech and pharmaceu-

tical sectors, from solar power to wind, from

geothermal to hydrogen-powered vehicles.

As green company technologies continue to

develop, we will see new products on store

shelves. Each day amazing breakthroughs

in the green sector are being discovered that

help to eliminate pollution, conserve water,

and reduce harmful emissions. Finally, the

save-the-planet consciousness has reached a

cadre of entrepreneurs willing to leave cor-

porate life to start green companies, whose

lifeblood is provided by the entrepreneurs’

own initial funding or those of friends and

family members, early investors, non-profit

organizations, or government agencies.

Hopefully we have made our small con-

tribution in this issue of Micro-Cap Review.

We used recycled paper and non-toxic ink to

print this issue and we digitized and made

it available on the Web to engage readers

interactively. If we all do our part, Earth will

be a better place to live for us, our children,

and their children.

Wesley Ramjeet

www.microcapreview.com

Micro-cap ReviewP.O. Box 4216Metuchen, NJ 08840-1848T 732-603-1250F 212-202-6020

SNN Incorporated23705 Vanowen St #333West Hills, CA 91307

PUBLISHERWesley [email protected]

Sheldon [email protected]

EDITORRonald [email protected]

WRITERSGordon ChiuJames DePelisiMichael FulpShelley GoldbergRobert GreenRobert HaagChet HebertJordan KimmelSheldon KraftJack LeslieLarry MayDaniel MurphyM.C. Elvis OxleyPaul Pelosi, Jr.Todd PitcherStephen RobbinsMarshall StermanLissa SwihartLarry TurelSteven Witherly

ACCOUNTINGJennifer [email protected]

ADVERTISINGVong [email protected]

BUSINESS DEVELOPMENT

Ron [email protected]

CIRCULATIONJackie [email protected]

Suki [email protected]

GRAPHIC PRODUCTIONTony [email protected]

WEBMASTERKelvin [email protected]

Micro-Cap Review Magazine is published Quarterly, Spring, Summer, Fall, Winter POSTMASTER send address Changes to Micro-Cap Review Corporate Offices. © Copyright 2009 by Micro-Cap Review Inc. All Rights Reserved. Reproduction without permission of the Publisher is prohibited. The publishers and editors are Not responsible for unsolicited materials. Every effort has been made to assure that all Information presented in this issue is accurate and neither Micro-Cap Review Magazine or any of its staff or authors is responsible for omissions or information that is inaccurate or misrepresented

to the magazine.

4 Micro-Cap Review Magazine www.microcapreview.com


C O N T E N T S

WWW.MICROCAPREVIEW.COM

Q UA RT E R 2 2 0 1 0

Featured Articles

32 Green Paradigm Shift Technologies by Gordon Chiu34 Uranium: The New Green Metal by Michael Fulp37 Geothermal Energy-Heating Up by Larry Turel44 Jatropha’s Place in the Biofuels Race by Lissa Swihart46 Wealth from Waste by Steven Witherly & Larry May

Finance & Investments

6 Investing in the Green Economy by Todd Pitcher18 Clean Tech-The Technology Eco-Boom by Jordan Kimmel24 China’s US-Stock Exchange Listed Cleantech Companies by Robert Haag28 Ask Mr. Wallstreet-Micro-cap Capital Formation by Sheldon “Shelly” Kraft29 The Challenges of Green Investing by Shelley Goldberg

Comics

35 Wall Street Chicken

Profiled Companies

12 Neah Power Systems14 Ucore Rare Metals21 VisEnergy42 Private Company Marketplace50 Converted Organics56 Terrasphere

Viewpoints

10 A Challenge to All Entrepreneurs by Sheldon “Shelly” Kraft57 Government Budget Focus by M.C. Elvis Oxley & Daniel Murphy59 Getting Jobs and Money into the Economy by Marshall Sterman60 Green Jobs by Paul Pelosi, Jr.61 Overcoming Loss by Stephen Robbins70 Ombudsman by Jack Leslie

Legal, Tax & Accounting

65 Clean Balance Sheet Can Help a Company in More Ways than One by James DePelisi66 Tax Benefits of Green Energy Projects by Robert Green69 Compliance Corner by Chet Hebert


• Governments worldwide are addressing

the impact of climate change with emissions

reduction strategies (e.g., adopting lower

carbon intensive generation technologies

and those that reduce emissions);

• Alternative energy and clean technology

have become a viable trillion dollar growth

industry and present investors with ample

opportunities to invest in future energy

needs; and

• Governments generally remain commit-

ted to the potential for new jobs created by

“New Green Deals,” despite the mixed results

of the 2009 Copenhagen climate conference.

Whether the rationale is environmental,

economic, or political, money is flowing into

the alternative energy and clean technology

market.

• The United States will use about $100

billion of the $787 billion government

stimulus package towards clean-technology

investments and activities.

• South Korea expects to commit $84 bil-

lion to clean-technology investments by 2013.

Investing in the Green economyPromises, Pitfalls, and Profits

Tens of billions of dollars are being invested in renewable energy and clean

technology, and billions more will be invested over the next decade. There is

substantial motivation to do so on several fronts:

TODD M. PITchER

F I N A N c E


• China could end up spending $440 bil-

lion to $660 billion toward its clean-energy

build out over the next decade.

• Through the Clean Tech Fund, the World

Bank and other multilateral organizations

plan to raise $40 billion for investment into

countries to deploy low-carbon technologies

and renewable energy projects.

• Bloomberg New Energy Finance recently

projected that the annual investment in

renewable energy must increase to $230

billion by the end of the decade, if govern-

ments are to meet their emissions reduction

targets. Renewable energy will account for

22 percent of the world’s installed power

generation capacity by 2020, up from 13 per-

cent today, and will account for 31 percent

by 2030. However, renewable energy must

account for 40 percent by 2030, if govern-

ments are to hit their targets.

The list goes on. These data points sup-

port the thesis that there is a real, long-term

commitment to investing in and adopting

alternative energy and clean technologies

at the federal, state, municipal, utility, and

consumer level.

For an investor, the impulse for oppor-

tunity is poignant. The range of potential

investments in various segments of renew-

able energy and clean technology is broad.

StIll tIme to Get In early…

but watch your Step.

A fundamental way to make money in the

financial markets is to find out where “every-

one” is going and try to get there first. But

risks abound. Investors who want to be part

of the green economy should be cautious

of falling into the trap of “environmental

religion” investing. Successful investments

in emerging growth industries frequently

require a horizontal and vertical under-

standing of the marketplace.

Even though revenues from solar, wind

power, and biofuels are projected to increase

in aggregate to over $300 billion over the

next decade, investing in any garden variety

solar, wind, or biofuel company will not nec-

essarily result in a winning or even a prudent

strategy.

A diversified approach to investing isn’t

without risks either. The first, and one of the

most widely known clean technology funds

available today, the PowerShares WilderHill

Clean Energy Fund (NYSE:PBW), is down

20.6 percent year-to-date, and is down 49.7

percent since 2007.

On September 22, 2009, the NASDAQ

OMX Clean Edge Smart Grid Infrastructure

Index began with a base value of $250. As

of June 2010, it traded at about $242. On

June 26, 2008, the NASDAQ OMX Clean

Edge Global Wind Energy Index began with

a base value of $250. As of June 2010, it

traded at about $114. The NASDAQ® Clean

Edge® Green Energy Index (CELS) began on

November 17, 2006 at a Base Value of $250.

As of June 2010 it traded at about $187.

Despite the promise of hundreds of bil-

lions of investment dollars pouring into

the green economy, stock performance has

been spotty. How is a green investor going to

reconcile the incredible potential of growth

in alternative energy and clean technology

markets with totally lackluster stock per-

formance over the past 24 months? At what

point do sectors like solar and wind come

back into favor and begin to outperform?

Greener tomorrowS…

Here is what we know. Big money is flowing

into the green economy. Companies that

have developed differentiated technologies

at sufficiently low costs to compete with

incumbent fossil fuel energy technologies

without government support will be win-

ners in the long-term. These companies

will continue to have access to the capital

markets and will have sufficiently strong bal-

ance sheets to adapt, scale, and consolidate as

conditions dictate.

As with any growth industry, the profile

of leaders in the renewable energy and clean

technology markets will change with alarm-

ing frequency. Many companies with leading

positions today may lose their edge tomor-

row when a more cost effective technology

emerges. We have seen this dynamic unfold

across the landscape of renewable energy

and clean technology segments.

what InveStorS Should

look for

• In solar, investors should avoid compa-

nies integrating downstream, unless there is

actually a plan to “own” the customer. Too

many midstream firms think the easiest way

Looking for the next

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to fill their manufacturing pipeline is to buy

accounts by purchasing integrators. This is

an expensive, high-overhead way to pick up a

business in most cases. Scale is probably more

critical in solar manufacturing than in any

other industry, which is rightly obsessed with

beating the costs out of systems. Cost-per-

watt is a more critical metric than efficiency

when evaluating a successful solar project in

which a solar investor has plenty of space but

efficiency remains critical on the rooftop.

• In wind, investors should avoid newcom-

ers. The market is mature, and the incum-

bents are well established from a brand,

installed customer base, and manufacturing

perspectives. The exception to this rule will

be firms that are entering the market with

a differentiated profile (technological, geo-

graphic, or customer base). These firms may

be purchased by an incumbent anyway.

• Potential upside exists in the demand

management, controls, and efficiency mar-

ket. The low-hanging fruit of the green econ-

omy continues to be consumption reduction.

This is the logical first step which is ignored

all too often by many energy generation firms,

because they just want to sell more panels or

other distributed generation. Companies that

build relationships with customers based on

energy expertise and trust by first reducing

total energy spend and demand and then by

supplying alternative generation will win out

in the end. Ultimately companies find them-

selves with a strong client base for developing

recurring revenues.

• In biofuels, investors should avoid ‘gen-

eration 1’ business models. The winning

firms will have to vertically integrate, be

logistically differentiated, and be extremely

efficient, given the razor-thin margins which

are endemic to the industry. From a feed-

stock perspective, regardless of the actual

substance to the food-fuel debate, the bot-

tom line is that this debate will continue to

be noise and therefore is subject to too much

political risk to make sense as an investment.

Investors should try to find firms that can

scale using non-edible feedstock.

• Geothermal is a proven, base-load tech-

nology with tons of potential. The problem

is that geothermal development is extremely

capital intensive on the front end and takes

substantial land and capital resources to

make sense as a long-term equity invest-

ment for growth investors. The most appeal-

ing model is one which is diversified and

encompasses developing, owning, operating,

technology licensing, EPC, and even consult-

ing. Interestingly, there haven’t been much

in the way of geothermal companies adding

waste-heat recovery to the mix, which would

be lower in terms of scale (sub-10MW), but

which balances out some of the logistical risk

that greenfield geothermal development car-

ries. Recovery heat energy firms tend to gen-

erate quicker cash flow, and the technologies

in both cases are actually very similar.

• The EV, hybrid, and PHEV market is

going to be massive, eventually. Every major

auto manufacturer is heading down this

path. The problem for investors is that there

isn’t a good way to find a reasonable risk

profile for pure plays in this space. Invariably,

those that succeed will get consolidated. On

a related basis, energy storage carries much

of the same characteristics and perhaps even

greater upside potential, but also an incred-

ible amount of technology risk. It is almost

prohibitively expensive to get into the game,

and the curve to commercialization and cash

flow profitability is inevitably a long one.

This greatly increases the risk profile of ener-

gy storage stocks, which are only suggested

for investors with the strongest stomachs.

The bottom line is that successful investing

long-term in the green economy requires a

fair amount of due diligence and knowledge

about the markets. There are too many ways to

underperform in the short-to-mid term. Don’t

buy into the “rising tide” thesis. It may have

some level of relevance in bubble-markets, but

can absolutely destroy a portfolio in just about

every other instance

Investing smartly in alternative energy and

clean technology requires a broader, contextual

understanding of the energy markets as a critical

backdrop, sensitivity to political winds, as well

as more specific vertical-related comprehension

about key technologies and what makes them

better and more differentiated. Even then, there

is no guarantee of success. These practices can

only mitigate risk, but the reward, for investing

smartly in the green economy at this still early

stage can certainly be spectacular.

about the author

Todd M. Pitcher is founder and managing partner of Aspire Clean Tech Communications, Inc., an alterna-tive energy and clean technology-focused profes-sional services firm based in San Diego, California. Mr. Pitcher writes and publishes the Aspire Week in Review newsletter. For more information about Aspire, please visit www.aspirecleantech.com. n


a challenge to all entrepreneurs

V I E W P O I N T S

This story is being written at a time when the British

Petroleum (BP) oil spill will go down in history as the

worst environmental disaster ever.

by ShELDON “ShELLy” KRAFT

I just don’t feel right, knowing that this

accident could have and should have been

avoided, but wasn’t. My heart goes out to the

families of those who lost their lives in this

tragedy. I wonder what steps are being taken

to prevent this calamity from ever happen-

ing again. We have the technology to find,

drill, pump, and control the flow of oil a

mile below the ocean surface, yet emergency

equipment is not available to cope with a

disaster such as the BP oil spill? Is there no

plan yet in place to remediate oil that is spill-

ing into the ocean? Even today, the oil spill

hasn’t been fully stopped. I remember when

Iraqi troops were exiting Kuwait after their

failed invasion. The last terrorist act that the

soldiers committed was to destroy Kuwait’s

oil wells. The press coverage of wells burning

in the desert is now forgotten by most of us.

The BP oil spill is very different. This oil spill

will affect our children and grandchildren.

Fish covered with oil on their skin and gills

are being poisoned. So far, British Petroleum

has not had much world pressure outside

the United States; yet some twelve weeks

after the Deepwater Horizon oil rig exploded

in the Gulf of Mexico, millions of gallons of

oil are still destroying wildlife, shorelines,

habitats, preserves, ocean vegetation, and

in some cases causing irreparable damage.

First, it was Hurricane Katrina and now the

BP oil spill. This hard hit area of the United

States is being destroyed. Jobs are disappear-

ing; industries like shrimp fishing are at a

standstill. Terrorists are watching the same

news reports as we are, which alarms me to

no end. We have to get this right folks. It is

time to regulate and plan for worst case sce-

narios on every offshore oil rig and establish

procedures when dealing with such disasters.

Where are the answers? This is a great chal-

lenge to entrepreneurs near and far. Necessity

is the mother of invention. Someone out

there has the answer, whether he or she is an

engineer, mechanic, or a librarian. It doesn’t

matter what line of work that person is in.

What matters is that the person invents the

needed technology. Whoever has the answer

and can have it tested, perfected, and put

into the market will be richly rewarded. The

world doesn’t need another can opener or a

cork screw. It is time ladies and gentlemen

to think, design, and build something that

works and works quickly. n

Whoever has the answer and can have it tested, perfected, and put into the market will be richly rewarded.


the need for power Neah Power Systems

PROFILED cOMPANIES

a company with an innovative fuel cell technology that can change the way battery power is used in consumer, industrial, and military applications

the need for power

Portable electronic devices have

become ever-present and have an

ever-growing need – reliable power.

Laptop computers, mobile phones, and por-

table e-books are only a few of the power

hungry applications that demand a ceaseless

supply of power. Consumer products lead

the way, but industry and the military are

also seeking effective mobile and “off-the-

grid” power solutions.

The need for portable power has been pri-

marily met by lithium-ion batteries. The draw-

backs to this technology are many, including

low power capacities, long recharging times,

and added weight. Lithium-ion batteries also

have a history of safety and disposal con-

cerns. Manufacturers are increasingly turn-

ing to fuel cells as a replacement to battery

power.

Fuel cells generate power by the electro-

chemical conversion of a fuel. The advantag-

es to fuel cells are many. They produce power

for a longer period and can be recharged

instantly. Direct methanol fuel cells are the

most promising solution because of their

compact size and use of methanol as fuel.

Commonly referred to as wood alcohol,

methanol is readily available, environmen-

tally safe, and “energy dense.”

Most current fuel cells are based on a

decades old technology called proton

exchange membrane or PEM. Each PEM

contains a gel-like membrane to produce

power. Although performance of PEM-based

fuel cells has improved since their introduc-

tion in the 1960s, they continue to have

significant technical and commercial limita-

tions. PEMs require access to air to produce

needed chemical reactions. Environmental

factors, including water and pollution, can

reduce the effectiveness, reliability, and dura-

tion of the power supply.

Neah Power has developed an innova-

tive technology that eliminates the primary

drawbacks to PEM-based fuel cells and bat-

teries. Neah Power has created a porous

silicon design that uses a liquid electrolyte,

which allows the fuel cell to operate in non-

air environments. This can be particularly

useful in naval, aerospace, or military appli-

cations where little or no air is available. The

silicon-based fuel cell can produce more

power for its size and can be manufactured

using existing semiconductor production

facilities. This makes the Neah Power fuel

cell a cost-effective solution.

Neah Power has multiple U.S. and interna-

tional patents, and the technology has won

multiple awards. Most recently the com-

pany was awarded a contract by the Office

of Naval Research of the U.S. Navy for the

production of a fuel cell prototype.

lImItatIonS of pem-baSed

fuel cellS

Like batteries, fuel cells have two electrical

terminals or electrodes, one negative and

one positive. Fuel cells generate electricity by

combining a fuel, such as methanol, at the

negative electrode (the anode) with oxygen

from air or another oxidant at the positive

electrode (the cathode).

Electricity is produced from the chemical

reaction of the fuel, catalyst, and electro-

lyte at a common point (the three-phase

interface). Current fuel cell designs create

this three-phase interface at the surface of a

polymer material called the PEM.

The PEM serves as a separator between the

two electrical terminals in the fuel cell. Its

solid lattice contains functional groups that

help conduct protons. Since the functional

groups are fixed in place and are not avail-

able freely in liquid form, the only place for

the production of electricity is at the surface

of the PEM.

This design limits the chemical reaction

to a two-dimensional area and restricts the

power output of the fuel cell. It also leads

to several technical and commercial limita-

figure 1: Compact, high power -density, silicon fuel cell

figure 2: Neah uses cost effective tech-nologies like atomic layer deposition, injection molding, and wire bonding


tions, including the fuel crossover contami-

nation, fuel waste, and low power densities.

The PEM-based power supply also degrades

in poor environmental conditions and from

seepage of water from fuel cell ventilation.

the neah power advantaGe

Silicon-based fuel cells have significant

advantages over those based on PEM tech-

nology. Neah Power’s revolutionary tech-

nology replaces the PEM and uses a liquid

electrolyte with a silicon electrode structure.

Neah Power fuel cells can maintain its effi-

cacy for longer durations while operating in

a far greater range of environments.

Instead of using a two-dimensional elec-

trode surface, the silicon fuel cell uses a three-

dimensional zone for higher power output.

This design offers a higher “power density”

and can produce up to 250 percent more

power than can the PEM design (see Figure 1).

Neah Power’s fuel cell is self-contained.

The porous silicon electrodes can be assem-

bled into cells and stacks without additional

separators between the positive and negative

terminals. This allows the fuel cell to carry an

on-board oxidant, which means that the fuel

cell can operate anaerobically (i.e.,without

any interaction with the environment). This

unique feature opens up markets for Neah

Power’s fuel cells that the current PEM fuel

cells cannot serve.

While environmental conditions, such as

humidity, temperature, and pollutants, can

cause the typical PEM fuel cell to degrade, the

Neah Power self-contained fuel cell includes

an on-board oxidant and serves as a reservoir

for collecting any excess water. This enhances

the operation of the fuel cell by prevent-

ing contaminants from interfering with the

chemical reaction. The Neah Power fuel cell

has been proven to run in excess of 2,000

hours with less than a 10 percent loss in power.

The Neah Power fuel cell also uses its fuel

source, methanol, efficiently by employing a

recirculation process that operates until all

available fuel in the replaceable cartridge is

consumed.

fuel cell manufacturInG

coStS

Most PEM fuel cell manufacturers purchase

PEM membrane materials rather than manu-

facture the product internally. In addition,

these manufacturers often have to invest in

expensive production plants to build and test

their product. This leads to high capital and

product costs.

In contrast, Neah Power uses outsourced

semiconductor manufacturing facilities to

produce silicon wafers. This provides the

benefits of using the cost-efficient infra-

structure of the semiconductor processing

industry. Thus, Neah Power can take advan-

tage of proven technologies, such as atomic

layer deposition, injection molding, and wire

bonding. This arrangement allows for favor-

able economies of scale like those of the

semiconductor industry (see Figure 2).

the “Green” buSIneSS

With the focus on the environment today,

individuals and businesses are looking for

ways to protect the environment when

developing power sources. Using renewable

fuels, like methanol, can lessen the negative

impact of using fossil fuels or toxic chemi-

cals to produce power.

In view of its “green” goals, Neah Power

recently acquired a distributor of direct current

air conditioning systems. These systems can

function using solar, wind, fuel cells, or battery

power inputs, and can operate in locales with-

out access to the traditional power grid.

avaIlable productS

Neah is currently taking orders for its various

products: the stand alone fuel cell products

(the Neah Infinity eLTM) (see Figure 3), the

custom designed and application engineered

products (the Neah Custom eLTM), the direct

current air conditioning product line (Neah

Hot and ColdTM line of direct current air con-

ditioning products) (see Figure 4), and the

remote area power supplies (Neah RAPSTM).

meetInG the power need

Neah Power’s patented technologies are

ground-breaking and applicable to a wide

variety of products and markets. With its

technological and cost-effective product

offerings, Neah Power could soon be the

leader in portable power supply and off-the-

grid power systems. n

Disclaimer: This corporate profile is based upon informa-tion provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes

only, and to increase awareness of the company profiled.

Safe Harbor Statement: The statements in this adverto-rial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contrac-tual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received pay-ment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

figure 3: Neah Infinity eLTM line of fuel cells available in 5W, 50W, 100W, 8 hr systems

figure 4: Neah Hot & ColdTM line of direct current air conditioning available from 5000 BTU to 18000 BTU


a rare opportunity

PROFILED cOMPANIES

ucore rare metals tackles a u.S. Supply crisis in the Green energy & high technology metals Sector

Rising from a rainy and windswept

inlet in Southeast Alaska is a fore-

boding granite intrusion that

locals sometimes refer to as the “Rock.”

The location is Bokan Mountain, near the

head of Kendrick Bay on South Prince of

Wales Island, an area known for its Pacific

Northwest scenery and prodigious rainfall.

“Bokan is located about as far south in Alaska

as you can possibly go without stepping into

Canada,” says Jim McKenzie, president and

CEO of Ucore Rare Metals (OTC:UURAF;

TSX.V:UCU; www.ucoreraremetals.com),

the sole owner of U.S.-based Rare Earth One,

LLC. “So, the area has fairly mild weather

year round, an excellent feature for any min-

ing operation. But it ranks up there with

Seattle for the highest annual rain counts in

the U.S. Best to take your rubber boots when

you venture to Bokan.”

The Bokan project is the unlikely center

of an emerging white-hot political debate on

some of the scarcest, most valuable and most

sought after metals known to man – metals

that are available in this area of Alaska and

very few other places in the Western world.

Known by the somewhat mysterious sound-

ing name of rare earth elements (REE) or

rare earth metals, they’re a group of metals

of strategic importance to the United States.

They’re so critical, in fact, that a Senate com-

mittee was recently convened to investigate

the threatened supply of these irreplaceable

“technology metals,” and the progressive

cutback of rare earth metals exports from

China, the dominant supplier of these mate-

rials to the United States and most of the

world.

So, what exactly are these obscure high

technology metals that we can’t seem to live

without? “They’re a unique group of metals

set off from the periodic table [of elements],

since they share unique characteristics unlike

any other elemental group,” says Dr. Anthony

Mariano, a Massachusetts-based expert in

rare earth mineralogy. “Those characteris-

tics – such as thermal properties and super

conductivity – have made them absolutely

essential to high tech and green technol-

ogy applications in the modern world.” With

such unpronounceable names as Europium,

Gadolinium, Terbium, and Dysprosium,

they’re an unusual combination of the seem-

ingly exotic and the absolutely indispensible,

and they’re central to the ongoing competi-

tive viability of U.S.-based technology in the

21st century.

“Much of what we consider to be the

clean-tech, high tech, and industrial complex

in the U.S. today would grind to a standstill

without the rare earths,” says McKenzie.

“China currently has a near monopoly on

this product, and an announcement in 2009

indicating a staged withdrawal of these met-

als from world markets has created a flurry

of investment interest. Fact of the matter is

that you cannot have a ‘clean-tech revolu-

tion’ without access to these technology met-

als.” That announcement served as a warning

shot from China to the West, and the race

was on for the United States to find replace-

ment sources in the near term.

The Chinese announcement also triggered

a phenomenon that some junior resource

pundits are calling “Rare Earth Mania,”

bringing into focus companies like Ucore,

with the largest historical deposit of heavy

rare earth metals on U.S. soil at its Bokan

Mountain location. In turn, the Bokan proj-

ect is one of very few contenders capable of

meeting a rapidly approaching supply gap,

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as China shuts down rare earth metals sup-

plies to the United States over the next 36 to

60 months.

“Unbelievably, much of what we consider

to be the essential technologies of today, from

laptops to cell phones to medical devices and

much more, would be unworkable without

the heavy rare earths,” says Mariano. “What’s

more, the majority of green technologies

touted as alternatives to fossil fuels, such as

wind turbines, electric vehicles, and even

solar generators, would be largely ineffective

without the inclusion of REEs. They’re the

absolute lifeblood of high technology and

green technology today.”

a loSt art and a crItIcal

ScIence

The United States is the world’s largest con-

sumer of rare earth elements (or REEs).

Until 25 years ago, Uncle Sam was also the

world’s largest producer of these materials,

with a virtual lock on the art and science

of rare earth metals production. But the

Chinese changed the equation in 1980s and

1990s, flooding the market with inexpensive

REEs and essentially driving the United

States out of the technology metals business.

The result was the unavoidable closure of the

leading U.S.-based rare earth metals mine

at Mountain Pass, California. In the fallout,

America also saw the loss of rare earth met-

als processing capabilities and know-how to

countries in the East. For example, General

Motor’s Magnaquench operating unit is now

owned and operated by Chinese concerns.

Such was the case for the past quarter cen-

tury, with globalization flourishing and China

continuing to all but monopolize a field once

considered a U.S. birthright. But in 2009, the

rare earth metals industry again took an unex-

pected turn. In August of that year, as part of

its Five Year Plan, China announced that it

would no longer serve as the world’s primary

supplier of these strategic metals. China said

that the exponential growth in the demand

for rare earth metals had created a situation in

which the country was simply running out of

these critical resources and could conceivably

exhaust reserves in as few as 15 years at the

current rates of global consumption.

With that announcement, Beijing offered

an olive branch to the West, but one with

a distinctive barb. Yes, China would be cut-

ting back on rare earth metals exports in the

near term. U.S.-based manufacturers, how-

ever, could ensure long term access to these

crucial materials simply by relocating their

manufacturing facilities to China. As might

be expected, this suggestion was greeted with

more than a little political resistance in the

U.S. Congress. Soon after, a lobby effort took

hold to reignite the once mighty rare earth

metals industry in the United States.

In the nine or so months since then, the rare

earth metals discussion in the United States has

taken on a life of its own. An industry-specific

lobby group known as the Rare Earth Industry

and Technology Association (or “REITA”)

has been hard at work in Washington, D.C.

Proposed legislation was recently tabled by

Rep. Mike Coffman (R. Colorado) to rein-

vigorate the U.S. high technology metals sec-

tor (introduced to the media as the proposed

“RESTART” Act). The U.S. Departments of

Defense and Energy have also weighed in

on mushrooming rare earth metals politics,

and agendas have been discussed to wean

the United States off of its almost complete

dependence on China as quickly as possible.

In turn, the media has been alight with rare

earth metals coverage, with no less than the

New York Times and the Economist weighing in

on the rare earth metals crisis and its implica-

tions for the United States, the world’s largest

consumer of these technology metals.

the bokan InItIatIve

In the whirlwind of renewed interest in rare

earth metals, one of the largest REE resources

in the West is being expedited to restart pro-

duction at Mountain Pass, California. The

owner of that facility, Molycorp Minerals

LLC, has received a great deal of press cover-

age with the company recently announcing

a planned IPO to fuel the RESTART embers.

But while Molycorp’s Mountain Pass facility

has an abundance of a specific group of met-

als known as the light rare earth elements (or

LREEs), there remains a gaping hole in the

supply equation for the United States. That

hole comes in the form of heavy rare earth

elements (or HREEs).

This brings us once again to Bokan

Mountain in Alaska and Ucore Rare Metals.

“Not all rare earth metals are created equal,”

says McKenzie. “HREEs are significantly

more scarce than the LREEs and are also a

great deal more valuable. While Molycorp

has a lock on the largest historical LREE

deposit in the States, Ucore has the counter-

part with the largest historical HREE deposit.

So, between these two companies, the United


States has the potential for complete self suf-

ficiency across the full spectrum of rare earth

elements: both LREEs and HREEs.”

“The United States is moving quickly

toward eliminating its dependence on non-

domestic rare earth metals supplies,” contin-

ues McKenzie. “Taking Mountain Pass and

Bokan into account, the United States has

enough rare earth metals on its own soil to

furnish domestic needs for decades to come;

and the supply is available in the reasonably

near term, and without the need to look

beyond U.S. borders. Many consider rare earth

metals to be the key component in green

energy technologies and the driver behind the

post-fossil fuel technology age. The U.S. has

a window of opportunity to gain complete

domestic sufficiency in a sector that China has

long dominated, and control its own destiny

in a critical area of growing global competi-

tion. So, the case for an independent mine-to-

market rare earth metals industry in the States

is gaining a great deal of momentum.”

the alaSkan advantaGe

“So, what makes Ucore’s Bokan project

so special, and why is it the answer to

the United State’s HREE needs?” we asked

McKenzie. “Well, there’s a host of factors that

set Bokan apart as the absolute near term

go-to [source] for heavy rare earth metals in

the States,” says McKenzie. “Bokan is a prior

producing mine, with much of the required

infrastructure still intact – including broad

area road networks and prospective ore stag-

ing sites. It’s got deep water access pretty

well at mine-mouth, which means we can

ship largely unprocessed ore anywhere in the

world for well under a dollar per ton.”

“It’s in an area that’s been set aside by the

U.S. federal government specifically for sus-

tainable resource development, with zero first

nations issues,” continues McKenzie. “Bokan

is in a temperate weather zone, with ease of

access year-round. Importantly, it’s estimated

to be the largest historical, non 43-101 com-

pliant HREE deposit in the States.”

“But more important still is Bokan’s

American location from a political, com-

petitive, and homeland security perspective.

Simply put, it’s located on U.S. soil, which

essentially eliminates the possibility that the

States could wind up trading one foreign

dependency for yet another. With enough

HREEs to furnish U.S. technology growth in

its own back yard in the near term and at low

cost, the case for Bokan versus alternative non-

domestic sources is strong, to say the least.”

McKenzie emphasizes that Alaska has been

proactive in getting Bokan back into produc-

tion as a heavy rare earth metals facility. In

April 2010, the Alaskan State Legislature

and House of Representatives unanimously

passed a resolution that will expedite that

process. Resolution 16 states that Alaska

legislators will, to the full extent allowable

by state law, remove all permitting hurdles

required in activating the Bokan project as

a producing HREE mine. With this sort of

geopolitical support, Ucore believes that an

HREE mine can be active in as few as three

to five years, which is lightning speed by

mining standards. Another drawing card is

the growing demand for domestic rare earth

metals production at a federal level, with

Congress actively advancing this agenda.

Ucore is also quick to point out that

Bokan is unique not only in the United

States, but on a world level as well. In addi-

tion to other HREEs, drill assays have indi-

cated anomalously high levels of Terbium

and Dysprosium. These are among the most

valuable metals known to man, and con-

sidered by many to be the “miracle REEs,”

essential to everything from green technolo-

gies, to medical applications, to military and

industrial uses. Their presence makes Bokan

a rarity among rare earth metals deposits

worldwide, the vast majority of which are

skewed to the much less valuable LREEs.

As a result, Ucore has opened dialogue with

multiple end users in the United States at a

state and federal level, including public and

private operators. With demand escalating

and supplies rapidly dwindling, McKenzie

believes that Ucore Rare Metals couldn’t be

in a better position at a better time.

InventorIeS & eSSentIal

toolS

We say good-bye to McKenzie as he prepares

to assess the inventory for Ucore’s drill pro-

gram at Bokan for the summer of 2010. On

the docket are barge facilities and helicopter

supplies, diamond drill bits, and core boxes by

the dozens. He confers with key members of

his management team, Harmen Keyser, Cliff

Hanson, Peter Manuel, and Nick Vermeulen,

just days before a military-like mobilization

of crew and heavy equipment to Kendrick Bay

near Bokan. The list seems complete, but he

seems perplexed, like something essential has

escaped the fine teeth of the inventory mani-

fest. “Oh yes,” says McKenzie, “I almost forgot

the two most important items for survival in

Southeast Alaska … a decent pair of Extratuf

rubber boots.” n

Disclaimer: This corporate profile is based upon informa-tion provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled.

Safe Harbor Statement: The statements in this adverto-rial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.


Consumers and domestic auto manufactur-

ers alike seemed to fail to learn any lessons

from the oil spikes of the 1970’s. The prior

warnings of “peak oil” fell on deaf ears. In

the end, it is usually pure economics that

ultimately leads to changes in consumer

behavior. The good news for our environ-

ment is that any real long term energy policy

will set off a clear path that will lead to a

greener society- and lead to a host of new

industries that will create millions of jobs-

right here in America.

The recession of 2008-9 was so severe, it

seemed like many economists were acting as

if they never lived through a previous down-

turn. When I graduated college, the unem-

ployment rate was higher than it is today. In

fact in 1981 the entire country was in much

worse shape than it is today. The unemploy-

ment rate was over 12% and it looked to

many that America’s best days were passed.

Then along came the technology revolution

that ushered in one of the longest and great-

est periods of prosperity and wealth cre-

ation in our country’s history. Interestingly,

several of the very same venture capitalists

that funded the most successful technology

companies that were founded in the 1980’s

are bankrolling the clean-tech companies

sprouting up today.

F I N A N c E

“We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inex-haustible sources of energy—sun, wind and tide. I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”

—Thomas Alva Edison (American inventor, 1093 patents, 1847-1931)

Clean Tech…the Technology

Eco-BoomThere is an obvious silver lining to the spike in energy costs

we have experienced over the last few years. The jump in energy costs has done the important job of increasing our awareness of our country’s need to adapt and create a compre-hensive energy policy.

by JORDAN KIMMEL


Thomas Edison long ago warned against

the hazards of the combustion engine and

our thirst for fuel. He understood back then

that we would need to develop alternatives

to pumping and polluting. There is no doubt

that sometime in the future our primary

sources of energy will not be coming from

hydrocarbons. It will take time for existing

alternative energy solutions to transition in,

but we can expect there will be new tech-

nologies that will emerge in years to come.

Give an entrepreneur a problem and he will

find a solution!

We often hear the question, “Where will

the new jobs come from?” To be sure, that

seems like a tough question, but sometimes

you need to look back in time to get a proper

perspective. It turns out that currently 30%

of our country’s workforce is employed at

companies that are in industries that did

not even exist 30 years ago! The unpredicted

explosion in technology over the last 25

years, and unforeseen boom in related jobs,

has clearly outpaced nearly anyone’s expec-

tations. While it is hard to imagine another

engine of growth similar to the technology

boom- I think you could now look forward

to the clean-tech energy boom! We cannot

even imagine the new job opportunities and

the new companies that will create the more

eco-friendly environment we all know we

need.

In my new book, The Magnet Method of

Investing (Wiley, 2009), I showed the list of

companies that ranked out the highest on

my model as we went to print. Using my

Magnet® Stock Selection Process, I use a

“bottoms up” approach to identify the indi-

vidual companies within each sector that

have the best combination of value, growth

and momentum. The list was not intended

as a buy list- just a list of the top ranked

companies according to the Magnet model.

It was interesting to see how many of the top

ranked companies are in the energy sector-

and how many of them are based overseas.

Only one of them has anything to do with

alternative energy. The question is, “Who

will break through with what?” Whether it

will be a major corporation that comes up

with the next big thing, or one of the thou-

sand of garage start ups- clean alternatives

to today’s hydrocarbons will surface. The

US has vast amounts of coal and natural

gas. One challenge is to find a way to use

coal cleanly. I would not bet against Thomas

Edison either- solar, wind, and hydropower

are all being advanced by today’s engineers.

The sure way to create a profitable business

is by providing a solution to a big problem. I

am keeping my eye out for any and all future

“Magnets”- they will emerge over time.

I continue to be amazed at the progress

and innovations coming from today’s engi-

neers and scientists. If you look carefully,

there are always new, profitable companies

emerging in the market. When you can find

them in an industry that is just blossom-

ing you know you may be onto something.

There is new interest in investing in compa-

nies that are “doing well by doing good”. If

we can find “Magnet stocks” that help solve

the energy problems of today, even better.

Your children and grandchildren might even

be one of the millions of employees at one

of these still unfounded green companies.

While too many investors are still gloomy

thinking about the recent problems- the

future is bright. Tomorrow’s society and

energy sources will be cleaner and more

efficient – and you may be able to make

profits by identifying the new leaders taking

us there. n

Jordan Kimmel is the Market Strategist at National Securities Corp., and as a Financial Planner he man-ages customer accounts at their affiliate National Asset Management. He is the author of the recently released book, The Magnet Method of Investing, and can he be found and contacted through his website

www.magnetinvesting.com.

We cannot even imagine the new job opportunities and the new companies that will create the more eco-friendly environment we all know we need.

The question is, “Who will break through with what?” Whether it will be a major corporation that comes up with the next big thing, or one of the thousand of garage start ups- clean alternatives to today’s hydrocarbons will surface.


PROFILED cOMPANIES

Simplifying Sustainability

The energy-related challenges of the 21st century require a dramatic shift in direction, from an emphasis on energy production to an emphasis on sustainable energy and resource management policies.

At present, most organizations are faced

with the dual task of delivering energy effi-

ciencies against financial and environmental

goals; however, the implementation of a tac-

tical plan is a significant challenge, because

the landscape is confusing or incomplete.

Unlike most providers in the industry,

VisEnergy has the ability to deliver a turnkey

solution that offers a broader scope of prod-

ucts from one source rather than multiple

parties.

As stated within the news release by

President Obama and Secretary Chu,

“Residential and commercial buildings con-

sume 40 percent of the energy and represent

40 percent of the carbon emissions in the

United States. Building efficiency represents

one of the easiest, most immediate and most

cost effective ways to reduce carbon emis-

sions while creating new jobs. With the

application of new and existing technology,

buildings can be made up to 80 percent more

efficient or even become ‘net zero’ energy

buildings with the incorporation of on-site

renewable generation.”

The future lies in a company’s abil-

ity to achieve not only zero-energy building

(ZEB), but also to increase profitability from

energy management. Many building owners

and facility managers are now realizing that

effective lifecycle management is essential

in achieving corporate energy objectives.

VisEnergy strives to help building owners

lower operating costs, reduce the carbon

“One of the fastest, easiest,

and cheapest ways to make

our economy stronger and

cleaner is to make our economy more energy

efficient,” said President Obama in a news

release dated June 29, 2009. “That’s why we

made energy efficiency investments a focal

point of the Recovery Act. And that’s why

today’s announcements are so important. By

bringing more energy efficient technologies

to American homes and businesses, we won’t

just significantly reduce our energy demand;

we’ll put more money back in the pockets of

hardworking Americans.”

The energy-related challenges of the 21st

century require a dramatic shift in direc-

tion, from an emphasis on energy produc-

tion to an emphasis on sustainable energy

and resource management policies. While

current investments in energy efficiency

are having an important impact on the U.S.

economy, efficiency remains underfund-

ed and the potential benefits of efficiency

remain unrealized. There is a fundamental

shift in policy occurring at all levels of

government that will create a multitrillion

dollar market opportunity between now

and 2020.

“Making buildings more efficient represents

one of the greatest, and most immediate oppor-

tunities we have to create jobs, save money,

save energy, and reduce carbon pollution,” said

U.S. Secretary of Energy Steven Chu in a 2009

press release issued by the U.S Department of

Energy. “Our goal should be buildings that are

80 percent more [energy] efficient.” (http://

www.energy.gov/news2009/7648.htm)

As with all previous socioeconomic shifts,

technology will play a critical role in the

pending transformation. As we move from

a consumption-based market to one that is

focused on “Smart Consumption” based on

a “Smart Grid,” technology will be the key

to enabling and measuring the effective-

ness of this shift. The economic downturn

has virtually halted new construction and

shifted the emphasis on the retrofit market.

Companies are clearly focused on sustain-

able practices to prepare for the major policy

shifts (i.e. cap and trade legislation). We

expect the market to accelerate with this

increased level of focus.

visenergy, Inc.


footprint, meet regulatory compliance, and

ultimately increase asset value by offering

a comprehensive energy management pro-

gram and an optimized renewable energy

plan.

VisEnergy has a significant head start

in this area with over six percent mar-

ket share in New Jersey, one of the lead-

ing solar producing states in the country.

With unparalleled 300 percent year-over-

year growth in revenues for the past six

years, VisEnergy is one of the best posi-

tioned companies to capitalize from this

eco-energy boom. Few companies have the

experience to successfully implement all that

encompass a turnkey energy management

venture, including benchmarking, engineer-

ing, design, implementation, and continu-

ous full-service commissioning. VisEnergy

currently shares the spotlight with a handful

of potential competitive companies, includ-

ing Renewable Energy Installers and Energy

Efficiency Vendors.

VisEnergy distances itself from the more

single-focused service providers by deliver-

ing true, long-term benefits to customers

with a combination of industry best prac-

tices, experienced professionals, and best-in-

class technology. At the core, the company’s

energy monitoring technology significantly

reduces building energy costs, energy con-

sumption, and carbon emissions through

its best-in-class iBEnergy™ Software Suite.

VisEnergy’s intelligent software applications

provide real-time insight at the individual

building, campus, or enterprise portfolio

level, and are easily deployed via software as

a service (SaaS) model. The products enable

and empower building stakeholders to be

more energy efficient, realizing savings that

can range from five to thirty percent annu-

ally. The company’s solutions are being used

by a host of leading commercial and finan-

cial organizations, government agencies, and

educational institutions.

The VisEnergy executive team consists of

recognized operational and industry experts

that include the area’s best solar engineering

and field installation operators. Currently

one of the leading engineering, procure-

ment, and construction (EPC) firms of pho-

tovoltaics, VisEnergy uses only proven tech-

nologies to deliver successful solar power

system solutions. The company prides itself

on delivering the highest quality products

coupled with timely and professionally man-

aged installations, resulting in long-term

financial benefits to customers. VisEnergy

guides each customer step by step through

the process, eliminating confusion behind

the purchase, installation, and use of a solar

electric system. The company’s combina-

tion of industry prowess, domain expertise,

technology, best practices, and experienced

professionals deliver maximum value to cus-

tomers.

Bill Hoey, chairman of VisEnergy and

CEO of both NJ Solar Power and Quality

Attributes Software, has kept the vision since

he installed his first solar panel in 2003.

“To effectively manage anything requires the

ability to measure it; thus, by benchmark-

ing and monitoring all energy usage, you

can quickly determine meaningful savings

opportunities. If you apply the same logic of

monitoring and understanding of produc-

tion maximization of free renewable power,

you have a powerful ability to recognize sus-

tainable financial win-win results.”

VisEnergy’s energy lifecycle manage-

ment, continuous commissioning services,

and renewable solar energy products enable

customers to reduce energy consumption

and maximize profitability of their building

portfolio. Further, VisEnergy is helping to

improve energy sustainability and reduce

carbon emissions. n

Disclaimer: This corporate profile is based upon informa-tion provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled.

Safe Harbor Statement: The statements in this adverto-rial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

VisEnergy distances itself from the more single-focused service providers by delivering true, long-term benefits to customers with a combination of industry best practices, experienced professionals, and best-in-class technology.


Micro-Cap Review Magazine announces introduction of

its First Resource Issue

For information: 818-730-6000 or [email protected]

snnwire.com microcapreview.com

The issue will featuremicro-cap resource companies including exploration,

development and production, resource service companies, mining and oil & gas companies

exploration

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CLEAN TECHNOLOGY

ISE LIMITED

TSX: ISE$20,700,000

IPOFebruary 2010

CLEAN TECHNOLOGY

CATCH THE WIND

TSXV: CTW$22,000,000

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*All financings in C$

Leader in Clean Technology127 Issuers11 new issuers**

$1.5 B equity capital raised**

Clean Technology

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For more information contact:Robert Petenna, Senior Manager,Global Clean Technology416 947-4305 or [email protected]

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TSX_TSXV_Cleantech_Ad_Quart_vertical.qxd:Layout 1 31/05/10 10:50 Page 1

Dr. John L. FaesselON THE MARKET

7685 Caminito CoromandelLa Jolla, CA 92037

(858) 587 [email protected]


China is not only the most populous nation

in the world, but also the fastest grow-

ing major economy. More than any other

nation, it needs clean technology to sus-

tain and safeguard its future development.

The Chinese government has demonstrated

great foresight and vigor by enacting poli-

cies to foster the development and growth

of its cleantech industries and companies.

By providing inexpensive loans from state

banks, direct investments by the government

and/or state run companies, land grants,

technology transfers, tax credits and man-

dated buying, China has clearly shown that

it is committed to fostering the growth of its

cleantech industry.

In the clean energy sector, China has made

a significant push in manufacturing and

increasingly in research and development

and deployment. China’s near-term clean

energy targets include a 20 percent reduc-

tion in energy intensity from 2006 to 2010

and a 40 to 45 percent reduction in carbon

intensity below 2005 levels by 2020. China

wants to produce 20 percent of its electricity

from renewable energy resources by 2020. In

terms of attracting new investments in the

clean energy sector, China has now become

the leader. In 2009, clean energy investments

in China totaled $36.4 billion, ahead of the

United States, which totaled $18.6 billion,

and the United Kingdom, which totaled

$11.2 billion.

According to the China Greentech Report,

jointly issued by PricewaterhouseCoopers

and the American Chamber of Commerce in

Shanghai in September 2009, the estimated

size of China’s green technology market could

F I N A N c E

China’s Cleantech Companies Forge a Path to Sustainable GrowthChina’s position in the clean technology (cleantech) indus-

try is unparalleled among the nations of the world. The country’s already massive and increasing demand for energy, minerals, and other resources has created a powerful need for clean energy and other clean technologies.

by RObERT hAAg


be between $500 billion and $1 trillion annu-

ally, or as much as 15 percent of China’s fore-

casted GDP in 2013. With the positive incen-

tives from the Chinese government’s policies

to develop green technology solutions, China

is playing an increasingly important role in

green technology market development. Many

people believe China is poised to take the

lead in a variety of cleantech industries, most

notably renewable energy.

China is a significant player in solar power,

wind power, hydro power, lithium-ion and

related battery technology, fuel cell tech-

nology, industrial waste management, and

biodiesel, a renewable and clean-burning bio-

degradable fuel. Many of China’s cleantech

companies are listed on U.S. stock exchang-

es, such as A-Power Energy Generation

Systems (NASDAQ:APWR), a provider of

distributed power generation systems and

a manufacturer of wind turbines; China

Green Agriculture, Inc. (NYSE:CGA), a pro-

ducer of humic acid-based organic fertil-

izers that are environmentally safer than

traditional fertilizers; Duoyuan Global

Water Inc. (NYSE:DGW), a domestic water

treatment equipment supplier; and China

BAK Battery (NASDAQ:CBAK), one of the

world’s largest manufacturers of lithium-

based battery cells. (Please see a selected list

of companies at the end of this article.)

The largest U.S.-listed Chinese companies

in the alternative energy sector are within

the solar industry. The top three compa-

nies by market capitalization are: Suntech

Power Holdings Co. Ltd. (NYSE:STP), a

leading designer, developer, and manufac-

turer of photovoltaic (PV) products world-

wide; Trina Solar (NYSE:TSL), a leading

manufacturer of solar PV products, includ-

ing ingots, wafers, cells, and PV modules;

and Yingli Green Energy Holding Co. Ltd.

(NYSE:YGE), a leading manufacturer and

seller of PV components, including mul-

ticrystalline polysilicon ingots, wafers, PV

cells, PV modules, and integrated PV sys-

tems. China is currently the world’s largest

producer of solar products.

In addition to investment opportuni-

ties in larger companies that are listed on

the NYSE and the NASDAQ Global Select

Market, many other China cleantech com-

panies trade on smaller exchanges, such as

the NASDAQ Capital Market and the OTC

Bulletin Board (OTCBB). They include

China Wind Systems, Inc. (NASDAQ:CWS),

a supplier of forged rolled rings to the wind

power industry; China Sun Group High-

Tech Co. (OTCBB:CSGH), a Dalian-based

producer of anode materials used in lithium

ion batteries; China Solar and Clean Energy

(OTCBB:CSOL), a provider of solar water

heaters and renewable energy solutions;

China Industrial Waste Management, Inc.

(OTCBB:CIWT), a company which collects,

treats, and recycles industrial wastes; and

China Energy Recovery Inc. (OTC:CGYV),

a manufacturer and installer of waste heat

energy recovery systems that provide facili-

ties with greater energy efficiency.

According to The Cleantech Group and

Deloitte, a record number of clean technol-

ogy investment deals were completed in the

first quarter of 2010. Clean technology ven-

ture investments in North America, Europe,

China, and India, totaled $1.9 billion across

180 companies, up 29 percent from the

previous quarter and up 83 percent from

the same period a year ago. The leading sec-

tors were transportation, solar, and energy

efficiency technologies. Chinese companies

raised $72 million in 10 disclosed rounds.

Although the total investment was approxi-

mately the same as in the previous quarter,

the deal count was the highest in more than

three years.

In China, the two largest deals were for

Wuhan HC SemiTek Co., Ltd., an LED

lighting company, which raised $22 million

from CXC Capital (a joint venture of China

Development Bank and Cisco Systems), IDG

Ventures, and private investors; and Prudent

Energy, a developer of vanadium redox flow

batteries for large scale energy storage, which

raised $22 million in Series C funding from

Northern Light Venture Capital, Sequoia

Capital China, Draper Fisher Jurvetson,

and DT Capital. To date, approximately 30

Chinese cleantech companies are listed on

major stock exchanges. Many more com-

panies are waiting to list their shares in the

United States.

Cleantech companies in China haven’t

gone unnoticed by the world’s greatest inves-

tor. In late December 2008, Warren Buffett

spent $230 million buying up 10 percent

of BYD Co. Ltd., a Chinese battery, mobile

phone, and electric car company. He believes

the company can become the world’s largest

automaker by selling electric cars. He may

be onto something. In March, BYD, which

stands for Build Your Dreams, replaced Faw-

Volkswagen to become the number three

maker of automobiles in China after selling

68,129 vehicles in March, an increase of 99.3

percent. The company plans to produce

800,000 cars in 2010 with the goal of becom-

ing the world’s largest automaker by 2025.

Since 2003, I have been travelling to China

for business and have lived in Asia for almost

three years, including most of last year in

China. The scale of the social changes and

multitude of business opportunities there

are astounding. There is no way that the

media can convey the true scale. However,

as the reader can see from the sample list

of 31 U.S.-listed Chinese cleantech compa-

nies, there are ample opportunities for U.S.

investors to participate in China’s growth

by buying into Chinese companies that are

listed on U.S. stock exchanges. In fact, right

now there are over 500 U.S.-listed Chinese

companies. Many more companies are lining

up to be listed every week. If you would like

more information, please send me an e-mail

at [email protected]. n

about the author

Robert Haag is the Asia managing director of IRTH Communications. IRTH provides investor relations and consulting services to cleantech and green com-panies. A graduate of Hamilton College, Mr. Haag has worked in the investment industry for 20 years and spends most of his time in China. IRTH is based in Santa Monica, California and was founded by his

brother, Andrew Haag.

*See page 26 for a Sampling of 31 Chinese

US-Listed Cleantech Companies.


31 chinese uS-listed cleantech companies

A-Power Energy Generation Systems, Ltd.

(NASDAQ:APWR) is a leading provider of dis-

tributed power generation systems in China and

a fast-growing manufacturer of wind turbines.

The company recently celebrated the launch of

the final development phase of its jointly owned

Texas Wind Farm.

Advanced Battery Technologies, Inc.

(NASDAQ:ABAT) is a leading developer, manu-

facturer, and distributor of rechargeable Polymer

Lithium-Ion (PLI) batteries, and is a manufacturer

of electric vehicles.

China Agri-Business, Inc. (OTC: CHBU) is a manu-

facturer and distributor of solar water heaters and

space heating devices, and is a provider of renew-

able energy solutions in China.

China Agritech, Inc. (NASDAQ:CAGC) is engaged

in the development, manufacture, and distribu-

tion of liquid and granular organic compound

fertilizers and related products in China. The

company has developed proprietary formulas that

provide a continuous supply of high-quality agri-

cultural products while maintaining soil fertility.

The company sells its products to farmers located

in 28 provinces of China.

China BAK Battery, Inc. (NASDAQ:CBAK) is one of

the world’s largest manufacturers of lithium-based

battery cells as measured by production output.

The company produces battery cells that are the

principal component of rechargeable batteries

commonly used in cellular phones, notebook

computers and portable consumer electronics,

such as digital media devices, portable media

players, portable audio players, portable gaming

devices, and PDAs.

China Clean Energy, Inc. (OTC: CCGY) is engaged

in the development, manufacturing, and distribu-

tion of biodiesel and specialty chemical products

made from renewable resources.

China Energy Recovery, Inc. (OTC:CGYV) is an

international leader in designing, manufacturing,

and installing waste heat energy recovery sys-

tems which provide facilities with greater energy

efficiency. The company’s primary focus is on

the Chinese market. CER’s technology captures

industrial waste energy to produce low-cost elec-

trical power, enabling industrial manufacturers to

reduce their energy costs, minimize emissions, and

generate saleable emissions credits.

China Green Agriculture, Inc. (NYSE:CGA) China

Green Agriculture, fertilizer products are certi-

fied by the Chinese government as “Green Food

Production Materials.” The company produces

and distributes humic acid-based organic fer-

tilizers across China through a wholly-owned

subsidiary.

China Industrial Waste Management, Inc.

(OTC:CIWT) is engaged in the collection, treat-

ment, disposal and recycling of industrial wastes

principally in Dalian and surrounding areas in

Liaoning Province through its 90 percent-owned

subsidiary, Dalian Dongtai Industrial Waste

Treatment Co., Ltd. (“Dalian Dongtai”) and other

indirect subsidiaries.

China Organic Agriculture, Inc. (OTC: CNOA) is a

diversified leading company based in China and

primarily engaged in processing and distribution-

oriented high-quality natural foods. It mainly

engages in green and organic rice processing and

distribution, food provision, mountain specialty

trading, and production and marketing of ice

wine and red wine.

China Ritar Power Corp. (NASDAQ:CRTP) is the

leading supplier of innovative nano gel and envi-

ronmentally friendly battery products and solu-

tions for power applications and power storing

systems. China Ritar’s products and solutions

are used in Alternative Energy (solar and wind

power), Telecommunications (3G), Uninterrupted

Power Source (UPS) and Light Electrical Vehicles

(LEV) industries.

China Solar and Clean Energy Solutions, Inc. (OTC:

CSOL) is a manufacturer and distributor of solar

water heaters and space heating devices, and is a

provider of renewable energy solutions in China.

China TMK Battery Systems, Inc.(OTCBB:DFEL)

Founded in 1999, TMK manufactures and dis-

tributes high rate discharge Nickel Metal Hydride

(“Ni-MH”) multi-cell batteries that are reliable

and long-lasting rechargeable power solutions for

widely used consumer products, which include

home appliances, cordless power tools, medical

devices, multiple personal communication devices

and electric bicycles segments.

China Wind Systems, Inc. (NASDAQ:CWS) sup-

plies forged rolled rings to the wind power and

other industries and industrial equipment to the

textile industry in China. With its newly finished

state-of-the-art production facility, the company

has increased its production and shipment of

high-precision rolled rings and other essential

components primarily to the wind power and

other industries.

Duoyuan Global Water Inc. (NYSE:DGW) is a lead-

ing China-based supplier of domestic water treat-

ment equipment. Duoyuan’s products address the

key steps in the water treatment process, such as

filtration, water softening, water-sediment separa-

tion, aeration, disinfection, and reverse osmosis.

Green Material Technologies, Inc. (OTC: CAGM) is

a Chinese leader in developing and manufacturing

starch-based biodegradable containers, tableware,

and packaging materials.

Gushan Environmental Energy Limited (NYSE:GU)

produces biodiesel, a renewable, clean-burning,

and biodegradable fuel and a raw material used

to produce chemical products. Biodiesel is made

primarily from vegetable oil offal, used cooking

oil, and by-products from biodiesel production,

including glycerine, plant asphalt, erucic acid, and

erucic amide.

HQ Sustainable Maritime Industries, Inc.

(AMEX:HQS) ($83M) is a leading producer of

functional, sustainable Tilapia biomass, including

fish and personal healthcare products.

JA Solar Holdings Co., Inc. (NASDAQ:JASO) is a

Chinese manufacturer of high-performance solar

products.

LDK Solar (NYSE:LDK) is a leading manufacturer

of multicrystalline solar wafers and PV products.

LianDi Clean Technology Inc. (OTC:LNDT) is a

leading provider of clean technology, downstream

flow equipment, engineering services and software

to China’s leading petroleum and petrochemical

companies. The company is focused on the large,

rapidly growing, clean technology market for oil

refineries, projected to reach over $1 billion in

the next 10 years. This market is expected to ben-

efit from favorable Chinese government policies,

including tax benefits and other incentives.

New Energy Systems Group (OTC: NEWN) is a

vertically integrated, original design manufac-

turer and distributor of lithium ion batteries and

backup power systems.

ReneSola Ltd. (NYSE:SOL) is a leading global manu-

facturer of solar wafers.

Rino International Corp. (NASDAQ:RINO) designs,

manufactures, installs, and services proprietary and

patented wastewater treatment, desulphurization

equipment, and high temperature anti-oxidation

systems for iron and steel manufacturers in China.

Sancon Resources Recovery, Inc. (OTC: SRRY) is a

rapidly growing environmental services and waste

recycling company with operations in both China

and Australia.

SmartHeat Inc. (NASDAQ:HEAT) is a market

leader in China’s clean technology energy sav-

ings industry.

Solarfun Power Holdings Co., Ltd. (NASDAQ:SOLF)

is a vertically integrated manufacturer of silicon

ingots and photovoltaic (PV) cells and modules

in China.

Suntech Power Holdings Co. Ltd. (NYSE:STP) is a

leading Chinese company with a market capital-

ization of over $2.5 billion. Suntech is a worldwide

leader in the design and manufacture of innova-

tive solar energy solutions for a wide variety of

customers and applications across North America,

Europe, Asia, and Australia.

Trina Solar Ltd. (NYSE:TSL) is a leading integrat-

ed manufacturer of solar photovoltaic products,

including ingots, wafers, cells, and PV modules.

Worldwide Energy and Manufacturing USA, Inc.

(OTC:WEMU) is a U.S.-based China manufactur-

ing company specializing in products for custom-

ers in the industries of solar energy, aerospace,

wireless telecommunications, medical equipment,

and automotive industries.

Yingli Green Energy Holding Co. Ltd. (NYSE:YGE)

is a leading solar energy company and one of the

world’s largest vertically integrated photovoltaic

manufacturers in China.

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As head of the company, a micro-

cap CEO has to wrestle with many

responsibilities, none of which is

more important than the participation and

direction in the capital formation process.

All eyes are on CEOs and their efforts to

raise money, develop investment banking

relationships, enhance interest in the value

of the company’s stock price, create volume

and liquidity in the stock, fine-tune the

amount of debt, and accordingly identify

new potential mergers or acquisitions using

the company’s shares as currency. In the

earliest stage of a micro-cap company, the

CEO is often more concerned with keeping

the lights on. Beyond the startup stage, the

CEO’s role in the capital formation process

gets much more interesting, demands greater

creativity, and is an important factor to

assess the CEO’s competence.

In today’s environment, banks avoid talking

to companies about lending, particularly to

smaller companies. In fact, existing borrow-

ers with bank lines of credit have seen interest

rates increased, or the credit facility reduced,

frozen, or called in altogether. In the past,

bank lending to qualified emerging growth

companies was an integral part of the capital

formation process. Banks could be counted

on for some or most of the financing needs.

The banks survived on the fee income and

thrived on the equity kickers. Unfortunately,

CEOs today can no longer count on banks

to provide adequate financing. Many growth

companies face the reality that banks increas-

ingly have become missing in action. The dis-

appearance of banks from the capital forma-

tion process places significantly more pres-

sure on the CEO to raise equity capital in the

capital markets, including going public, doing

PIPES, or using convertible debt instruments.

The capital raising process is anything but fun

and requires enormous skill, financial exper-

tise, persistence, and great advice from trusted

advisers and professionals having the com-

pany’s best interests in mind and at heart.

Money raising fees can be steep. Although

regulatory guidelines exist to prevent usury,

no one works for free and many CEOs and

professionals arrange fees to be paid in stock

and cash, mostly on the back-end based on

performance. All bets, however, are off when

a CEO becomes desperate. Valuations go out

the window and toxic deals look more like

helpful offerings.

Micro-cap companies that are adept

at raising money share common traits.

Successful companies have a clear picture

of how much money they need to raise and

present an accurate use of proceeds to inves-

tors. Companies indicate exactly how they

intend to grow the company, pay back inves-

tors, and show that every dollar received

will have a substantial return on investment.

Executives at these companies work relent-

lessly to trim the fat and show investors how

frugal companies spend and how they gener-

ate high returns for investors. Prudent CEOs

consistently “promise less and deliver more.”

They establish a track record that enables

them to maintain their post. Moreover, suc-

cessful CEOs are straight-talkers; they pro-

vide answers as they know to be true and

avoid changing answers based on how the

questions are being asked.

Let’s now focus on the nuances of the

capital formation process of green and

green-related companies. Green companies

have the government on their side. Federal,

state, and local governments provide grant

money for alternative energy developments,

co-payments to companies and homeown-

ers for purchasing new energy reduction

technology, and many reimbursement pro-

grams too many to list. In today’s political

atmosphere “green” also means jobs. Jobs

mean a stronger economy and jobs mean

consumer spending. Today’s green compa-

nies share similar stories with those of past

biotech companies. For instance, the initial

capital infusion into companies will never be

enough. Research and development is a very

costly activity. After a product is developed,

it needs to be protected, produced, packaged,

and promoted, which can take years and

many millions of dollars.

Green is the new “buzz word” of Wall

Street. Investors are looking for good green

companies, and investment bankers are

ready to talk to them and love the space.

From Al Gore to T. Boone Pickens, from

President Obama to the entire U.S. Congress,

the social consciousness has been raised to

save the planet. New urgency exists to adopt

alternative energy to address global warm-

ing and reverse the effects of environmental

pollution. The time is here and here with a

purpose. The question is whether there is

enough green cash to support this emerg-

ing growth industry filled with the promise

to create jobs for millions of Americans.

Ultimately the question may really become,

“Can we afford not to fund these green com-

panies?” n

F I N A N c E

A S K M R . W A L L S T R E E T

The Micro-Cap Capital Formation Process

by ShELDON “ShELLy” KRAFT


Projects aided by government stimulus pack-ages or private investments are taking place from water salination and wave technology to solar thermal energy and photovoltaics, from biomass and algae farms to the smart grid (linking information technology with electric-ity delivery), from sustainable building and construction materials to hydrogen enhanced retrofit technology. The list goes on.

While President Obama has promised to “create new industries and revive old ones…,” China is further along in its green initiatives, and Europe continues ahead with its long history of project developments.

Whether deciding to invest in green com-panies directly or via an investment manager, each route presents its own set of challenges. An investor who chooses to construct a port-folio of individual green investments, either in listed or non-listed companies, should be aware of the following issues:

1) Access to information: Many pure-play green investments are micro or small-cap companies with little to no Wall Street coverage; and many businesses are located overseas or in remote areas with limited interaction with management. Access to local expertise can also be difficult and often is a prerequisite.

2) Liquidity: Stocks of micro and small-

cap companies tend to trade in light volume,

making liquidity a concern.

3) Access to credit: Obtaining credit con-

tinues to be a challenge for start-up and early

stage companies. Additionally, navigating

the mix of private and public funding sourc-

es can be difficult to monitor and assess.

4) The M&A environment: The industry

is ripe for takeovers; this is good news for the

sector, but not necessarily for the investor on

the wrong side of the transaction.

5) Limited hedging vehicles: Many

small-cap companies do not have listed

options. Nor do private equity plays. And

while there is a growing number of green

focused exchange-traded funds (ETFs) and

exchange-traded notes (ETNs), finding the

appropriate short for a long-only or long-

biased portfolio can be difficult, as they

tend to have low correlations to green

portfolios. Commodity futures or general

market indices (S&P) may be more effec-

tive hedges.

Should an investor opt for professional

investment management, finding the talent

requires an active, hands-on, and on-going

due diligence. It is advisable to construct a

list of criteria essential for manager selection

and specific to the green space. Examples

include the following areas:

F I N A N c E

Finding the right investment or choosing the talent to find it

The Challenges of Green Investing

by ShELLEy gOLDbERg

Opportunities for investment in the green space abound and are multiplying globally, whether in renewable energy,

sustainable or clean technology.


1) Macro thinkers: A manager must have

a solid grasp of the global macro environ-

ment to compliment a bottom-up invest-

ment approach. An in-depth knowledge

of the green space and respective invest-

ments, carries little weight when correla-

tions approach 1.0 or 100 percent and when

market beta is high. A macro approach is

particularly crucial in times of market bub-

bles, which we already have witnessed in the

green space, and will likely experience again.

2) Specialists and generalists: There are

both pure play names as well as large indus-

trials with green subsidiaries. A special-

ist’s knowledge of a conglomerate’s ancillary

investment in wind turbine blade manu-

facturing, potentially representing a small

percent of the firm’s revenue, is insufficient,

without a solid understanding of the entire

organization, best served by generalists.

3) Proven track record, both long and

short: A hedge fund manager with talent only

on the long side is not as effective as one with

the knowledge and ability to seek out overval-

ued companies, questionable and unproven

technology, or ineffective management.

4) Non-equity traders: It is beneficial for

a manager to employ traders on the team

who understand the dynamics of the com-

modities, foreign exchange, credit, and fixed

income markets. With this added talent,

managers are better suited both to hedge the

portfolio and to construct an Alfa overlay

with other instruments.

5) Experienced scientists and technolo-

gists: Great bottom-up investors may be

exceptional at analyzing balance sheets, debt

ratios, and cash flows, as well as assess-

ing management; yet such investors gener-

ally lack a deep understanding of the science

behind the technology. Technologists can

help in this area. They can provide insights

into the science, including where it sits on

the traditional energy parity scale, whether

it is cleaner or more productive and efficient

than others, and its long term viability.

6) Access to climatologists, meteorolo-

gists, geographers, and demographers: Such

expertise can give a manager an edge in under-

standing temperature patterns, climate change,

glaciations, river flows, and hurricanes, as well

as population growths and shifts, and the

resultant consumption patterns of energies,

raw materials, water, proteins, and agriculture.

7) Strong ties to politicians, lobbyists,

and legislators: Green initiatives are highly

influenced by politics and policy makers,

both domestically and internationally, as

well as on the federal, state, and local levels.

Federal assistance is highly fragmented, while

regional laws vary considerably, whether

for a multi-state, single state or municipal

project. Issues over taxation, government

incentives, and environmental regulations

can alter the course of, or even put an abrupt

halt, to a project overnight.

8) Access to sector-specific attorneys: A

green investment manager must be knowl-

edgeable about legal issues in a number of

areas: environmental and energy, intellectual

property and patents, public policy, litiga-

tion, M&A, tax, contracts (as it pertains to

procurement, sourcing, leasing etc.), and

sovereign governments and trade.

The type of strategy to employ should be

consistent with the investor’s liquidity require-

ments, risk tolerance, and time committed

for due diligence. With respect to liquidity

and lock-ups, many green projects require

years of research and development and build

out, which tend to favor longer-term invest-

ments rather than those providing monthly

or quarterly liquidity. As such, the private

equity route is potentially the better approach

to green investing. Additionally, less liquid

investments can be more difficult to value and

hedge, and may not be appropriate for the risk

adverse investor or for the low volatility port-

folio. In general, the more successful managers

are running actively managed and diversified

portfolios. The following section provides a list

of the available investment options:

prIvate eQuIty / venture

capItal

• Best suited for longer-term plays where

liquidity and lock-ups are less of a concern

• Opportunities available outside of listed

markets

• Potentially higher risk

hedGe fundS

• Ability to pick both winners and losers

(long and short)

• Ability to hedge with other vehicles

(options, commodities, foreign exchange,

derivatives, etc.)

• Alpha generators

lonG-only (mutual fundS)

• High beta

• No hedging or shorting

• Restricted in the ability to sit on cash

during downturns or high volatility environ-

ments

Sector IndIceS

(etfS and etnS)

• Passive investing

• Pure beta

• Lower portfolio turnover

The green space is dynamic, evolving, and

growing, offering potential for strong returns,

coupled with a low correlation to the broader

markets. While there are many approaches to

green investing, success in the space requires a

deep knowledge of the sector, as well as a strict

and disciplined approach to investing and dili-

gent investment manager oversight. Following

these steps is key toward keeping green invest-

ments not only in the green, but profitable. n

about the author

Shelley Goldberg most recently served as a fund of funds portfolio manager and sector head of global resources with Union Bancaire Privée. Previously, she traded commodity derivatives for many years. She then served the role of risk manager for a hedge fund seed capital provider (Stonehedge Partners), which led to the launch of her own energy hedge fund (G3 Capital Partners). Throughout her career she has built portfolios of direct investments, as well as funds of hedge funds and other investment

vehicles in the green sector. n

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Today’s green living is bigger and more

sophisticated than people realize. The health

and environmental issues confronting peo-

ple around the world has spawned a slew of

innovative companies. Revolutionary break-

throughs are in the works that potentially

can transform how people live, work, and

play. Such transformational technologies are

at the heart of green paradigm shift tech-

nologies (GPSTs). Companies that possess

GPSTs are among the most sought out by

investors today. Companies with GPST share

the following characteristics:

1) Improve existing products by reducing

harmful side effects.

2) Fulfill a significant market need and not

just a special want or desire.

3) Possess proprietary technology that is

unique and unprecedented.

4) Has the leadership opportunity to cre-

ate a substantial shift (verifiable by the tech-

nology, science, and management).

5) Possess scalable business operations.

GpSt bIotechnoloGy

Until recently, patients with advanced pros-

tate cancer used to suffer immense pain as

the cancer spread to other parts of the body.

The barrage of treatments existing then

had too many side effects; often the can-

cer became resistant to treatment protocols.

Then biotechnology companies started to

emerge and introduced innovative drugs to

treat intransigent diseases, such as prostate

cancer. One such company was Dendreon.

Dendreon (NASD: DNDN) was focused

on targeting and eradicating cancer using

a new class of therapy known as active cel-

lular immunotherapies, or ACIs, which used

live human cells to trick the patient’s own

immune system into fighting cancer. The

idea behind ACI was as old as ayurvedic

and traditional medicines historically used

in India and China. These ancient practices

relied on personalized medicines, which had

proven to be highly effective even to this day.

Imagine what technological advancements

can be achieved today if children, scien-

tists, and physicians are taught these Eastern

medical principles early on? Further, per-

sonalized medicines used in regions of the

Far East are relatively inexpensive compared

with those of the West. The low healthcare

costs make this area increasingly enticing

for the United States. Dendreon is a living

F E AT U R E D A R T I c L E

Green Paradigm Shift TechnologiesIn many people’s minds, “green living” means going back to nature and

recycling plastics and paper products. Lately there’s been much talk

about reducing the carbon footprint, but even that concept is only the tip

of the iceberg.

by gORDON chIU


example of personalized medicine and tech-

nology working together.

A revolutionary event occurred in western

medicine on April 29, 2010, when Dendreon

announced that it had won U.S. Food and

Drug Administration (FDA) approval for

Provenge®, the world’s first cancer vaccine.

Prior to Provenge, men with advanced pros-

tate cancer had few treatment options; the

few that were available often did not extend

patients’ lives. The Provenge vaccine, how-

ever, was shown to extend a patient’s life

by an average of 4.1 months. The drug

works by stimulating the patient’s immune

system with an injection of a patient’s own

cells. Philosophically, using the patient’s own

cells to trigger an immune response is a

very green and novel approach to cancer

treatment, a method which once had many

naysayers. In the future, hundreds of similar

treatments will enter the floodgates because

of this breakthrough.

InveStment

About two years ago, Dendreon’s stock was

trading at $3 per share with a market capi-

talization of $400 million, despite the com-

pany having no earnings. Some said that the

company was based on hype or hypothetical

concepts. After the FDA approved Provenge

as a cancer vaccine, Dendreon’s stock was

trading as high as $54 per share with a mar-

ket capitalization of over $7.2 billion, an 18

times increase in value.

Numerous Dendreon-like companies

from start-ups to small-caps in the biotech-

nology sector will arise. Venture capital-

ists, investment bankers, and retail investors

are tempted to create portfolios of such

investments. The growth of the business

will depend on having the right science,

execution strategies, and management team.

Although this is one of the harder technolo-

gies to understand, GPST biotechnology will

play an important role in medical health care

in the near future.

GpSt In the water InduStry

Some people have called it global climate

change. Others call it hype. One thing is

certain. Without proper management, bio-

logical, pharmaceutical, and toxic wastes

will eventually end up in our water and food

supplies to threaten the human population.

This problem applies to both developed and

emerging countries.

Over the past decade, water-related/sup-

ported transmittable diseases (WR/STDs)

have threatened to decimate humanity at

epidemic and pandemic proportions on sev-

eral notable occasions (e.g., SARs in 2002,

H5N1-Avian Flu in 2006, H1N1-Swine Flu

in 2009). As dangers to human survival

increase, certain technologies in biological,

chemical, and material sciences will experi-

ence major paradigm shifts. For example,

animal husbandry, waste water, and solid

waste disposal are areas with the most urgent

needs. Consequently, companies in these

industries have the most potential to develop

technological breakthroughs.

Scientifically speaking, the frequency of

contact, high concentrations of microbes

(e.g., virus, bacteria, and fungi) are perfect

storm conditions that can lead to virulence

and cause epidemic health threats. Under

these conditions, a new microbe can come

into existence and catch the public unpre-

pared. Relying solely on ultraviolet radia-

tion and chlorination to disinfect drink-

ing water can be dangerous. Traditional

sanitation methods are not fail-safe. You may

have noticed that the odor of tap water has

increased substantially over the years.

Particular companies are focusing their

research on technological advancements that

control microbes at the water source. While

every 50 years, an opportunity arrives that

could save lives, this particular sector of

research could save all of humanity. n

about the author

Dr. Gordon Chiu is an execution driven businessman with more than 15 years of combined domestic and international experience in biomedical, chemical, cosmetic, medical, and technology industries. He has been invited to serve on the board of public and private companies and to provide vital advice to the board while increasing overall shareholder value.

His solid background and broad experience has allowed him to accomplish and advise in areas of Alzheimer research, breast cancer research, derma-tology, drug addictions research, green technology and antimicrobial research. He started his career as a research scientist at Pfizer and Merck & Co., and has healthcare and marketing experience with strong links to Wall Street and Asia.

His educational background began with a B.S. degree in chemistry from Rensselaer Polytechnic Institute with a summa cum laude. He graduated with an M.S. degree in chemistry from Seton Hall University with high honors. Additionally, Dr. Chiu was accepted as an MD/PhD candidate under the National Institutes of Health’s Medical Scientist Training Program for four years at the Mount Sinai School of Medicine where he also researched, devel-oped, consulted, and advised the Department of Dermatology’s Dr. Huachen Wei in skin cancer research. Seeing the opportunity to impact foreign policies in healthcare, he transferred his credentials to the fully accredited University of Bridgeport School of Naturopathic Medicine to receive his doc-torate in naturopathic medicine.

With this unique background, he has investigated the validity of foreign treatments and their success level for public health. He has also been chosen to serve as an advisory role in the identification of low cost solutions (i.e. non-invasive diagnostic equip-ment) for emerging countries that cannot afford to maintain armies of physicians across numerous sub-specialties. His years of experience and con-tinuous involvement have created deep relationships within the scientific, business, and medical commu-nities. Dr. Chiu developed and owns methodologies called directed combinatorial algorithmic libraries (D.C.A.L.) that are used in various commercial appli-cations, composition development, and research.

Disclosure: Dr. Chiu does not hold an investment posi-tion in Dendreon Corporation. He has been appointed as an independent adviser to SNN.


However, there is now good reason to

consider uranium “green.” Nuclear power

plants produce electricity with only a min-

ute amount of greenhouse gases. With the

current worldwide emphasis on reducing

carbon emissions, environmental, scientific,

and political communities are supporting

expansion of nuclear power production as a

green technology.

Even the co-founder of Greenpeace Patrick

Moore supports nuclear power as a means of

mitigating climate change.

My, how times have changed!

The U.S. domestic uranium business was

devastated in 1979 with the accident at

Three Mile Island. That event combined

with the fictional movie about a nuclear

reactor meltdown starring Jane Fonda (The

China Syndrome) led to massive protests

against nuclear power by environmentalists.

Numerous plants in the planning stage or

under construction were cancelled due to

permitting difficulties, construction delays,

and cost overruns. The uranium price col-

lapsed and nearly all domestic mines were

shut down by the mid to late 1980s.

Although nuclear energy continues to

supply nearly 20 percent of our electric-


Uranium: The New Green MetalUranium is commonly known as “the other yellow metal,”

because the uranium oxide concentrate produced by mines is a bright yellow, coarse powder called “yellowcake.”

by MIchAEL S. (MIcKEy) FULP

ity, it’s been 14 years since a new nuclear

power plant has been commissioned in the

United States. The de facto moratorium on

new construction will end with President

Obama’s recent announcement of govern-

ment loan guarantees for building two new

nuclear reactors in Georgia. But the damage

has been done: during the past 30 years the

United States has gone from a net exporter of

uranium to a massive importer. We currently

consume 55 million pounds while producing

only four million pounds of uranium a year.

Worldwide, nuclear energy supplies about

13 percent of electrical power and that per-

centage is projected to grow substantially

over the next two decades. There are cur-

rently 56 new nuclear reactors under con-

struction in the world and more than 200

are on the drawing board. There will be a

substantial increase in uranium demand

over the next 20 years.

Nearly half of the world’s 2009 uranium

mine supply came from countries that are

unstable, corrupt, or unfriendly to the West.

The top ten producers include Kazakhstan

(which recently became the world’s larg-

est), Russia, Niger, Uzbekistan, China, and

Ukraine.


This is not an all-star cast of model gov-

ernments. Kazakhstan is increasingly nation-

alizing its nuclear power industry. Leaders of

the country’s state-owned uranium mining

company were charged with corruption last

year. Niger had a military coup that over-

threw its despotic president one year ago.

And Uzbekistan recently closed its border

with Kyrgyzstan to refugees fleeing ethnic

bloodshed, as a result of the government

coup.

I doubt few Americans would consider

two other countries on this list, Russia and

China, to be our trusted friends. Ukraine is

a former Soviet republic and lies within the

Russian sphere of influence.

As if this was not enough, one-half of

our domestic uranium consumption for the

past 15 years has been supplied by the

dismantling of Russian nuclear weapons

and the conversion of weapons-grade ura-

nium to reactor-grade uranium. Known as

the “Megatons to Megawatts” program, that

supply agreement expires in 2013.

So, where will the United States get its

uranium supply in the next 20 years? The

current yearly deficit is over 50 million

pounds and the Russians are cutting half of

that supply in three years.

I think a partial answer lies in revital-

izing our domestic uranium mining indus-

try. There are numerous uranium projects

in advanced permitting, construction, and

development stages in the Western United

States and Texas. However, with a recent

spot uranium price of $41 per pound and a

long-term contract price of $60 per pound,

little investment interest currently exists for

uranium explorers, developers, and miners.

The uranium sector of our micro-cap

junior resource market has been beaten up

and trounced upon since the uranium spot

price collapsed from $135 per pound in mid-

2007. It is a forgotten commodity with a few

strong companies surviving from the many

juniors that piled into the sector during the

uranium bubble days.

And that is precisely why I am interested.

For those who are not familiar with my

work, I employ a contrarian philosophy and

strive to identify sectors that are out of favor

with the speculating investment community

and choose undervalued companies with the

right combination of share structure, people,

and projects that will lead to rewards for

shareholders.

I like to buy when volumes and prices are

low to be well-positioned for a run-up when

the sector comes back on the investor’s radar

screen.

In the gold sector, I commonly invest

in exploration companies that operate in

countries with significant geopolitical risk.

Since these emerging market countries have

not had every meter of ground trod upon

by curious geologists in the past, giant gold

deposits still can be discovered by the tried

and true methods of “boot leather and drill-

ing.”

However, I am unwilling to take those

sorts of risks in the highly sensitive and geo-

politically risky uranium business.

The companies that draw my interest are

exploring and developing projects in past

and/or currently producing major districts

in North America. These geologically and

geopolitically favorable areas include the

largest and highest grade uranium prov-

ince in the world, Saskatchewan’s Athabasca

Basin; the world’s second largest produc-

er, New Mexico’s Grants Mineral Belt; the

Wyoming Basins; and the South Texas

Uranium district.

In my opinion, the junior uranium sec-

tor offers good speculative risk with current

market valuations. I see opportunities to

make some “green” with my uranium plays.

I urge you to do your own research and

due diligence, assess your personal risk pro-

file, and decide if there are companies in this

space that are worthy of your investment. n

about the author

The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. degree in earth sciences with honors from the University of Tulsa, and M.Sc. degree in geology from the University of New Mexico. Mickey has 30 years experience as an exploration geologist searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia.

Mickey has worked for junior mineral explorers, major mining companies, private companies, and investors as a consulting economic geologist for the past 22 years, specializing in geological mapping, property evaluation, and business development. In addition to Mickey’s professional credentials and experience, he is high-altitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Chile, Canada (British Columbia), and the United States (Nevada).

Mickey is well-known throughout the mining and exploration community for his ongoing work as an analyst, newsletter writer, and speaker.

Contact: [email protected]

Disclaimer: I am not a certified financial analyst, bro-ker, or professional who is qualified to offer investment advice. Nothing in a report, commentary, this website, interview, and other content constitutes or can be construed as investment advice or an offer or solicita-tion to buy or sell stock. Information is obtained from research of public documents and content available on the company’s website, regulatory filings, various stock exchange websites, and stock information services, through discussions with company representatives, agents, other professionals and investors, and field visits. While the information is believed to be accurate and reliable, it is not guaranteed or implied to be so. The information may not be complete or correct; it is provided in good faith but without any legal responsi-bility or obligation to provide future updates. I accept no responsibility, or assume any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information. The information con-tained in a report, commentary, this website, interview, and other content is subject to change without notice, may become outdated, and will not be updated. A report, commentary, this website, interview, and other content reflect my personal opinions and views and nothing more. All content of this website is subject to international copyright protection and no part or portion of this website, report, commentary, interview, and other content may be altered, reproduced, copied, emailed, faxed, or distributed in any form without the express written consent of Michael S. (Mickey) Fulp, Mercenary Geologist.

Copyright © 2010 Mercenary Geologist. All Rights Reserved.


is equal to one billion watts), less than

one percent of global electricity demand.

This compares favorably with many nuclear

plants. A recent Massachussetts Institute of

Technology survey has named “enhanced

geothermal” to generate 100 GW world-

wide by 2050. The United States is already

the world leader in geothermal energy. A

growing number of utilities and energy

companies has already made a presence in

the industry, including Southern California

Edison, San Diego Gas & Electric, PG&E,

Chevron, and an unlikely source, Google.

Reliability is very important for operating

systems because energy plant operators are

at risk of being charged for any energy short-

fall. This means that if the energy supply is

not delivered at the promised energy load or

capacity, the public utility will have to go out

on the spot market.

High temperature geothermal heat is

found near tectonic plate boundaries in

regions with high earthquake and volca-


Finding the right investment or choosing the talent to find it

Geothermal Energy- Heating Up

by LARRy TUREL

Geothermal energy is derived from the original formation of the Earth, the radioactive decay of materials, and the sun’s

energy absorbed at the surface. Prehistoric man used geother-mal energy for heating bath water and ancient Romans used it for space heating.

Today, geothermal energy is used for gener-

ating electricity. Geothermal plants of vari-

ous types are being built around the world.

Generation of geothermal energy in the

United States is subject to the same regula-

tions as those for other energy sources. State

public utility commissions (PUCS) control

the destinies of geothermal power producers.

In comparISon

Solar energy’s future looks bright. The

downside is that solar energy has only a 25

to 35 percent reliability (sunrise vs. sunset, as

the sun does not shine all the time).

The popularity of wind energy is gaining

strength. Wind-generated power has a 25

to 40 percent reliability (the wind does not

always blow when you need it).

Geothermal energy is hot! Geothermal

energy is available with over 90 percent reli-

ability. Worldwide geothermal power plants

produce over 12 gigawatts (one gigawatt


nic activity, oceanic trench formation, and

mountain-building. Even cold ground con-

tains heat, which can be extracted by using a

geothermal heat pump. The use of geother-

mal energy for heating homes and buildings

is a rapidly growing market, which is esti-

mated to grow by over 10 percent annually.

Closed-loop geothermal heat pumps cir-

culate a carrier fluid (most often a water/

anti-freeze solution) through pipes buried

in the ground. As the fluid circulates under-

ground it absorbs heat and brings the now

warmer fluid to an electric heat pump which

extracts the heat from the fluid. The remain-

ing fluid is now without heat and is sent back

into the ground to repeat the cycle. The heat

that is extracted by the heat pump is used

to heat the house. This technology makes

geothermal heating economically feasible in

any location.

Geothermal energy encourages conserva-

tion of natural resources and produces mini-

mal high-carbon emissions, while making us

less dependent on fossil fuels. Geothermal

energy is a true renewable energy source. We

can now take this same principle and apply

it on a much larger scale.

Geothermal energy is considered renew-

able because it is derived from the nearly

infinite heat supply generated by the ongo-

ing process at the molten core of the plan-

et. According to the Geothermal Energy

Association, the heat continuously flowing

from the earth core is estimated to be equiv-

alent to 42,000 GW of power (20+ times

today’s global electricity generation). If har-

nessed properly, geothermal could become

a material contributor to global electricity

generation. The earth’s natural heat produc-

es molten rock (magma) which heats and

creates reservoirs of superheated fluids (hot

water or brine) at some locations within

relatively shallow distances of the earth’s

surface. Geothermal electricity generation

is possible by drilling a well to bring to the

surface these superheated fluids or stream

to drive turbines. A growing number of

companies is generating electricity using this

technology.

Relatively shallow geothermal resources are

found in some areas of the Earth, including

large portions of the western United States.

Below is a U.S. geothermal resource map,

prepared by the U.S. Department of Energy.

The geothermal resource map of the

United States shows the estimated subter-

ranean temperatures at a depth of six kilo-

meters (just under four miles), which is

considered relatively near the surface. As

the map shows, essentially most areas of the

United States have some form of available,

near surface geothermal potential.

Use of geothermal resources is based

on temperature. The highest temperature

resources are generally used for electric

power generation. Geothermal power in the

United States currently totals about 2,800

MW or the output of five large nuclear

plants. An almost inexhaustible supply of

heat resources is found within the earth. A

well managed geothermal program has the

potential to be operational for decades, and

perhaps centuries.

One geothermal resource is dry steam,

which is used to power steam plants to

generate electricity. In these plants, steam

is passed directly through a turbine, heat

exchanger, or radiator to generate electric-

ity. They are commonly used at areas such

as the geysers in northern California, other

portions of western United States, Iceland,

some parts of Japan, and other geothermal

hot spots around the world.

The dry steam technology uses the steam

from a geothermal production well to be

fed directly to a steam turbine without a

secondary heat exchanger. The turbine then

converts the change in steam pressure into

mechanical rotational energy, which is then

converted to electrical energy by a generator.

exhibit 1

Although dry steam geothermal power plants

may emit marginal quantities of hydrogen sul-

fide (H2S), nitric oxide (N2O), and carbon

dioxide (CO2), these emissions are much lower

per energy unit than those based on fossil fuels.

By using gas mitigation systems to remove these

small amounts, geothermal power can be made

an emission-free source of electricity. Again,

geothermal power has the potential to help

reduce global warming if widely deployed to

replace fossil fuels and gases.

flaSh Steam power plantS

It is more common for very high tempera-

ture geothermal fluids (above 350 °F) to be


produced from a geothermal resource. This

high temperature pressurized fluid is passed

through a low temperature tank. The tank

allows a portion of the flow to “flash” off as

steam, which is then directed to a turbine

to generate electricity. The remaining spent

geothermal fluid is returned for reinjection

or in some cases is used for additional energy

generation in either a dual flash cycle or in a

“binary bottoming cycle” power unit. Using

this type of power unit, a second flash tank

is used to separate the fluid at a lower pres-

sure to drive the turbine and produce more

power.

enhanced Geothermal

SyStemS (eGS)

With the rising popularity of geothermal

energy as an alternative to fossil fuels, signifi-

cant amount of capital has been invested in

research and development of new technolo-

gies. Although not commercially viable as

yet, enhanced geothermal systems (EGS) are

designed to extract heat from areas with low

permeability and porosity, which would sub-

stantially enhance extraction technologies

and methodologies. Enhanced geothermal

systems consist of production and injection

wells that are drilled to more than 10,000 feet

in depth, enough to reach sufficient perme-

ability and porosity. In a recent major report

entitled “The Future of Geothermal Energy,”

Massachusetts Institute of Technology esti-

mated that EGS could provide up to 100 GW

of new geothermal capacity annually.

free Green enerGy llc

Free Green Energy LLC is a non-utility

power producer located in Houston, Texas.

The company plans to make use of two sepa-

rate resources, (neither of which requires

combustion or produces a single pound

of CO2 emission) geothermal energy and

kinetic energy. The company is currently in

the process of identifying, acquiring, and

operating geothermal energy properties

using geothermal powered engines to gener-

ate electricity.

Geothermal Energy’s source will be hot

brine from producing and abandoned oil

and gas wells in Louisiana, Oklahoma, and

Texas. According to the Texas Secretary of

State and the Texas Railroad Commission

(responsible for the regulation of oil and

gas production in Texas), there are 13,000 to

16,000 abandoned oil and gas wells in Texas

alone. Using a closed-loop organic Rankine

cycle (ORC) to create pressure by boiling

EPA-approved chemicals into gas. The gas

expands in a one-way system and turns a

patented twin screw expander, which drives

a generator to create electricity.

Kinetic energy’s source is focused on high

pressure gas wells owned by others to pro-

duce electricity and will share revenue with

the gas producer. It is expected that orphan

wells will be used to produce electricity with

pressure generated by CO2 injection. In the

case of orphan wells, the company will be the

producer and will not be required to share

revenue with a third party.

There are several desirable advantages

currently associated with renewable energy

projects, including:

1) Tax Credits – Two common tax credits

are available.

a. Investment Tax Credit (ITC) - The fed-

eral government has allowed an investment

tax credit (ITC) of 10 percent.

b. Production Tax Credit (PTC) – Operators

of geothermal power plants are entitled

to a production tax credit (PTC) of $.021

per kilowatt hour for 10 years. The PTC is

indexed for inflation, so the rate is expected

to increase over time.

To illustrate the use of the tax credits, let’s

assume that a geothermal power project

with a 10 MW generating capactity with

a cost of $25 million. Investing in such a

plant will result in an investment tax credit

of $2,500,000 and an annual production tax

credit of $1,838,000 (or $18,386,000 over a

10 year period).

The tax credits may be combined for a

one-time ITC of 30 percent. The present

value of the PTC at a four percent interest

rate is $12,420,923. This ITC may be given

in the form of an immediate tax-free cash

grant, rather than be used as a tax credit to

reduce tax liabilities at year end.

The present value of the combined ITC

and PTC, with the PTC claimed annually

over the 10 year period, is $14,920,923. This

is much greater than the elective ITC of 30

percent ($7,500,000).

2) Accelerated Depreciation – Up to 50

percent of the amount invested may be

depreciated the first year. However, if the 30

percent ITC is used, the depreciable amount

becomes 85 percent of cost and the first

year depreciation is limited to 42.5 percent

exhibit 3: Binary-Cycle Power Plant – U.S. Department of Energy

exhibit 2

Binary-Cycle Power Plants. For lower

resource temperatures (300 to 350 °F), it

is more efficient to transfer heat from the

geothermal fluid to a secondary fluid (with

a lower boiling point – typically a hydrocar-

bon such as isobutane or isopentane) that

vaporizes. These vapors will then drive the

turbine which generates electricity. Such

plants are called “binary” since a secondary

fluid is used in the actual power cycle.


(50% of 85%). At the maximum allowable

depreciate rate of 50 percent, the first year

depreciation amount on a 10 MW of capac-

ity is $12,500,000.

3) Intangible Completion Costs – If the

well produces commercial oil and gas associ-

ated with the thermal or kinetic energy used

to generate electricity, intangible completion

costs will be deducted. This would amount

to about $4,300,000 on a 10 MW capacity.

4) Depletion Allowance – If the well

produces commercial oil or gas, well partici-

pants are allowed to shelter some of the gross

income derived from the sale of the oil and

gas. This can range from 15 to 20 percent.

5) Renewable Energy Credits (RECS) –

Renewable energy credits are created when

a renewable energy project begins creating

power. The green power is sold into the grid

where the project is located. The RECS are

sold separately from the electricity as a com-

modity.

6) Carbon Credits – Carbon credits pro-

vide an incentive for companies to reduce

CO2 gas emissions. Credits are calculated

based on the amount of carbon dioxide

normally generated that is offset by the

zero emission of a renewable energy project.

Currently there are five exchanges trad-

ing in carbon allowances: Chicago Climate

Exchange, European Climate Exchange, Nord

Pool, Power Next, and the European Strategy

Exchange. There are at least two electronic

markets that also have been established:

Cantor CO2e and Preserval Marketplace.

7) Exemption from Severance Tax – In

Texas, oil or gas produced coincident with

geothermal energy is exempt from state

severance tax.

As exhibited, a multitude of incentives

exist to encourage investment in geothermal

energy.

the future IS now

According to John Doerr, a pioneer ven-

ture capitalist whose firm bankrolled Sun,

Google, Compaq, and Symantec, “The mar-

ket for energy technology is larger, maybe

10 times larger, than the Internet boom that

preceded it. We’re at the beginning of a green

technology boom. The sheer magnitude of

the problems can translate into an equally

vast opportunity.” To create a kind of world

fit for his daughter to live in, he says that we

need to invest now in clean, green energy.

According to a recent report by the

Geothermal Energy Association (GEA),

the April 2010 United States Geothermal

Power Production and Development Update

showed a 26 percent growth in new projects

in the United States in the past year. There

are 188 projects underway in 15 states which

could produce as much as 7,875 megawatts

(MW) of new electric power.

According to GEA, the projects under

development will represent capital invest-

ment of more than $35 billion when com-

pleted. “California could achieve its 2020

goal for global warming emissions reduc-

tions just by keeping energy demand level

and replacing coal-fired generation with

geothermal,” said Karl Gawell, GEA’s execu-

tive director.

Geothermal power generation is con-

centrated mostly in the U.S. South and

Southwest. In these regions the number

of projects is increasing at a rate rang-

ing from 50 to 400 percent. States with

geothermal power projects include Alaska,

Arizona, California, Colorado, Hawaii,

Idaho, Louisiana, Mississippi, Nevada, New

Mexico, Oregon, Texas, Utah, Washington,

and Wyoming. This translates into over

28,000 direct and indirect permanent jobs to

be added to the workforce. This represents

capital investment of more than $35 billion,

and it is accelerating.

The renewable energy boom has been

driven largely by environmentalists who fear

the dangers from an increased reliance on

foreign oil and clear evidence of global

warming. The boom is being greatly acceler-

ated by the Obama administration, which

will require that by the end of 2012, at least

10 percent of all electricity consumed in the

United States be derived from clean, sustain-

able energy sources, such as solar, wind, and

geothermal. With the national generating

capacity currently around one million mega-

watts, this will increase the renewable por-

tion from 20,000 megawatts generated today

from solar, wind, and geothermal to about

100,000 megawatts in 2012–a 500 percent

increase in only four years.

With recent improvements in drilling

technology, geothermal plants can now be

built and operated at costs comparable to

those of coal-fired plants, with the added

benefit of near zero fuel cost.

To quote a former racehorse owner’s

thoughts, “Never invest in anything that eats

while you’re sleeping (i.e., a racehorse), but if

you can find an industry that creates revenue

while you are sleeping, invest in that instead.”

Scientific evidence suggests that human-

ity is living unsustainably. To reduce the

effects of consumption of natural resources

to within sustainable limits requires the

development of new and green technologies.

That is the path that we must follow. n

about the author

Larry Turel has worked in the securities and invest-ment banking industry for over 30 years, including serving as a securities broker and trader. Mr. Turel has a deep understanding of all facets of the securi-ties and investment banking business. He has advised public and private companies to develop and execute on business plans. Further, he has helped many cli-ents secure funding using bridge loans, private place-ments, and initial public offerings.

Mr. Turel currently serves as chief executive officer of Zoegenics LLC, a private cancer clinical research company focused on improving immune systems in humans and animals. The company is in the process of licensing specific patents and intellectual proper-ties, and inventions to joint venture pharmaceutical and manufacturing companies. In addition to his responsibilities at Zoegenics, he has recently been appointed vice president- corporate development/ IR for Spot Mobile International Ltd., a publicly trad-ed telecommunications company based in Miami, Florida. He also serves on the advisory board of Free Green Energy LLC and Gift and Save, Inc.

Mr. Turel graduated from Ithaca College in Ithaca, New York with a bachelor of science degree in busi-ness administration with a minor in economics.


the private company marketplace

PROFILED cOMPANIES

an alternative financing tool

Capital formation has not worked

well for emerging companies seek-

ing capital. Private companies in

particular find the process to be challenging

given that the marketplace has become high

speed and fragmented. Sophisticated trading

strategies relying on algorithms and deriva-

tive products appear to have replaced an

efficient pricing mechanism for individual

issues. Growing companies looking for capi-

tal cannot turn to the security industry as

they once did. The volatility of traded securi-

ties today has helped generate fat profits for

securities firms, but has not helped issuing

companies in a way that they would expect.

With this as a backdrop and the potential

of the Internet as a support system, Private

Company Marketplace, Inc. (PCM), was

founded to provide a Web-based platform

for private companies (and public compa-

nies doing private capital raises) and the

accredited investor community.

In the current environment, private capi-

tal has become increasingly important to

the emerging company and, for that matter,

companies of all sizes.

In the past, private companies did not

have an effective platform to find investor

capital. What had been available consisted of

segmented programs designed to trade illiq-

uid securities or Web portals that listed avail-

able offerings seeking wider participation.

It was evident that private companies

needed a central platform that functioned

like stock exchanges for public companies.

The nature of a public company, however,

rests in its liquidity. The existence of an effi-

cient pricing mechanism borne from the dis-

counting of all relevant information in the

public’s trading activity should theoretically

result in a fair price for each issue. Platforms

for public companies are based on trading.

Private companies, on the other hand,

are illiquid by nature. How companies are

priced depends on the due diligence of

the individual investor and the investor’s

perceived value. Private companies need a

platform designed for capital formation, not

trading. They need a platform that provides

information delivered in an efficient manner

to the greatest number of accredited inves-

tors. Accredited investors need a platform

that delivers that information in a consistent

manner so that they can make optimum

investment decisions.

To address the issue of liquidity, the

Private Company Marketplace offers an

integrated global platform that allows mem-

bers to auction their stock when changing

personal situations dictate. This auction is

not designed to price the stock as efficiently

as a liquid public issue but gives accredited

investors an opportunity to create their own

liquidity event at a price that is determined

by the seller based on available information.

The Private Company Marketplace allows

companies and accredited investors to inter-

act for the benefit of both. In addition, as

a FINRA/SIPIC member, Private Company

Marketplace can be part of a selling group in

underwritten private placements.

Private Company Marketplace leverages

the Internet to disseminate information effi-

ciently to potential investors and to provide

a medium for them to communicate directly

with a company. With the tools provided by

PCM, a company can raise immediate capital

or create visibility to attract a following for

future financing opportunities.

The Private Company Marketplace is

designed to list companies and not just cur-

rent stock offerings. Companies have a plat-

form to provide information consistently to

inform current and potential investors.

More information about Private

Company Marketplace can be found at

www.pcmexchange.com. n

Disclaimer: This corporate profile is based upon infor-mation provided by the issuer or company representa-tive. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the com-pany profiled.

Safe Harbor Statement: The statements in this adver-torial or profile relating to future products, partner-ships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

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Jatropha’s Place in the Biofuels RaceJatropha, a biofuel feedstock, could change the way the world

thinks about energy. Pitted against the most viable alterna-tive energy sources on the planet, Jatropha has the potential to compete in one of today’s fastest growing industries.

With government mandates to reduce the

global carbon footprint, the biofuels indus-

try has been sent into a frenzy. Alternative

fuels are in high demand and the race is on

to find the alternative fuel of choice.

Jatropha curcas, also known as the “die-

sel plant,” is an oil-bearing, sub-tropical,

drought-resistant shrub capable of growing

in challenging environments. When grown

in the right climate, Jatropha produces non-

edible nuts high in oil. Crude Jatropha oil

(CJO) can be used to run diesel engines

and has been tested successfully for use in

aviation.

Jatropha, however, has yet to become a

household name. Despite the myriad of

articles and news programs about Jatropha

and the heavy-hitting brands attached to it,

the biofuel feedstock has a lot of competition

in the world of alternative energy. Jatropha’s

greatest attributes are its non-food crop

status and its ability to serve as a drop-in,

cleaner burning replacement for traditional

diesel fuel.

Jatropha has made headlines because of

its association with organizations, such as

Toyota, Nestle, Kia, Bayer, General Motors,

NASA, and Boeing. Some are exploring the

use of Jatropha as a replacement for tradi-

tional fuel; some are growing Jatropha to

counter their own carbon footprint.

Originating in Central America, the plant

was largely considered a weed before the

discovery of the plant’s potential as a biofuel

resource, and was sometimes used as a hedge

to divide fields. The oil from its nuts was

occasionally used to fuel lamps. Jatropha

begins to flower within six to eight months

of planting, matures within three to four

years, and continues to produce fruit for up

to 50 years. When pressed, oil is extracted for

by LISSA SWIhART


biofuel and a pulp residue or seedcake is left

behind, which can be made into either fertil-

izer or animal feed. Needless to say, Jatropha

is no longer considered a weed.

Jatropha made its biggest debut in 2008 and

2009 when technological developments made

it possible to refine CJO to be used as a drop-

in fuel in existing engines. News sources, such

as New York Times, Newsweek, and Forbes,

began to feature articles about the plant. In

2007, the Wall Street Journal published an

article entitled, “Jatropha Plant Gains Steam

in Global Race for Biofuels.” In 2008, the

Economist kept the Jatropha buzz going with

an article entitled, “Kept aloft by plants and

algae.” In 2009, Time magazine questioned,

“Jatropha: the Next Big Biofuel?” In February

2010, Reuters published, “Jatropha Shines as

Non-Food Oil for Biodiesel.”

Crops like corn and soybean once domi-

nated the world of biofuels until scientists,

environmentalists, and human rights advo-

cates took issue with the effects of food

versus fuel. Prices of these crops were driven

up because of the demands of the oil indus-

try. Those crops became cost prohibitive

to some populations. Jatropha is inedible,

which excludes it from the food versus fuel

criticism. Beyond its non-food status, the use

of crude Jatropha oil does not require engine

modification, an attribute that makes its use

environmentally friendly and cost-effective.

Will Thurmond, president of Emerging

Markets Online, predicted the necessity for

biofuels to act as drop-in fuel in his 2009

article “Drop in Fuels: the Next Generation”

published in Biofuels International.

According to Thurmond, “from 2009 to

2020, the industry will see increasing invest-

ment into the production of ‘drop-in’ fuel

technologies and refinery processes to meet

rising demands for the integration of bio-

mass and petroleum systems, and to support

national biodiesel mandates and targets for

biofuels production.”

Thurmond listed Jatropha as one of the

feedstocks that can be refined to produce a

drop-in fuel “that require[s] no changes to

distribution, storage or engines for planes.”

He used the United States as an example of a

country that has spent more than $7 billion

on its existing petroleum refining, storage,

pipeline, and distribution structure, not to

mention the hundreds of millions of dol-

lars spent on research and development to

produce a new airline jet engine. In order to

be viable, biofuels have to act as a drop-in

replacement.

On December 30, 2008 in Auckland,

New Zealand in a joint initiative between

Air New Zealand, Boeing, Rolls Royce, and

Honeywell’s UOP, Jatropha diesel was tested

in the world’s first commercial aviation test

flight powered by Jatropha diesel specially

blended for aviation applications.

Last year, MIT’s Technology Review pub-

lished research findings by Alok Adholeya,

director of (TERI) Biotechnology and

Management of Bioresources. “Jatropha

is a one-stage conversion [to biodiesel],”

Adholeya says, explaining that converting

the plant oil to an oil that can be burned as

fuel requires only one stage of heating and

mixing with methanol. The resulting fuel, he

says, “is a very good quality diesel that can be

used in any transport vehicle.”

With so much public evidence of

Jatropha’s potential, some biofuel compa-

nies are relying on public participation to

get Jatropha plantations up and running.

Bedford Biofuels, headquartered in Calgary,

Alberta, Canada is educating investors about

the potential of Jatropha to attract small

and large investments. The company will

plant 100,000 hectares (or 247,000 acres) of

Jatropha in the Tana Delta District of Kenya.

David McClure, the president and CEO of

Bedford, said most of the CJO produced will

be consumed domestically but once quanti-

ties allow, the oil can be shipped to other

parts of Africa, Europe, and beyond.

In March 2010, NASA announced the

addition of a Jatropha experiment to the

International Space Station to test the effects

of microgravity on Jatropha cells with the

intent to accelerate the cultivation of the

plant for commercial use.

An article on NASA’s official Web site

quoted Wagner Vendrame, the princi-

pal investigator for the experiment at the

University of Florida. “As the search for

alternate energy sources has become a top

priority, the results from this study could

add value for commercialization of a new

product,” said Vendrame. “Our goal is to ver-

ify if microgravity will induce any significant

changes in the cells that could affect plant

growth and development back on Earth.”

The sky appears to be the limit for

Jatropha. Once considered a weed, the plant

has the potential to leave a green footprint

in history.

about bedford bIofuelS

Bedford Biofuels is a biofuel company head-

quartered in Calgary, Alberta that syndicates

private investment offerings in Canada to

facilitate its Jatropha operations in Kenya.

The company seeks to fund large-scale

operations, thereby allowing it to create com-

mercial quantities of biofuel. Bedford has

achieved stable production costs by securing

long-term land leases and exclusive supply

agreements, and by choosing geographical

areas with available labor, pre-existing infra-

structure, facilities, utilities, and government

support.

Bedford’s humanitarian division

EMPOWER (Every Member Prospers on

World Energy Resources) was formed to

bring healthcare, education, and clean water

to the people in the areas in which Bedford

operates. EMPOWER will teach farmers to

grow their own Jatropha crop to sell it to

Bedford for income. Through intercropping

and the transfer of farming skills to local

farmers and landowners, EMPOWER will

contribute to long-term food and financial

security. All of Bedford’s Jatropha operations

will incorporate sustainable use of natural

resources, farming practices, and production.

For more information about Bedford Biofuels,

please contact Robert Vanden Heuvel at (403)

648-6100 or [email protected],

or visit http://www.bedfordbiofuels.com/

welcome/microcapreview/. n


wealth from waste


nutraceutical Ingredients from food production waste Streams

The U.S. food industry is a giant with

annual sales approaching one tril-

lion dollars. The industry generates

a tremendous amount of waste by-products

that end up in landfills, polluting both earth

and waterway systems. In the past, much of

the by-products were used as animal feed.

Prompted by fears of contaminated animal

pathogens (e.g., mad cow disease), recent

regulations have been enacted to put a stop

to this practice. Each foodstuff – meat, milk,

fruits, or vegetable – creates unique waste by-

products that must be disposed of properly,

depending on the chemical composition and

levels of microbial contamination.

With advances in food production, many

waste streams are now being turned into

profits by science-saavy entrepreneurs who

recognize potential profits from other peo-

ple’s waste. The nutraceutical industry now

creates value-added nutritional ingredients

with a myriad of health benefits.

the nutraceutIcal

InduStry

Companies today can convert waste streams

into substances with a range of beneficial

uses, such as reducing the pain of osteo-

arthritis and improving mood energy and

cognitive functions. In some cases, these

ingredients can substitute for over-the-

counter drugs, often without side effects.

With worldwide sales of almost $80 billion,

this fast-growing nutraceutical category has

mined novel ingredients that prevent or

ameliorate modern aches and pains.

Let’s take a look at the creative efforts of

some entrepreneurial companies that trans-

form someone else’s garbage into profits.

by STEVEN WIThERLyAND LARRy MAy, M.D.

With advances in food

production, many waste

streams are now being

turned into profits by

science-saavy

entrepreneurs who

recognize potential

profits from other

people’s waste.

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ancIent waSte Stream

problem

Cheese production used to be an envi-

ronmental hazard. When cheese is manu-

factured, cow or goat’s milk is coagulated

with an enzyme (rennet) that separates the

casein (cheese) from the whey protein frac-

tion (milk serum). The whey used to go

straight to the municipal drain as late as

the early 1960s. Cheese production creates a

lot of whey-mineral soup, which used to be

siphoned off as a waste stream.

Today this highly polluting protein stream

is transformed into hundreds of valuable

food and pharmaceutical ingredients. The

ability to pull off or “ultrafiltrate” whey com-

ponents (called fractions) from the waste

stream created a new industry. The whey

protein fractions (proteins, sugars [lactose],

salts, immunoglobulins, and enzymes) may

be more valuable than the cheese itself.

The revenue stream from cheese production

waste includes whey, a high quality protein

that is found in shakes and many food

supplements. Whey also contains a variety of

immunoglobulin, disease-fighting proteins

with many health benefits. Other healthful

whey fractions include enzymes (e.g. lac-

toperoxidase) with unique disease fighting

properties.

Today the whey protein industry is worth

billions of dollars with numerous companies

leading the way in whey protein extrac-

tions and derivatives (called hydrolysates).

For example, Davisco International, a fam-

ily-owned business which started in 1943

from a single factory, supplies the U.S. food

industry with almost 400 million pounds of

cheese and 65 percent of all whey protein

sold worldwide. Their novel whey hydroly-

sate (Biozate 1) is easily absorbed, promotes

lean muscle mass, and enhances the meta-

bolic rate. Another innovative whey fraction

is called glycomacropepide (GMP), which

has been shown to contribute to a feeling of

fullness or enhanced satiety.

ShrImp and ShellfISh waSte

StreamS

Chitin is the name of a long chain biopoly-

mer found in the protective shells (exoskel-

etons) of shrimps, clams, and crabs. Next to

cellulose (trees and plants), chitin is one of

the most abundant protective biopolymers

on earth.

Modern food processing methods can now

take this polysaccharide and break it down

into a number of very useful ingredients that

find their way into food, pharmaceuticals,

cosmetics, textiles, and even paper products.

Chitin is a unique mucopolysaccharide with

low toxicity and can be easily manipulated

to make both water-soluble and fat-soluble

ingredients.

By far the two most useful ingredients

derived from chitin are chitosan, a type

of water insoluble fiber, and glucosamine,

one of the sugar molecules that are the

building blocks of chitin in the first place.

Chitosan finds many uses in various indus-

tries—printing, leather curing, water puri-

fication, and paper manufacturing. When

ingested, chitosan is also a fat absorbing

fiber source, which is extremely popular in

Japan. Chitosan is produced by grinding

up shrimp shells, which are then chemi-

cally treated (deacetylated) to open up the

molecules to bind to fatty materials. A recent

meta-analysis of six studies showed signifi-

cant reductions in a fatty material known as

cholesterol.

Glucosamine, the popular dietary treat-

ment for arthritis, is produced from chitin

by acid hydrolyses of the polymer followed

by deacetylation. Glucosamine is a much

smaller molecule and is easily absorbed in

the intestines.

Generally glucosamine is very safe. A rare

person with severe shellfish allergy may

react to glucosamine supplements. Cargill,

the food processing giant, discovered a way

to make glucosamine from a fermentation

process that first creates chitin with a sub-

sequent acid hydrolysis step, thus making

glucosamine a product suitable for vegetar-

ians. Their product is called Regenasure™

and is shellfish-contaminant free and kosher

as well. Also, a Wisconsin-based company

called Bio-Technical Resources has devel-

oped another unique fermentation process

based on metabolic bacterial engineering

that makes low cost glucosamine from a

common bacteria.

olIve proceSSInG waSte

StreamS

The popularity of olive oil as a seasoning

and cooking oil has never been higher due

to its great taste and health benefits asso-

ciated with the Mediterranean diet. Olive

processing has a dirty little secret. The

processing and pressing of the oil releases

large amounts of olive water or olive mill

waste. This olive effluent used to be dumped

in sewers or allowed to soak into the earth.

Olive oil contains many beneficial antioxi-

dants called polyphenols. The wastewater,

however, had many times more, as much as

300-500 times more beneficial polyphenols

than those found in the olive oil produced.

With annual production of 11 million

tons of this wastewater, olive oil processing

used to be an environmental problem until

Roberto Crea, Ph.D. and CEO of Hayward,

California-based CreAgri Inc., developed a

way to turn the pits, skins, and olive water

into ingredients for the food and cosmetic

industry. By using a proprietary freeze-dry

concentration technology CreAgri trans-

formed the olive water into a highly concen-

trated polyphenol mixture called Olivenol™.

Many studies show that olive polyphenols

promote cardiovascular wellness, provide

antioxidant protection, and may boost the

immune system.

rIce proceSSInG waSte

StreamS

Rice is the second most popular grain behind

corn. The production of white or milled

rice generates an abundance of rice bran,

the outer kernal. This lipid and nutritional


rich fraction of rice is limited to feedstuff

because it goes rancid almost as soon as it

is produced. This highly nutritious waste

stream of essential fatty acids, B-vitamins,

antioxidants, and polyphenols was just wait-

ing to be tapped.

To use rice bran it must first be stabi-

lized or rendered non-reactive to prevent

the various components from degradation.

Bran stabilization was solved by a scientists

who founded the Phoenix-based company

NutraCea™. Their unique rice bran stabiliz-

ing process takes the outer bran as it comes

off the rice kernel and stabilizes it on the

spot—thus creating a nutritious food with

a shelf life, which has been extended from a

few minutes to one year and possibly even

longer!

NutrCea now provides the food industry

with a high quality, nutrient-dense pow-

dered rice bran that has many applications—

from a food taste enhancer to improving

the nutritional quality of almost any food.

Another by-product of their technology is

rice bran oil, a delicate tasting oil which has

unmatched frying capabilities due to its high

smoke point. Rice bran oil also contains

many healthful properties derived from the

low saturated fat profile and numerous poly-

phenolic (antioxidant) substances.

wIne makInG waSte StreamS

Wine consumption is known to produce

many health benefits, ranging from reducing

high blood pressure to increasing good HDL

cholesterol. A variety of polyphenols and

anthocyanidins are released in the fermen-

tation of wine making. Wine is fermented

from grapes with seeds and skins kept in tact.

Beneficial antioxidant polyphenols are even-

tually found in the finished bottled product.

This process leaves millions of tons of waste

grape skins and seeds, which sometimes are

used as animal feed but usually are thrown

in landfills.

In the early 1990’s, the wine making giant,

Canadaigua Brands (now Constellation),

began selling a proprietary grape seed

extract (GSE). The company’s brand called

MegaNatural™ is made from unferment-

ed ruby red seeds and from the seeds left

over from white wine making. The health

properties of GSE are astonishing. Dozens

of clinical trials have shown GSE to con-

tribute to improved cardiovascular health,

improved skin tone, reduced blood pressure,

and enhanced mental alertness. Grape seed

extract actually crosses the blood-brain bar-

rier.

Although grape seed extract is preferred

in its native liquid form, many other parts

of the grape lend itself to additional nutra-

ceuticals, including quercetin from the juice,

natural coloring agents from the skins, and

resveratrol, the possible life-span extending

nutraceutical found as the white powder on

the outside of the grape skin.

tomato waSte StreamS

Although ketchup makes French fries taste

great, the production of America’s favorite

condiment creates multiple waste streams

from the washing, peeling, and seed extrac-

tion of tomato paste.

The chemical compound that makes

tomatoes and watermelon bright red is the

straight chain carotenoid known as lyco-

pene. This potent fat-soluble antioxidant has

numerous health benefits, including boost-

ing the immune systems and protecting the

skin from harmful radiation from the sun.

Several long-term epidemiological studies

suggest a connection between tomato con-

sumption and lowered risk of prostate can-

cer and coronary heart disease.

Lycopene is relatively expensive to make

synthetically. Many methods have been

developed to extract lycopene from the tre-

mendous quantities of tomato waste. Several

companies have developed technologies to

extract the lycopene from tomato skin, pulp,

and seeds. The best known is Israeli-based

LycoRed, a nutraceutical company which

pioneered the extraction of lycopene along

with associated phytochemicals that comple-

ment the antioxidant action of lycopene

itself. Such nutritional cofactors—phytoene,

phytofluene, beta-carotene, and vitamin E—

greatly enhance the absorption of the lyco-

pene, a carotenoid notorious for its ability to

resist human digestion.

Many popular nutraceuticals are derived

from nonedible components of food.

Bromelain, a pain-fighting enzyme, is

extracted from the stems of processed pine-

apple. Pycnogenol®, which has a myriad of

benefits from reducing diabetic retinopathy

to enhancing sexual function, comes from

the bark of the maritime pine. Kudzu, which

fights alcohol dependence, and saw pal-

metto, which supports prostate health, are

extracted from noxious weeds.

future dIrectIonS

Advances in separation and extraction tech-

nology promise to add many new healthy

ingredients to an already expanding list of

nutritional phytochemicals. With the world-

wide emphasis on green technology, food

processors and innovative biotechnology

companies can mine “greens” from waste

streams that accompany almost any type of

food or feed processing. n

about the authorS

Dr. Steven Witherly is a nutraceutical consultant in Valencia, California. He previously was the head of research and development at Herbalife, Nutrilite (Amway), and Leiner Health Products. He received a Ph.D. degree in human nutrition from Michigan State University and an M.S. degree in food sci-ence from the University of California at Davis. Dr. Witherly is the author of the book, Why Humans Like Junk Food, and is the inventor of the new antihang-over drink called Resurrection.

Dr. Larry May graduated Phi Beta Kappa from Harvard University with a bachelor’s degree in eco-nomics and received his M.D. degree from Harvard Medical School. He is the former chairman of the medical advisory board of Herbalife and is the medi-cal director of Targeted Medical Pharma. Dr. May is on the faculty of the UCLA School of Medicine and has authored several books, including a popular textbook. He currently practices medicine near Los Angeles and consistently has been recognized by peers as being among the best doctors in the country. Dr. May has been honored in publications, such as

Best Doctors in America.


converted organics Inc. (NASDAQ: COIN)

PROFILED cOMPANIES

Growing a Greener future from the Ground up

One of the most valuable and over-

looked resources available today

is food waste. Food waste is often

viewed as a liability, because it usually ends

up in landfills where the waste decom-

poses and creates harmful greenhouse gases,

such as methane. Converted Organics Inc.

(NASDAQ: COIN) sees food waste as an

opportunity. Based in Boston, MA, the

company is helping to change the way the

world thinks about food waste. Through

the use of a patented technology, Converted

Organics can cost-effectively convert food

waste into organic fertilizer products - valu-

able resources that are renewable and envi-

ronmentally safe.

are used in the retail lawn and garden, profes-

sional turf, and agriculture markets.

Converted Organics intends to build, own,

and operate food-waste-to-fertilizer manu-

facturing plants near large U.S. cities that

generate high volumes of food waste. The

company’s manufacturing plants can oper-

ate as perpetual urban recycling facilities:

they never fill-up and don’t pollute.

Currently Converted Organics oper-

converted orGanIcS In

brIef

A publicly listed company since 2007,

Converted Organics Inc. is a clean technology

company that holds a proprietary technology

called High Temperature Liquid Composting

(HTLC®TM) that allows the rapid conversion

of food waste into effective, sustainable, all-

natural fertilizers. The company’s products

2007 - Converted Organics Inc. went public via an IPO and began construction of its first manufacturing facility in Woodbridge, New Jersey.

2008 - Acquired the assets of California Liquid Fertilizer Corporation, a company that manufactures and markets liq-uid organic fertilizers into the agriculture market.

2009 - Began manufacturing and marketing fertilizers from the plant in Woodbridge, New Jersey.

2010 - Entered into a license agreement with MassOrganics LLC to install and operate Converted Organics manufac-turing facility in Sutton, MA.

2010 - Acquired a license from Heartland Technology Partners, LLC (“Heartland”) to use certain technologies in the treatment of industrial waste waters.

To date, Converted Organics has raised $89 million in capital and has quickly established a name for itself by selling organic fertilizer products in the retail lawn and garden, professional turf, and agriculture mar-kets.

31 million tons of food waste is disposed of annually in U.S. landfills.

COMPANY TIMELINE

Our daily reality.

Our lifelong support.

Vintage Filings continuously strives to reduce the ecological footprint in the nancial printing industry. Our products and services are a shining example of how seamless the transition has become from paper to digital. Its easy to often get lost in the hustle and bustle of our daily lives, but now more than ever it is important that we all re�ect on ways to make our planet energy e�cient and sustainable for future generations.

The future is in our hands.

310.417.1047212.730.4302

www.v�lings.com


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ates two manufacturing facilities: one in

Woodbridge, NJ (just outside of New York

City) and one in Gonzales, CA (just south

of San Jose, CA). The Woodbridge facility is

permitted to receive 500 tons of food waste

per day, or 150,000 tons of food waste per

year. The food waste is comprised primarily

of fruits and vegetables, cereals and grains,

and meats and fish – a diverse mix that

yields a very rich and highly effective organic

fertilizer.

Converted Organics has two sources of

revenue. While fertilizer product sales remain

the biggest source of revenues, the company

also generates revenues from “tip” fees from

waste haulers who accept food waste gen-

erated by grocery stores, food processors,

and hospitality venues. Since Converted

Organics offers a lower “tip” fee than land-

fills charge, waste haulers have an incen-

tive to bring their food waste to Converted

Organics’ facility. Within six days of receiv-

ing the food waste, Converted Organics con-

verts the waste into fully-pasteurized organic

fertilizers ready for sale.

The company also licenses the HTLC®

technology to third parties. Converted

Organics recently signed a licensing agree-

ment with MassOrganics LLC, which will

install, operate, and use the HTLC® tech-

nology to manufacture organic fertiliz-

ers in Sutton, MA. Converted Organics is

also developing smaller capacity operating

units, named the Scalable Modular AeRobic

Technology (SMART) units, which the com-

pany will design, build, and sell to third par-

ties to handle smaller food waste volumes.

The SMART unit will include a license to

use Converted Organics’ proprietary HTLC®

technology, and purchasers of the SMART

units will generate revenue from tip fees,

as well as from sales of fertilizer in markets

where their units operate.

food waSte: bIG problem,

bIG opportunIty

Each year in the United States, 31 million

tons of food waste is disposed of in land-

fills. Herein lies the problem: when food

waste is land-filled, it decomposes anaerobi-

cally (without oxygen) to produce methane

gas. Methane is a greenhouse gas that is

21 times more potent than carbon dioxide

(CO2). According to the U.S. Environmental

Protection Agency (EPA), “Landfills are the

largest source of human-related methane

emissions in the United States, accounting

for approximately 34 percent of all methane

emissions.” 1

Converted Organics is helping to reduce

greenhouse gas emissions by diverting food

waste from being disposed of in landfills.

Converted Organics is not only helping

to reduce greenhouse gases through recy-

cling, but is also helping to replace harm-

ful synthetic fertilizers. The production of

synthetic fertilizers consumes vast amounts

of energy and generates unwanted CO2 emis-

sions. To produce one ton of synthetic fertil-

izer today requires burning enough natural

gas to release 4.6 tons of carbon dioxide into

the atmosphere. In contrast, every ton of

Converted Organics fertilizer produced is a

net carbon savings.

Also, by constructing facilities near large

cities, which are the biggest sources of food

waste, Converted Organics eliminates the

need for costly interstate transportation

of food waste to landfills, thereby further

reducing CO2 emissions.

proceSS and technoloGy

At the heart of Converted Organics’ pro-

cess is a well documented microbial diges-

tion process called High Temperature Liquid

Composting (HTLC®). This process is an

extremely efficient, state-of-the-art, in-vessel

biological system which rapidly converts

organic matter into high quality, organic fer-

tilizer products. In the most basic terms, the

HTLC® process takes the age-old concept of

composting food waste one step further by

introducing additional oxygen and heat into

a closed, carefully monitored tank to greatly

accelerate the digestive process. By speed-

ing up this process, food waste that would

normally take months to compost can be

converted into useful, all-natural fertilizer

products in a matter of days.

The HTLC® process also guarantees full

product pasteurization, eliminating the

harmful pathogens often present in unpro-

cessed food waste. The finished product is

a fertilizer blend that is rich in nutrients,

plant growth regulators, and organic matter.

The fertilizer, free of synthetic chemicals,

animal manures, and bio-solids, can be used

to enhance the soil’s overall condition. Best

of all, it is completely safe to use around

children, pets, and the natural environment.

current marketS

Retail Lawn and Garden

About 30 million homeowners buy fertiliz-

ers for their lawns at retail lawn and garden

stores. More consumers are buying all-natu-

ral, organic fertilizers, because they are safer

than synthetic chemical fertilizers. Organic

fertilizers are experiencing more favorable

market growth than synthetics. After just

one year of selling into the retail lawn and

garden market, Converted Organics is sell-

ing its products to Home Depot, Wal-Mart,

Sam’s Club, and Whole Foods. In 2010, the

company’s “big box” retail customers have

reported same store sales growth of 129

percent for Converted Organics’ products

versus 2009.

Professional Lawn Care

The trend toward going organic in the con-

sumer market has greatly influenced the

professional lawn care market. Homeowners

often request all-natural, organic based

programs, such as those from Converted

Organics to replace synthetic chemical fertil-

izer programs. Until recently, the organic

options available to professional lawn care

companies have been mainly comprised of

chicken waste or bio-solids (treated sewer

http://www.epa.gov/epawaste/conserve/materials/organics/food/fd-basic.htm


sludge) fertilizers. Both have inherent weak-

nesses (e.g., odor, low coverage, negative

public perception), leaving many lawn care

companies on the hunt for better organic

fertilizers.

Converted Organics fertilizers are ideal

for professional lawn care companies that

are looking for a cleaner, safer alternative. A

number of national professional lawn care

companies now order Converted Organics

products in bulk because of the product’s

price and performance and the compelling

environmental story.

Golf Market

The United States has over 18,000 golf

courses, and it’s estimated that golf courses

consume $400 million of fertilizer annually,

with fertilizers and pesticides accounting

for 60 percent of golf course consumable

demand. Golf course superintendents are

under great pressure to reduce the use

of synthetic chemicals and improve the

environmental footprint of their courses.

This means shifting away from the use of

synthetic fertilizers, which can deplete soil

nutrients and pollute surrounding water-

ways with unwanted chemicals. Golf cours-

es are making the shift towards natural-

based fertilizers, which enhance soil health

and decrease the dependence of turf on

petroleum-based fertilizers.

Converted Organics liquid fertilizers can

be used to replace or significantly reduce

synthetic fertilizer used on golf courses.

According to a multi-year study conducted

by Cornell University, Converted Organics

fertilizers have been shown to decrease the

incidence of common turf grass diseases,

enabling superintendents to reduce fungi-

cide use by up to 50 percent. In short,

Converted Organics fertilizers enable golf

course superintendents to decrease chemical

inputs while improving turf quality, envi-

ronmental footprint, and profitability.

Agriculture

The agriculture market is comprised of two

segments: 1) certified organic agriculture;

and 2) conventional agriculture. Converted

Organics sells into both segments. Certified

organic growers are required to use certified

organic fertilizers. Converted Organics has

a full product line of fertilizers that support

U.S. Department of Agriculture (USDA)

certified organic crop production. There

are approximately seven million acres of

certified organic farmland in production.

Farmers increasingly are shifting more acre-

age from conventional to organic produc-

tion to meet growing consumer demand for

healthier foods.

In the conventional agriculture market,

Converted Organics liquid fertilizers have

been proven to deliver improved yields at

lower cost when blended with synthetic

fertilizers. For this reason, conventional

growers are using Converted Organics fertil-

izers to maximize the quality and quantity

of yields and minimize costs. About 23 mil-

lion tons of liquid fertilizer are used in the

U.S. agriculture market annually. Converted

Organics fertilizers enable growers to pro-

duce more food per acre at a lower cost,

an important factor given that global food

demand will rise as the human population

swells to an estimated nine billion people

by 2050. Converted Organics is dedicated to

promoting sustainable agriculture by offer-

ing a replacement for synthetic fertilizers.

GrowInG Green

Converted Organics is seeking to transform

how food waste is perceived and managed,

and how plants and crops are cultivated.

Holding strong to the belief that waste is

a valuable resource, Converted Organics is

acquiring businesses and other clean tech-

nologies that align with the company’s mis-

sion to convert waste materials into high-

quality, environmentally-friendly products

(i.e., organic fertilizers, clean water, and

energy).

In March 2010, Converted Organics

acquired a license from Heartland

Technology Partners, LLC (“Heartland”) to

use certain technologies to treat industrial

waste waters. Converted Organics’ acquisi-

tion of Heartland’s technology helps diversi-

fy the company’s business while maintaining

a “green environmental” focus.

To learn more about Converted

Organics, including obtaining an analyst

report by Concentric Research, please visit

www.convertedorganics.com/micro or send

an e-mail to [email protected]. n


Safe Harbor Statement: The statements in this adver-torial or profile relating to future products, partner-ships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

1 ton of synthetic fertilizer = 4.6 tons of CO2 from the burning of natural gas

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PROFILED cOMPANIES

IntroductIon

People around the world are seeking high qual-

ity, locally produced food that is free of pesti-

cides and other chemicals. Additionally, eco-

nomic, societal, political, and regulatory trends

have created a strong demand for innovative

agricultural solutions. In many regions of the

world, unfavorable climate conditions make it

impossible to meet these demands year round.

TerraSphere Systems, LLC is revolution-

izing the way people grow food. The com-

pany partners with investors and entrepre-

neurs to solve food production problems

on a commercial scale by creating the ideal

environment for plant production.

company

Founded in 2003, TerraSphere Systems, LLC

designs and builds highly efficient vertical

growth systems in compact, safe, pollutant-

free facilities. TerraSphere’s state-of-the-art

technology is fully contained, which means

crops can be grown year-round in any loca-

tion using precise combinations of light,

water, and nutrients to maximize produc-

tion. TerraSphere currently operates a facili-

ty in Vancouver, Canada and has successfully

grown a variety of crops, including lettuce,

strawberries, spinach, basil, and safflower.

TerraSphere offers investors a dependable

return on investment (ROI) by generating

revenue in three ways: 1) licensing fees and

royalties; 2) sale of equipment; and 3) prod-

uct sales.

technoloGy

TerraSphere employs an automated, soft-

ware-driven plant growth system that can be

used to grow a variety of crops–from lettuce

to tree seedlings to rare medicinal herbs. The

core TerraSphere technology is a module

that places rows of plants perpendicular to

an interior light source.

Locating the seedlings close to the light

allows for higher light levels when using low

level lighting. A psi pressure of 90 is used

when feeding through the sprayers to ensure

even distribution of the nutrient solution

to the crops. The result is an abundance

of plants with strong, compact, and multi-

directional growth.

advantaGeS

TerraSphere offers many benefits over tradi-

tional growing methods, including yields of

up to ten times greater than those of conven-

tional crop production methods. This urban

agricultural model allows locally grown, pes-

ticide-free produce to be cultivated closer to

population centers, resulting in fresher pro-

duce in stores, lower supply chain costs, and

reduced carbon emissions. The controlled

growing environment offers many other ben-

efits: it protects crops from weather-related

problems; eliminates the need for synthetic

pesticides, herbicides, and fungicides; reduces

nitrate run-off; and preserves natural resourc-

es owing to reduced farmland use.

GaInInG Ground

TerraSphere has been developing its pro-

prietary indoor growing system for the past

seven years. The company has completed a

number of transactions, including a partner-

ship with the Squamish Nation and Choices

Markets, British Columbia’s leading organic

foods grocer.

As a pioneer in alternative agriculture

production, TerraSphere provides a sustain-

able solution to the hunger crises facing the

world’s growing population.

To learn more about TerraSphere Systems,

LLC, please visit www.terraspheresystems.

com or send an e-mail to info@terrasphere-

systems.com. n


Safe Harbor Statement: The statements in this adver-torial or profile relating to future products, partner-ships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro-cap Review Magazine may have received payment to publish and print this advertorial or corporate profile. Micro-cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to

consult with your professionals.

terrasphere Systems, llc


V I E W P O I N T S

Smart Grid and Alternative Energy

Government Budget Focus

by M.c. ELVIS OxLEy & DANIEL R. MURPhy

funds in the form of grants. Moreover,

President Obama has proposed a “Cash for

Caulkers” program that will invest in energy

efficiency and retrofitting projects around

the country.

Heartland Energy Partners (HEP) is an

Arlington, Virginia-based company that

focuses on both the smart grid and energy

efficiency sectors for the nation’s 930 electric

cooperatives. The electric cooperatives were

awarded $260 million in ARRA grant money

to invest in smart grid technology. These

projects range from a basic AMI investment

to the integration of a meter data manage-

ment system and demand response pro-

grams. HEP is currently assisting Golden

Spread Electric Cooperative of Amarillo, TX

with their $43 million smart grid project.

However, Heartland Energy Partners’

largest opportunity lies within the energy

efficiency market with electric cooperatives.

Legislation is moving through both houses

of Congress that will create a new energy

efficiency program for electric cooperative

customers/members. This program consists

of loans which the cooperative must pay back

within ten years. The program will be admin-

These policies share a single motivation which

is to reduce carbon emissions. We have seen a

surge in start-up ventures which are looking

to manufacture and provide services in solar,

wind, and other forms of renewable power

generation. However, with all this effort and

focus, renewable sources of energy only com-

prise two percent of today’s total generation

within the United States. Until the federal gov-

ernment focuses on the electric grid to build

more capacity and until investment is made

in the design of a truly national transmission

system, renewable power energy will suffer to

expand as a driver of power generation.

There are other investments today which

will also revolutionize our power generation

and transmission. The utilization of technol-

ogy within the grid and distribution systems

has become known as “smart grid” and has

increased the efficiency of those systems

in an effort to curb demand. In addition,

energy efficiency has become a significant

driver in reducing demand, and thus carbon

emissions. The Obama Administration has

made significant investments in both of

these sectors through distributing America

Reinvestment and Recovery Act (ARRA)

The focus on renewable energy over the past several years has created a frenzy of investment—most of which is dependent

on the success of the policies of the Obama Administration.


istered by the USDA and includes upgrades

such as new furnaces, hot water heaters, and

insulation. An energy audit will be conducted

first to identify any mitigations in need of

installation. Then a certified contractor will

install any new equipment with an inspector

checking for quality and safety assurance.

HEP serves a niche market with the elec-

tric cooperatives that many companies have

found very difficult to serve. Many coop-

eratives are located in rural areas and can be

difficult to travel to for sales calls. The other

discouraging aspect is the size of the various

cooperatives—the smallest has 900 meters

and the largest coop manages a system with

250,000 meters. The average cooperative is

around 30,000-50,000 meters. This small

meter base and the sheer number of coop-

eratives—900 plus—makes it very difficult

for a large integrator to formulate a sales

strategy.

However, Heartland Energy Partners has

done just that, and has built its business model

around the values and needs of this under-

served market. Its founder, John English,

is from rural Oklahoma and his family has

served in the electric cooperative community

for nearly twenty years. “Electric cooperatives

have special needs and a special way of com-

municating that the large west coast integra-

tors find difficult to connect with”, English said.

“Electric cooperatives are suspicious of any

outsider or vendor who is just looking to make

a quarterly sales quota. Cooperatives want to

provide value for their customers/members”.

HEP’s ability to connect with its customer

base is why the company will be profitable

in its first fiscal year. The values in which

the company embodies is very much in tune

with rural America. These values center on

service—service to country, service to com-

munity, and service to family. Two of HEP’s

board members served as multiple term

governors of rural states. Both former gov-

ernors Tommy Thompson (Wis.) and Frank

Keating (Okla.) are playing significant roles

within the company’s strategy to penetrate

the markets in their respective states.

Heartland Energy Partners is a company

that illustrates that other green investments

in energy are viable today. The smart grid

and energy efficiency sectors are proving

results immediately versus the more long-

term investments of renewable sources of

energy. The inability to receive regulatory

approval for the construction of new power

plants due to the new climate change legisla-

tion and the effect any new energy bill will

have on such a significant building project

has placed new power plants and designs in

limbo. Instead of generating more power,

HEP and the electric cooperatives believe

we must find a way to drive down demand

through current technology and programs. n

about the authorS

M. C. Elvis Oxley is President of Oxley Consulting, LLC (www.oxley-consulting.com) and a professor at The George Washington University Graduate School of Political Management. Dan Murphy is Chairman of Chadbourn, a Division of Colorado Financial Service Corporation ([email protected]).


V I E W P O I N T S

Getting Jobs and Money into the Economy

by MARShALL STERMAN

Rather than continuing to fund politically

motivated pet projects, the Treasury’s print-

ing press should be used to match, dollar

for dollar, any new equity investments in

start-up or early stage enterprises. ANYONE

putting capital at risk qualifies a company

for matching funds. No need for legions of

bureaucrats to procrastinate and pass judg-

ment on the merits. What is important is that

investor money is equity and the U.S. tax-

payer matches it up to a “to be determined”

amount (at a minimal dollar for dollar),

have salary caps ($150,000, for example),

restrictions regarding “insider” sales, and

have repayment of interest and principal on

the government money on a free cash flow

formula. Investors are rewarded for their

risk by the added leverage the government

funds provide and by a reduction in the rate

of any tax on capital (20 percent?). Once the

government funds are repaid the company is

back under the same rules and regulations

that everyone else has to abide with.

God bless America! n

$500 per hour. Never mind the “unintended

consequences” of Sarbanes-Oxley, which

continues to confound. And to make matters

worse, the guardians of our personal wealth

(the same people watching porn and not

getting filings reviewed on a timely basis)

have redefined “sophisticated” in an effort to

take the last vestige of non-institutional help

from the entrepreneur. Where are Barney

Frank, Harry Reid, and Nancy Pelosi when

you really need them?

Believe it or not, there’s still a simple and

effective way to bring investor money back

to the table. There is a way to validate those

entrepreneurs and companies that cannot be

denied, protect the interests of the taxpayers,

and give the needed jump-start to a rebuild-

ing process that rewards everyone, not a

privileged few. For starters, we ought to take

the decision making out of the hands of the

people that gave thumbs up or down for

the likes of Citicorp, Lehman Brothers, Bear

Stearns, AIG, etc. Either a company qualifies

or it has to go back to the drawing board and

come up with a better business plan and a

team to execute on it.

New and early stage ventures have been the

undisputed drivers that create sustainable

jobs. Financing such ventures has always

been the venue of friends and family, angel

investors, venture capitalists, and both

investment and traditional bankers. The sad

fact is that the “system” that created the

American dream has been dismantled by our

regulators (SEC, FINRA, etc.) and our repre-

sentatives (Congress). They abrogated their

responsibility to protect small businesses

and the residents of every street except Wall.

Big was always better. To get there, the sys-

tem winnowed out the small broker dealer

and any source of debt that didn’t require

attorneys and accountants charging at least

There are no magic bullets or cure alls for the current eco-nomic problems; only common sense. It dictates that the

best solution to getting the country back on track is to create jobs that pay a living wage and are building blocks for future economic growth.


V I E W P O I N T S

Green JobsAttracting Innovation and Growing the Work Force

Governments and communities con-

tinue to rise out from the finan-

cial collapse of 2008. During these

tough economic times there is an increasing

need to look towards new ways of reshaping

the economy. A new green workforce has aris-

en to bring forth a more energy-efficient, cost

effective, and environmentally-friendly busi-

ness environment. Green workforce refers to

and an all employees focused on promoting

energy efficiency efforts, the creation of elec-

tric vehicles and alternative power.

In these trying time the green work-force

must continue to expand. It is imperative for

the market to believe that benefits of mov-

ing towards a “green” economy will and can

exceed the costs of the investment required

in order for it to exist. This has already hap-

pened in the past few years with the roll-

out of environmentally efficient light bulbs.

Once it was proven to be a good example

of the marriage between energy and cost

efficiency, it was an easy sell to the rest. The

first five percent of people who adopted such

light bulbs were innovators who were cer-

tainly motivated by environmental concerns.

The 80 percent which followed were driven

by different kinds of incentives. The remain-

ing 15 percent were those who were not

inclined to adopt any kind of environmental

initiatives, but did so voluntarily because

everyone else was doing it. By taking a

proactive approach, businesses and govern-

ments are able to jump start a community

willingness to light their buildings in a more

environmentally sound way.

As with light bulbs, another important

opportunity for the expansion of a green

work force is the construction of energy

In the future, a significant driver of green

jobs will be corporations eager to gain a

competitive advantage by investing in proj-

ects which reduce costs, increase revenues,

and achieve sustainability goals. Even during

periods of economic slowdown, corpora-

tions are under pressure by their consum-

er networks to provide greener products,

reduce resources consumption, and increase

efficiencies.

Hardships caused by spikes in commod-

ity prices have forced businesses to imple-

ment programs to protect against worldwide

demand for oil and other energy sourc-

es. Success against the most pressing eco-

nomic and environmental challenges of our

times depends on an unprecedented level of

collaboration among citizens, local busi-

nesses, multinational corporations, clean

technology companies, professional groups,

and governments.

Citizens are asking for a better quality of

life. The media, politicians, and celebrities

have all helped emphasize the importance of

environmental measures. Health and scarcity

of resources are the main concerns. Younger

people tend to want environmental reforms

in the workplace, and are more likely to be

vocal about these reforms.

The key for the future of the United States

in the green space will be to design, manu-

facture, and deploy technologically advanced

products for the renewable energy market.

A task which will require us to stay ahead

of our international competitors in order

to meet the needs of the community, which

will in turn dramatically expand the green

work force. n

and water efficient buildings. Building new

and improving existing buildings to new

“green” specs plays a central role in this cause

because it does not require a behavioral

change, while also providing communities

with the benefit of more jobs and a more

sustainable quality of life.

On the local level San Francisco in par-

ticular, has become established as a leader

in the environmental world due to suc-

cessful city mandates regarding commercial

building and energy efficiency. Health and

quality of life issues are the essential focus.

San Francisco has experienced this success

because of creative partnerships with other

local governments and in the private sector.

By understanding the needs of all people in

the community, San Francisco is better able

to present more fully integrated programs

which lead toward sustainability. The green

work force will continue expanding, as long

as local governments keep making invest-

ments for innovative ventures and the mar-

ketplace must realize that environmentally

sound businesses can be profitable.

The number of green workers has increased

dramatically with the implementation of

the American Recovery and Reinvestment

Act (“The Act”), which earmarked $150

billion for projects related to smart

electricity grids, energy efficiency, and local

renewable energy projects. The Act expand-

ed the green work force by accelerating

the promotion of clean technologies by the

federal government, upgrading many of the

500,000 existing government buildings, and

expanding federal grants to assist states and

municipalities to build LEED-certified pub-

lic buildings.

by PAUL F. PELOSI, JR.


V I E W P O I N T S

“Overcoming Loss”

RAbbI STEPhEN RObbINS, PSy.D.

ment and career to death and mourning. So

I approach the issue of overcoming the losses

you all live with from this financial collapse

from a very heartfelt position.

We spend our lives trying so hard to avoid

loss, from the time we are babies struggling

with separation anxiety up through this

stage in our lives. We think that if we work

and plan hard enough that we will avoid the

losses that attend life. And so we are all ill-

prepared when loss happens… and it does,

over and over again. Loss is the by-product

of change. When we are born, our fists are

clenched and we are screaming as if to hold

on to everything that life presents. And

when we die, our hands unroll, releasing

everything, our mouths open, with nothing

left to scream for.

My spiritual tradition teaches me how to

live, neither fearing loss nor trying to avoid

it, but accepting loss as the prelude to change.

If we think of our lives as a vessel filled to the

top or in our case in America, overfilled, we

keep trying to shove in as much as we can.

Change becomes traumatic. Nothing new

can enter if something old does not make

way for it and leave. Just as we go through

stages of growth in which we leave behind

our childhood and young adulthood and

mid-life crisis and enter into our senior

It’s not just that I lost assets, just like all of

you, but also because I have spent almost

fifty years as Rabbi and psychologist help-

ing people through all kinds of losses, from

financial to physical, from bankruptcy to

death. In my practice, I have specialized in

counseling individuals, families and busi-

nesses through the transition of difficult

losses, sales and foreclosures. I even have

worked helping family businesses through

the complexity of communication and deci-

sion-making. Personally, we—my wife and I,

and our family—have gone through our own

losses, ranging from multiple life-threatening

illnesses and accidents to losses of employ-

Why is a Rabbi writing a column in a financial publication? Because I am so well acquainted with loss, both person-

ally and professionally; the publishers thought I might be able to offer a different approach to responding to and overcoming the recent dreadful losses in the collapse of the financial system in America.


years (where I am now), we discover if we

are wise enough to let go of that which can

no longer be held onto, mourn its passing,

learn its lesson and refocus ourselves to live

gracefully in whatever comes next. I phrase

it this way: for every loss, there is a gain.

For every gain, there must be a loss. Until

we learn that there are no losses, only gains.

We are tried by the losses and healed by the

gains. If we only remain trapped in the pain

and fear of the loss, the gain and its healing

will never appear. Losses and gains are never

individual. They may be centered in one

of us, but the impact is felt by all of those

with whom we live and work. The error we

make many times is to become isolated in

the loss and so we will disrupt, even destroy,

the bonds of family and friendship that will

help us through. Learning that the pain of

loss is always shared, and providing us the

capacity to reach out to others, is the first

step towards the gain.

Two years ago, everyone talked about the

incredible real estate market and the finan-

cial opportunities, telling stories about their

investments, the private funds that they were

in and the great counselors that they had, and

in the midst of the conversation someone

would say, “You know, we’re in a bubble and

one day, it’s going to burst.” But the behavior

continued without change. Speaking with

those same people after 2008, I asked them

why, if they had been so smart and careful

in amassing their investment portfolios, had

they had become so ‘stupid.’ When the signs

of the crash began why didn’t they change

and save themselves? Most people didn’t

believe it was really happening. Now, many

come to me in for counseling, to try and

understand how they got themselves in this

situation. And what I’ve discovered since

then is the following.

We no longer understand our relationship

to money and finance. Most of us, even

those in the business of finance and invest-

ment, are themselves overwhelmed by the

amount of activity and information we are

bombarded with, moment to moment that

flows through the financial world. All of us

were looking for the right place to put our

assets, so that we could get the best return,

an advisor who could assess the market with

great intelligence, luck or an unusually broad

view of market trends. We wanted that per-

son to be our guide and do the work for us.

How is it that we have come to surrender

the trust in our own minds and decision-

making abilities, and to place that trust so

completely in others who have led us to the

enormous disaster that we, as individuals

and institutions, find ourselves in today?

There are those who hold that greed drove

us all “like lemmings into the sea,” and led

us consistently to bad investments that we

believed we could keep selling off to other

people. Others believed that the institu-

tions in which they trusted would “never let

them down,” and that somehow they were

going to be safe and protected. While others

believed that they would see disaster coming

and be able to pull themselves out before

it happened. And last of all, the ones who

now believe that all of this was intentional—

planned in the minds of an unrelated group

of individuals and institutions who saw an

opportunity in an unregulated market to

conceive of the greatest con game in the

world. I tend to accept the latter statement.

The success of a con game lies not only

in the artfulness of the con man (woman

or institution) but also in the intentional

gullibility of the mark. What makes the

con successful is the belief that the mark is

getting a deal that nobody else could ever

get. This greatest of con games took in the

whole world. Nations, governments, finan-

cial institutions, big and small investors and

government protection systems were all part

of the con. It seemed impossible to imagine

that anybody could fool all of the collective

wisdom that was focused on the market. We

all believed that being vigilant we could pro-

tect ourselves from the con man.

In truth, the government and the business

community had set us up by deregulating

the finance industry and inviting the con

man in. To understand how we came to

suspend our sense of self-preservation and

buy in to the con, we must look at a couple

of factors.

MONEY - Capital was created in order

to substitute for the barter. Money became

the symbol of value contained in an object

held somewhere else in trust, and was never

intended to be a possession itself. In the

transformation of the psychology of money,

it has now become the greatest of all pos-

sessions. “Money” used to mean some pre-

cious bullion or stones that had intrinsic

value of their own. Today, money is a value

held in an ownership that has no physical

quality. What money can buy has become

the symbol of how much money you own

instead of the other way around. Looking

rich is not the same as being rich, and money

becomes the means by which you can look

to be something that you’re not. Its value is

a fantasy—a shadow that cloaks the unmet

needs of the self to make you look and feel

greater than you are, while hiding your own

inner fears that you are not what you project.

The American economy used to be a bal-

ance between manufacturer and consumer.

Now, the American economy is almost all

consumerism and is based on that psychol-

ogy of illusion. The more things you own,

the more secure you are about yourself and

your place in society. The establishment of

limitless credit enabled that fantasy to come

to fulfillment. You can buy as much as you

need to make you feel good and you can

avoid paying the bill. It’s true that you really

don’t have to pay the bill if you can cycle debt

into debt into debt, but if one day, as hap-

pened a little over two years ago, the bills get

called… then the system collapses.

FULFILLING THE DREAM - To ful-

fill the American dream, you must own

your own home… but even that is a fan-

tasy because it is the lending institution

that owns the home, not those who live in

it. As real estate values rose to unreal levels,

providing inflated equity, it became a simple

device to draw everyone who had that dream

into the con game of thinking they could

buy a house without paying for it. The bad

loans made to financially-incapable debtors


became a way of fulfilling this American

dream. As the illusion dissipated, so did the

dream of home ownership.

What is amazing is that people invested

without investigative background checks to

find out if the business or the instruments

were themselves reasonable and prudent.

And yet while everyone was lending money

to unqualified debtors, they felt they could

escape from the bad loan by selling the paper

to someone else, either in America or to

another country. This was truly the “selling”

of America. Not even the SEC, the Federal

Reserve, Congress or the President was will-

ing to intervene in this orgy of bad finance

for fear of making it collapse and engender-

ing a crisis.

Why no intervention? Why, when whistle-

blowers tried to stop it, were they shut down

and ignored? We all know that the power of

those companies, financial houses and banks

to manipulate the market was so profound

that everyone believed that it was impossible

for them to fail. To believe that something

can’t fail is to live in the greatest of all fanta-

sies. And what we’ve learned is that, in fact,

it’s the opposite. The “big boys” are the most

vulnerable to the collapse, because they are

the ones that are the most overextended.

THE BUSINESS DEAL - One of the fun-

damental premises of capital is the exchange

of value. I give you something of value, and

you return by giving me something of value.

Capital is a mutual exchange in which some

form of equity and balance sustains the

quality and morality of the deal itself. But

that principle had disappeared under the

guise of the one-way deal. I make, and you

make nothing. Or what you get in the deal

doesn’t matter to me at all. For example, I

lend you money to buy your dream house

until you find that you can’t fulfill the

loan and the loaner takes back your house.

There is a principle in Jewish business ethics

from Talmud that says, “When one gains,

the other does not lose.” That means that

business deals are not combat, nor a zero-

sum game, and that all partners in it must

come out with something of value. In that

exchange, not only do parties come out with

something of physical value, but they also

come out with a sense of self-respect. This

kind of deal is based on the premise that no

information is withheld from either party so

that all decisions are made in full knowledge

of the ramifications of the decisions. This

teaches that the ultimate value of a good

business deal is the recognition and support

of the value of every person involved. There

is no business that is not personal and there

is no business deal that has no ethical value.

WINNER TAKES ALL - What led to our

collapse was that the business dealing was

no longer a mutuality of exchange between

people who respected each other but rather

was a con game, where one person was the

mark. By being given a bad loan, sold bad

paper, or being urged to invest in valueless

equities, our financial system became like

the Old West idea of winner-takes-all. If you

could win, you were right. It didn’t matter

what happened to the loser. The real value

of winning is not the money but the act of

winning itself. Being a “winner” provides

a sense of power and invulnerability that is

euphoric. We became addicted to the psy-

chology of the business deal as winning ver-

sus losing. When we win, we feel power over

the loser. There are many people in America

today who feel like losers when they are not.

NOBODY KNOWS IT ALL - Investment

gurus, either as individuals or institutions,

became the soothsayers, psychics, and for-

tune tellers of our time. They became wis-

dom figures to whom we abdicated our

choices and believed all of their analyses and

promises. It is a profound help to see that

the wealthy and wise took as big of a beat-

ing in this collapse as the average investor.

At some point we all search for a parental

image to make decisions for us; therefore, we

abdicate our decision-making and do what

we are told. It has been tragic to see those

who had amassed significant personal assets

and have lost them while trusting in a person

or an institution. They were wise enough to

amass it and yet not wise enough to keep it.

Whether it was Lehman Brothers or Bernie

Madoff, we surrendered all skepticism about

reported profits in order to believe in the

fortunes we were told that we were making.

The truth is that there were many people in

finance who would not work against the sys-

tem and who tried to get their clients to be

part of the con. They were ordered by their

superiors to sell the financial instruments

that they themselves had set up to collapse.

KEEPING SECRETS - The unregulated

market has generally proven the downfall of

American finance and capital. Only trans-

parency makes it possible for true regula-

tion to continue and maintain the market’s

health. The deregulated market relies on

profits from individuals, who will set up the

con game in which there is no real transpar-

ency, and rely on the greed, the dreams and

the gullibility of the investor.

BACK TO BASICS - As those of us who

live and/or work in these insecure financial

times know, we must change the way that we

do business. We must understand and rein-

vest in the concept of equitable exchange of

value. We must participate in full disclosure

of all the information we have. The institu-

tions in which we work cannot bet against

the success of their own product. The insti-

tutions can’t create a structure for insolvent

business agreements, which are then resold,

carrying bloated equity. It is time for the

individual investment counselor, broker and

consultant to make a commitment to the

well-being of the person whose account they

represent rather than to the success of the

institution or business for which they work.

We now live in a climate in which there is

little trust for anyone who works in finance.

The beginning of good business lies in trust.

Mutual trust begins the healing from trag-

ic loss—trust in ourselves and those with

whom we share our lives. The trust that, at

the heart of the business agreement, is the

principle that while one gains, the other does

not lose. n


LEgAL • TAx • AccOUNTINg

A Clean Balance Sheet Can Help a Company in More Ways Than One

by JAMES DEPELISI

Companies can help their cause with more than just investor relations

There are several ways to restructure debt:

1. If cash is not an issue, the company can

negotiate with note holders to retire the debt

with cash. In some cases, the company can

convince note holders to accept a settlement

at a discount.

2. If a company is cash-strapped, it can

give stock to note holders in exchange for

their debt.

3. Contingent on its asset base, a company

can swap convertible debt into bank debt to

reduce the overall debt on the balance sheet.

The company uses no cash, and the notes

have more intrinsic value backed by the

assets of the company.

4. The company can negotiate with note

holders to extend maturity dates of the prin-

cipal and/or interest payments.

A company with a clean balance sheet

can put itself in a better position to create

opportunities for the future. This helps a

company in more ways than one, especially

if it can post positive earnings per share and

return on equity. n

about the author

James DePelisi is the president and founder of LDV Capital Management, a registered investment adviso-ry firm based in Florida. LDV Capital Management offers investment banking services with a focus on balance sheet clean-up, institutional capitalization, fairness opinions, valuations, financial advisory, and merger and acquisition work. The company also provides services for financial statement prepara-tion for 10Q,10K,S-1,S-3,and Form 10 filings. More information about the company can be obtained by calling (954) 746-3117 or sending an e-mail to [email protected]. The firm’s Web site is www.LdvCapitalManagement.com.

Copyright 2010, LDV Capital Management

When publicly-traded companies

try to achieve break-through

performance and increase

their stock price, they generally focus first on

improving operations or public relations. An

area often overlooked is financial reporting.

Managers too often ignore the importance of

having a strong balance sheet. Without having

a clean balance sheet, however, achieving the

aforementioned goals often is futile.

A balance sheet tells a lot about the health

of a company, especially its liquidity and

solvency, two areas that investors are keen on.

Carrying more debt on the balance sheet will

require the company to use more working

capital and revenue to pay off that debt. Using

cash to service debt siphons away money

that can be used to re-invest in the overall

growth of the company. In some cases, high

debt levels will force companies to issue more

shares to raise money for working capital.

Issuing shares is dilutive to the company and

drives the stock price lower.

A company with high debt is like a person

with a lot of credit cards. People with high

credit card debt will need to use a higher

proportion of their personal earnings to

pay off that debt. Hence, individuals or

families with a lot of credit card debt often

see their living standards decline.

The same idea applies to a publicly-traded

company. What is even more concerning

about a company carrying excessive debt

(compared to revenue or cash reserves on

their balance sheet) is that the company

attracts the wrong kind of people to its stock.

Most Wall Street analysts gauge the suc-

cess of a company based on its ability to

generate high earnings per share (EPS) and

return on equity (ROE).

Interest expenses associated with debt can

hurt earnings per share. Additionally, one of the

quickest ways to gauge whether a company is an

asset creator, cash consumer, or debt accumula-

tor is to look at the return on equity.

Wall Street typically does not place a high

value on stocks of companies with significant

debt on the balance sheet, a low ROE, and a low

EPS. Traders and investors calculate the likeli-

hood that the price of such stocks will go down

instead of up. In many cases, the negative out-

look attracts short sellers to a company’s stock.

Even when a company cannot post positive

earnings, short sellers in a company’s stock will

not be frightened by the risk of having to cover

their short selling positions. Ultimately, this

drives micro-cap stocks down to penny stocks.

What then is the answer? Companies need

to rid their balance sheet of unnecessary

debt. If the perfect situation of zero debt on

the balance sheet is unrealistic, a company

should try at least to have more cash or rev-

enue compared to debt on the balance sheet.

How do companies clean up their balance

sheet? They do so by restructuring the exist-

ing debt.



Tax Benefits of Investing in Green Energy ProjectsLaunching your own investment management business in the

green energy marketplace can be rewarding. There are many green energy tax breaks and some expire soon. In this article, we discuss how active and passive investors can take advantage of these tax benefits.

by RObERT A. gREEN, cPA

Investors in green businesses should learn

to sort the hype from truth. The govern-

ment has enacted many tax breaks for the

green-energy industry. Unfortunately, the

tax breaks are complex and often are over-

looked. If you’re interested in taking on a

green-energy project or investing in one,

consider these tax-saving ideas. The key is

learning about the many tax breaks available

for green-energy undertakings.

Green-energy projects resemble hedge-

fund structures in legal form, but have a far

more complicated business model. Green

energy co-generation facilities are expen-

sive, long-term ventures, requiring com-

munity approval, modern design, complex

installation, efficient operations, and guar-

anteed power-purchase agreements with

local utilities.

losses in the early years. Suspending those

tax breaks is inefficient and unattractive.

Rather than doing so, you can set up a vehi-

cle such as an LLC that is intended for active

investors only. Passive investors can buy into

a green-energy fund instead.

Active investors have the opportunity to

satisfy the IRS’s rules for “material participa-

tion,” which navigates around Section 469

passive-activity loss rules. That allows active

investors to use pass-through tax breaks,

including green-energy and other business

tax breaks.

The only caveat for using tax breaks and

tax losses is that active investors must have

sufficient cost basis in the project. Active

business owners in pass-through vehicles

can report tax losses only up to their cost

basis; excess losses are carried forward to

future years. Active investors can build up

their cost basis in later years by contributing

additional capital in the form of personal or

business expenses incurred in the project.

Active investors may incur expenses,

including travel, meals, entertainment, sup-

As a tax writer in the trading and hedge-

fund industries, I have an interest in going

green for my own social and business pur-

poses. Decades ago, I discovered a way to

overcome IRS Section 469 passive-activity

loss limitations, a tax change that slowed the

private syndication business in real estate

and film (the old tax shelters). I created

“active investors,” allowing investors to over-

come passive-activity rules. This concept is

helpful to green-energy syndications too.

actIve InveStorS

Our “Green Energy Active Investors” pro-

gram is an add-on module to a traditional

investment-management business structure.

With a private-investment limited liability

company (LLC) structure, you can allocate

many tax breaks to active investors in a sepa-

rate LLC class, and counterbalance it by allo-

cating more cash flow to passive investors.

Internal Revenue Code, Section 469 limits

passive-loss deductions to passive-activity

income. Most green-energy projects generate


SGS-COC-004752


plies, home-office expenses, dues, publica-

tions, research, furniture, fixtures and equip-

ment, professional fees, and more. These

expenses can be contributed to the company

and added to the investor’s cost basis. Active

investors can deduct these expenses on their

individual tax return (Schedule E) as “unre-

imbursed partnership expenses” (UPE). This

is safer than deducting such expenses at the

company level. If the active investor is overly

aggressive on expenses, he/she will not put

the LLC vehicle or other investors at risk.

This applies to material participation stan-

dards, as well. Each investor needs to make

that assessment and is responsible for that

determination, not the LLC.

Consider setting up special-purpose green-

energy investment funds (Green Fund LLCs).

You can have multiple classes of LLC mem-

bership interests. Each green energy proj-

ect should be owned in a special-purchase

vehicle formed in a state or city; we’ll call

it the “Project LLC.” The Green Fund LLC

can own a portion of the Project LLC to get

pass-through tax breaks, or it can own the

equipment and lease it to the Project LLC.

In addition, you can set up a Management

Company LLC to service the Green Fund LLC

and Project LLC. You can earn and collect

management and performance fees.

Special-purpose local Active Investor LLC

vehicles can be set up too. These can own

interests in the Green Fund LLC, Project

LLC, and Management Company LLC, if

desired.

recruIt actIve InveStorS

to overcome “not In my

back yard” reSIStance

Often, these projects run into obstacles from

people in various communities who take

the “not in my back yard” (NIMBY) stance.

Although many Americans may embrace

the green energy agenda, far too many don’t

want a green energy project in their neigh-

borhood.

This is where the active investors come

into play. You can set up active-investor

vehicles in local communities where a green

energy project is to be located. Recruit active

investors from local builders, architects, con-

tractors, attorneys, accountants, doctors,

quasi-town officials, politicians, media own-

ers, promoters, and other local professionals.

These VIPs can help convince their neigh-

bors to vote “yes” on green-energy projects.

Give your local active investors the lion’s

share of the up front tax breaks. (Remember,

active investors need to have a cost basis

to reap these tax benefits.) They will put

up some cash and incur their own expens-

es, providing tax savings even beyond the

green-energy tax breaks. The green-ener-

gy tax breaks offset the cash investment;

along with the active-investor tax breaks,

this makes the investment a home run. And,

local active investors can help overcome the

NIMBY problem.

Green-enerGy tax breakS

Green-energy incentives are available from

many sources: federal, state, county, and

local governments; quasi-governmental

organizations dedicated to making green-

energy projects happen; utilities offering

co-generation guaranteed power purchase

agreements; private green energy investment

funds; and more.

For current federal incentives, see the

U.S. Department of Energy (USDE) page

“Tax Breaks for Businesses, Utilities, and

Governments” at http://www.energy.gov/

additionaltaxbreaks.htm and http://www.

energy.gov/media/HR_1424.pdf. For state,

county, and local incentives, see “The

Database of State Incentives for Renewable

Energy” (DSIRE) at http://www.dsireusa.

org/.

Federal incentives generally include tax

credits for electricity generation using wind,

refined coal, geothermal, biomass, solar, and

combined heat and power systems. In some

cases, a subsidy can replace a credit.

Tax credit bonds are attractive too. Public

sector bond issuers can obtain financing at

zero percent interest. Bond investors receive

tax credits in lieu of bond interest payments.

The Recovery Act materially expanded the

national limits on bond principal. Find out

if your project qualifies for this type of

financing incentive and the limit available

in your state.

Although there’s a long list of incentives,

note that some have short expiration dates

when you consider the long timetable for

making a green-energy project operational.

This highlights the inherent problems with

tax incentives. Can businesses count on an

extension of these breaks?

co-GeneratIon Guaranteed

power purchaSe aGree-

mentS

The most important concern of any new busi-

ness is generating cash flow. Co-generation

guaranteed power purchase agreements

(PPAs) address this issue. A utility provider

is a valued partner. It can offer specifications

and a coveted co-generation guaranteed PPA

to automatically buy all the power you gen-

erate at a fair and regulated price for resale to

their customers. Connect to their grid, turn

the switch on, and you’re in business.

Power purchase agreements vary by utility

and state. Before you consider a local proj-

ect, check the available agreements in your

targeted communities. Speak with your local

utilities about becoming partners. Learn

more about PPAs at http://en.wikipedia.

org/wiki/Power_Purchase_Agreement.

However, it’s crucial to know the risks.

Co-generation revenues and tax incentives

are only tapped when a project is approved

and underway. Significant development

costs before this time may not be recouped

if the project never becomes operational.

bottom lIne

Think green: consider a green-energy proj-

ect, go green, and make some greens. The tax

incentives can be like picking fruit off a tree. n


So, you fancy yourself to be an investment

banker…

Effective May 2010, FINRA Requires

Investment Bankers to Pass the Series 79

Examination

Much discussion has been centered on the

types of services that would require the S-79

license by a registered representative. To

understand the limits of any registration,

follow the money. If you are getting paid

for advising on a transaction, you need the

S-79. If you are going to handle a capital

raise, you’ll need the S-7 or S-62 to receive

commissions. Check with your broker-dealer

to determine your firm’s particular require-

ments. Keep in mind that your broker-

dealer would need either to be a registered

underwriter to handle a public offering,

or be cleared to handle an offering exempt

from registration, such as a Regulation D

private placement. When using the services

of a registered broker-dealer for an offering,

issuers should comply with all federal and

state securities regulations. Don’t forget that

issuers are required to submit Form D detail-

ing any private offering.

As financial regulation winds its way

through Congress and as states become more

active in the regulation of private place-

ments, being registered with a broker-dealer

and using a broker-dealer for capital raises

appear to be a given. Companies needing to

raise capital or obtain investment banking

services would do well to hire only profes-

sionals affiliated with a FINRA broker-dealer.

rISk manaGement and

complIance

Much has been spoken and written recently

about risk management. How does a firm

manage its risk? How does a registered rep-

resentative manage his or her risk? How

does an issuer manage its risk? In today’s

environment, the management of risks takes

on many and varied forms – regulatory risk,

financial risk, and public relations risk. Being

in compliance with a regulation does not

mean that you are proactively managing risks.

Regulations do not address risk management.

Registered representatives, broker-dealers, and

issuers must develop risk management plans.

SEC Approves Amendments Permitting

FINRA to Halt Trading of Securities when

a Primary Listing Market Has Issued a

Trading Pause Due to Excessive Market

Volatility

On June 10, 2010, the Securities and

Exchange Commission (SEC) approved an

amendment to FINRA Rule 6121 to permit

FINRA to halt trading of individual securi-

ties whenever the primary listing market has

issued a trading pause in that security due to

a move of 10 percent or more from a sale in a

preceding five-minute period (the trading-

pause rule). This rule change was a part of

a coordinated effort among FINRA, the SEC,

and other self-regulatory organizations to

halt potentially destabilizing market volatility,

such as the type of sudden price declines that

were experienced on the afternoon of May

6, 2010. Details are contained in FINRA

Regulatory Notice 10-30. n

about the author

Chet Hebert is founder and president of The Compliance Department Inc., a compliance consulting firm located in Centennial, Colorado. The firm assists broker-dealers and investment advisors in the areas of firm formation, compliance, CRD service bureau, out-sourced back-office processing, and branch office audit services, including AML and Regulation S-P compli-ance. For more information about the firm, please visit www.thecompliancedepartment.com or call Chet at (303) 339-9870.

by chET hEbERT

The Compliance Corner



In light of the environmental issues confronting this country, this month’s column is

dedicated to saving trees. Each year broker dealers send documents with thousands of

pages to FINRA for review. How much of this waste can be avoided? Is it really necessary

to have all of the paperwork which only contributes to redundancy, storage problems,

and lost documents?

I realize that FINRA is in the land of excess called Washington, D.C. It is quite ironic

that none of FINRA’s paper filing requirements is mentioned on government environ-

mental panels. If microfilm can be brought back to the private sector, there would be

less need for paper and the greenhouse effect might be slowed down a bit. The issue over

the use of microfilm was once about the dangers of chemicals. All of that has changed;

microfilm can now be processed without them. Just imagine the benefit to the broker

dealers who monitor e-mails. Today they are able to have an electronic file that is secure

and which cannot be altered.

Mention this idea to the stodgy regulators and watch them scowl. They want you to

experience the frustration by having you do it their way. The regulators probably have

never written a ticket and do not know what it is like to work under strict deadlines.

What they might not know is that microfilm is still being used to archive government

documents. In the interest of our planet, let us urge them to adopt electronic filings to

conserve paper. By doing this, not only will we save trees, but also we will use less toxic

ink and will have a lesser need for carbon credits. Do we need to continue to increase

global awareness to these mollycoddled members of the human race?

Instead of just handing money to unemployed people, we ought to have them hold

signs on street corners educating people on how to conserve. The person with the most

unique idea should be given a bonus. We should encourage store owners to have con-

tests, plant trees, or encourage community participation. We ought to be doing some-

thing positive for our children.

Readers may ask what all of this have to do with due diligence? Well, if we don’t do

our due diligence on the environmental problems facing us, then who will? n

ombudsman

V I E W P O I N T S

Instead of

just handing

money to

unemployed

people, we ought

to have them

hold signs on

street corners

educating

people on how

to conserve.

by JAcK LESLIE

VisEnergyinc.com

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Single Page Bleed: 8.75” W x 11.25” H • Trim Size: 8.5” W x 11” H • Live Area: 7.75” W x 10.25” H • 4C ProcessMicro-Cap Review Magazine • June 2010 • Outside Back Cover

Micro-Cap Review Spring 2010

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Transcript of Micro-Cap Review Spring 2010