News Column


January 22, 2014

The following discussion of the financial condition and plan of operations contains forward-looking statements that involve risks and uncertainties. Please see "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" elsewhere in this annual report on Form 10-K. Financial condition, liquidity and capital resources At September 30, 2013 , we had $1,211,183 in total assets and $5,918,520 in total liabilities, resulting in a stockholders' equity (Deficit) of $(4,707,337) . Our net working capital deficit at September 30, 2013 was ( $5,727,119 ), which is a decrease in working capital since December, 31, 2012 of $462,988 . During the nine months ended September 30, 2013 , we incurred a net loss of ( $462,988 ), which included $-0 - in non-cash depreciation expense. For the nine months ended September 30, 2012 , we incurred a net loss of ( $919,615 ), which included $503,719 in non-cash depreciation expense During the nine month period ended September 30, 2013 , we had no revenues. Management decided not to incur the cost of operating the power plants for the following reasons: 1. continued high feedstock prices and low power prices during the winter; and 2. the need to move and relocate certain operating assets; and 3. the effort to finalize the development of the H.O. Clarke property (Houston Clean Energy Park). All of these factors caused management to focus on the future expansion of the H.O. Clarke property and not on current operations. We believe our available resources, together with our anticipated operating revenue and the anticipated proceeds of certain planned short-term borrowings, will be sufficient to pay our anticipated operating expenses for a period of three to six months from the date of this quarterly report on Form 10-Q. Our available resources are not sufficient to pay all of our anticipated capital costs and we are presently seeking additional financing. We believe we will need at least $10 million in additional capital to finance our planned facility expansions and future acquisitions. Capital requirements are difficult to plan for companies like ours that are developing novel business models. We expect that we will need additional capital to pay our day-to-day operating costs, finance our feedstock and fuel inventories, and finance additions to our infrastructure, pay for the development of additional generating facilities and the marketing of our green electricity. We intend to pursue additional financing as opportunities arise. Our ability to obtain additional financing will be subject to a variety of uncertainties. The inability to raise additional funds on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition and results of operations. If we are unable to obtain additional capital when required, we would be forced to scale back our planned expenditures, which would adversely affect our growth prospects. As a result of our limited operating history, our operating plan and our growth strategy are unproven and we have limited insight into the long-term trends that may impact our business. There is no assurance that our operating plan and growth strategy will be successful or that we will be able to compete effectively, achieve market acceptance for green electricity or address the risks associated with our existing and planned business activities. 3 -------------------------------------------------------------------------------- Table of Contents Plan of Operation During the nine months ended September 30, 2013 , we incurred $68,801 in selling, general and administrative expenses for a net loss of ( $462,988 ). There was no operating income for this period. We purchased this 79 acre site on March 20, 2009 for a price of $1,350,000 . This acquisition includes 79 acres of land at the intersection of South Main Street and Hiram Clarke Road , together with all infrastructure, equipment, buildings and other improvements. The H. O. Clarke property is adjacent to a 500 MW switchyard operated by CenterPoint Energy and has ready access to the Texas ERCOT grid. This decommissioned power plant was originally operated by Houston Lighting and Power with a total of 268 MW of gas fired steam generation until the 1980s. An additional 78 MW of gas fired turbines were added to the distribution system as peaking units and were last used in 2004. These peaking units have been removed from the site but the interconnection equipment remains. We plan to evaluate the steam turbines for reuse and scrap the equipment that has no future utility. We do not have sufficient financial resources to restore operation to this power plant and there can be no assurance that suitable financing will be available when needed. If we are not able to attract adequate financing, we may have to delay or abandon plans for all or part of the recommissioning of this site. The key to this site is its central location inside the nation's fourth largest city and the opportunity to build a model Urban Renewable Power Plant. We plan to form the Houston Clean Energy Park on this site to introduce a variety of renewable technologies for clean power. Planned elements include biofueled electric generation, low emission gas turbine power generation and renewable syngas generation. Future projects could include biomass and solar energy. The facility has adjacent natural gas line access, fuel storage and pipelines and distribution system access as well as transmission power connection. We plan to move certain of our biofueled generation assets to the site for connection to the distribution grid and study the feasibility of adding larger scale baseload equipment to the transmission grid in the future. We feel that this site offers a unique opportunity to provide baseload and peaking power to the ERCOT transmission and distribution systems over time. There can be no assurances, however, that future contract prices for green electricity will provide sufficient revenue to offset our anticipated operating expenses. We believe our Company has a unique market focus, is well positioned demographically and is operationally efficient. Many retail electric providers are actively seeking "green energy" for sale to environmentally conscious residential and commercial customers who are willing to pay more for electricity produced from renewable energy resources. Our expertise in the field and our innovative approach to green energy distinguish our Company from its competitors. Nevertheless, there is a possibility that new competitors, who could be better capitalized than our Company, could seize upon our business model and produce electricity more efficiently, which might allow them to capture a significant share of our target market. Until we are able to negotiate contracts that provide for a significant green energy premium, we intend to rely on equity financing to cover our current and anticipated operating losses. We need additional capital and intend to take advantage of financing opportunities as they arise. There is no assurance that our current financial resources and the proceeds of any future financing activities will be sufficient to pay our operating costs. The Company is also participating in a feasibility study related to the construction of a small scale modular gas-to-liquids ("GTL") facility located at the Company's H. O. Clarke facility. The current low cost of natural gas and abundant supplies produced from unconventional shale resources enhances the opportunity to profitably convert natural gas to higher value liquid fuels. The focus of the feasibility study will be on smaller units capable of converting 5 - 10 million cubic feet per day of natural gas into approximately 500 - 1,000 bbls per day of syncrude. A plant capacity expansion on the Company's Houston Clean Energy Park may be initiated on successful completion of the initial GTL Plant. The GTL concept under consideration would also be capable of exporting power into the Texas ERCOT grid. Off-balance Sheet Arrangements We have no off-balance sheet arrangements.

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Source: Edgar Glimpses

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