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GreenShift Corp. (OTCBB: GERS)

GreenShift Corp. (GERS) develops and commercializes clean technologies that facilitate the use of natural resources. GERS does this by developing and integrating technologies to produce biofuel and other biomass-derived products. As of December 31, 2008, it owns four corn oil extraction facilities that are located in Oshkosh, Wisconsin; Medina, New York; Marion, Indiana; and Riga, Michigan. It has also installed one facility in Albion, Michigan, and owns a 10 million gallon per year biodiesel refinery located in Adrian, Michigan and an oilseed crushing facility in Culbertson, Montana.

The Company was formerly known as GS CleanTech Corp. and changed its name to GreenShift Corp. in February 2008. GERS was founded in 1984 and is headquartered in New York, New York.

Source: http://www.reuters.com/finance/stocks/incomeStatement?stmtType=INC&perType=INT&symbol=GERS.OB , https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=GERS , http://www.greenshift.com/

Financial Summary

GERS posted total revenues for the three months ended June 30, 2009, at $1,177,026 representing a decrease of 4,784,749, or 80.3%, over the three months ended June 30, 2008, revenues of $5,961,775. Revenue for the three months ended June 30, 2009, included $1,110,231 in biofuel sales and $66,795 in equipment and technology sales. In the comparable period of last year, GERS revenues were comprised of $774,027 from the sales of biofuels and $5,187,748 from sales of equipment and technology.

Cost of revenues for the three months ended June 30, 2009, were $838,664, or 71.8% of revenue compared to $2,252,799, or 42.4% of revenue for the same period in 2008. During the three months ended June 30, 2009, the Company’s biofuel production costs of revenue were $516,973 as compared to $630,839 for the same period in 2008, and were attributable to costs associated with feedstock and other raw material purchases, transportation and maintenance.

Cost of revenue for GERS equipment and technology sales business were $321,690 for the three months ended June 30, 2009, as compared to $1,865,908 for the same period in 2008.  Revenues in 2009 decreased due to the fact that the Company’s biodiesel refinery and equipment manufacturing operations were shut down because of the unavailability of the working capital resources these operations require. Included within cost of revenue is depreciation and amortization expense of $297,969 and $100,103 for the three months ended June 30, 2009, and 2008, respectively. Depreciation and amortization expenses increased by $197,866 over the same period in 2008.

Gross profit for three months ended June 30, 2009 was $338,362, representing a gross margin of 28.7%. This compared to $3,435,976, representing a gross margin of 57.6%, from the comparable period in 2008.

Operating expenses for the three months ended June 30, 2009, were $5,383,163 compared to $2,016,985 for the same period in 2008. Included in the three months ended June 30, 2009, was $0 in stock-based compensation as compared to $32,816 for the three months ended June 30, 2008. The greatest increase in operating expenses, $4,315,204 in bad debt expense, was related to the accounts receivable due from BIG for equipment and corn oil provided by various subsidiaries of the Company. The Company has set up an allowance for bad debt for the total amount due.

Interest expenses and financing costs for the three months ended June 30, 2009, were $1,896,075 and $1,634,629 for the three months ended June 30, 2008. Included in the three months ended June 30, 2009, was $1,543,708 of interest expense, consisting of $1,498,924 in accrued interest, $44,784 in accrued interest due to a related party, and $352,367 in non-cash expenses associated with the conversion features embedded in the convertible debentures issued by the Company during the three months ended June 30, 2009.

Net loss from continuing operations for the three months ended June 30, 2009, was $6,652,796 as compared to a loss of $1,790,940 from the same period in 2008. Gain for discontinued operations was $14,354,069 for the three months ended June 30, 2009, as compared to $507,044 for the three months ended June 30, 2008. Net income for the three months ended June 30, 2009, was $7,701,272 as compared to a loss of $2,279,984 from the same period in 2008.

GERS posted net income during the three months ended June 30, 2009, at $7,701,272, which is increased from the $2,279,984 loss recorded in the same period of 2008. The primary reasons for the magnitude of this net loss were the dramatic reduction in our operating activities as compared to 2008 and expenses attributable to past financing and restructuring activities. The income included the following non-cash items: reversal of amortization of debt discount and deferred financing fees of about $189,000, loss on conversion liabilities of $354,000, depreciation expenses of about $300,000, and accrued interest of about $1,500,000.

Source: http://www.greenshift.com/investors.php?mode=1

Analyst Consensus

No chart available

Source: Financial Times.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/estimates?symbol=GERS.OB

Investment Highlights

GERS announced earlier this week that the U.S. Patent and Trademark Office issued notice that pending patent number 11/688,435 will be issued as U.S. Patent No. 7,608,729, titled “Method of Freeing the Bound Oil Present in Whole Stillage and Thin Stillage” (the ’729 Patent) on October 27, 2009, to GS CleanTech Corp., a wholly owned subsidiary of the Company.

GERS previously announced the October 13, 2009, award by the U.S. Patent and Trademark Office to GS CleanTech of U.S. Patent No. 7,601,858, titled “Method of Processing Ethanol Byproducts and Related Subsystems” (the ’858 Patent).

GERS’ patented and patent-pending corn oil extraction technologies enable the Company to “drill” into the back-end of first generation corn ethanol plants to tap into a new reserve of inedible crude corn oil with an estimated industry-wide output of about 20 million barrels per year. This corn oil is a valuable second generation feedstock for use in the production of biodiesel and renewable diesel – advanced carbon-neutral liquid fuels, thereby enhancing total fuel production from corn and increasing ethanol plant profits.

GERS’ portfolio of patented and patent-pending extraction technologies can cost-effectively extract most of this corn oil, thereby increasing biofuel yields per bushel of corn by 7% while reducing the energy consumption and greenhouse gas (“GHG”) intensity of corn ethanol production by an estimated 21% and 29%, respectively. There are no other technologies that have been developed for corn ethanol producers that begin to approach even a fraction of these results in the entire history of the ethanol industry.

GERS earlier this year announced that its proprietary corn oil extraction technologies have been included in the analyses completed by the U.S. Environmental Protection Agency (“EPA”) on the contribution of corn ethanol to the renewable fuels industry. The Company’s corn oil extraction technologies make it possible for the production of biodiesel from inedible corn oil, a previously untapped feedstock entrained in the distillers’ grain co-product of corn ethanol production. This process increases the yield of biofuel from corn by 7% while reducing the amount of fossil fuels used in the corn ethanol production process by up to 10%. On May 5, 2009, the EPA signed a notice of proposed rulemaking, Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program (the “RFS2 Program”), which was supported by a Draft Regulatory Impact Analysis (“DRIA”) made available on the same date. These two documents were drafted to solicit comments pertaining to proposed new rules to increase requirements to use renewable fuels as an important part of the nation’s transportation fuel supply.

GERS announced on October 14 that its wholly owned subsidiary, GS CleanTech Corp., has filed legal action in the U.S. District Court (Southern District of New York) against GEA Westfalia Separator Inc. and other companies in the industry for infringing on GERS’ U.S. patent covering corn oil extraction technology. According to a release, the complaint alleges that GEA Westfalia Separator and others in the industry infringed U.S. Patent No. 7,601,858, titled “Method of Processing Ethanol Byproducts and Related Subsystems” (the “‘858 Patent”). The ‘858 Patent covers processes for recovering corn oil by evaporating, concentrating and mechanically processing thin stillage, a precursor to the distillers grain co-product of corn ethanol production (”DDGS”).

Source: Scottrade.com, Reuters.com

Technical Analysis

Source: www.stockcharts.com

Moving Average Price Compare

No current signals

Bollinger Bands

GERS’ recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, GERS is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

MACD

GERS’ MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

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