The Trading Floor

[Arctec]

Weekly Update February 4, 2007

--------------------------------------------------------------------------------

Plug Power (PLUG/NASDAQ $3.73)
www.plugpower.com

Hydrogen Fuel Cells

Sept 30th - net cash approx. $270 million U.S. ($2.12/share)
shares fully diluted: 127 million
Revenue is marginal - near $6 million for 2006 (development stage)

It would be difficult to have missed all the media this past week over Global Warming. The state of California has taken the most proactive approach recently by banning power companies from buying electricity from high-polluting sources, including most out-of-state coal-burning plants. In Bush's recent state-of-the-union address, he also approved billions in funding to develop alternative energy sources. Thanks to Bush and the United Nations report on global warming, alternative energy is back in the limelight.


World Class Technology
Plug Power designs and develops on-site energy systems, based on proton exchange membrane (PEM) fuel cell technology, for energy consumers worldwide. Their technology platform includes proprietary PEM fuel cell and fuel processing technologies, from which multiple products are being offered or are under development.

They are currently offering for commercial sale thier GenCore® product, a backup power product for telecommunications, broadband, utility and industrial uninterruptible power supply (UPS) applications. The GenCore is fueled by hydrogen and does not require a fuel processor. They are also developing additional products, including a continuous power product, with optional combined heat and power capability for remote small commercial and remote residential applications.

PLUG is smallcap by U.S. standards but for us, it's abnormally large. I am presenting it for diversification, long term investing, and possibly pension accounts. It is trading at the low end of their chart and I believe the downside risk is limited to low $3's which were tested a couple weeks ago. The recent media is contributing to a cleanup that started just over a week ago.



Potential for Buyout by Russia's Norilsk ?
This past summer, Interros, a major Russian investment firm, and Norilsk Nickel, the world's largest producer of nickel and palladium, invested $217 million in exchange for shares of Class B Capital Stock that are convertible into 39.5 million shares of common stock (factored into the shares outstanding above). The purchase price per share of common stock in the transaction, on an as-converted basis, is $5.50 - on a converted basis, these two Russian companies own 35% of PLUG.

The fundamentals have continued to improve since this investment was made by the Russian investors, but the share price continued to drift lower. If it was to drop near $3, we could see the company as a takeover target because of its cash value, and significant value of the technology - almost $3/4 Billion has been invested in this company since startup.

I typically have little interest in alternative energy companies but these guys are very well funded, have huge backers, and own some of the most advanced fuel cell technology in the world. As you'll see from two recent news releases, the U.S. and European governments are also prepared to back them.

Plug Power To Receive $8.6M in DOE Funding

LATHAM, N.Y., Oct. 31 /PRNewswire-FirstCall/ -- Plug Power Inc. , a leader in providing clean, reliable on- site energy products, has been selected by the U.S. Department of Energy (DOE) to receive three separate awards totaling $8.6 million for hydrogen fuel cell research, development and demonstration projects.

Specifically, Plug Power will receive:

* $4 million for development and demonstration of an ethanol-based, grid-connected system with the U.S. Army Engineer Research and Development Center's Construction Engineering Research Laboratory

* $3.6 million for the international development and demonstration of a high temperature combined heat and power proton exchange membrane (PEM) fuel cell system targeted for multi-family home applications.

* $1 million for the development of a new design for a prototype 1kW PEM fuel cell stack

European Commission Funding

LATHAM, N.Y., Dec. 14 /PRNewswire-FirstCall/ -- Plug Power Inc. and Vaillant Group of Germany have been selected by the European Commission to receive a grant for the international development and demonstration of three high temperature combined heat and power proton exchange membrane (HT- PEM) fuel cell system prototypes.

"This grant helps Plug Power and its partners accelerate the application of fuel cell systems as heat and power sources for commercial and residential structures," said Dr. Roger Saillant, Plug Power's CEO. "Moreover, the project sets an exciting precedent for the future of fuel cell development as a response to the increasing global demand for transformational clean energy products."

The European Commission will provide euro 2.5 million in funding for the project, which is estimated to have a total value of more than euro 11 million over a two- year period. In October, the U.S. Department of Energy awarded $3.6 million to support the international collaboration. This is the first cooperative program in fuel cell technology between the two government entities.

"Vaillant Group and Plug Power have successfully developed and tested three generations of micro combined heat and power fuel cells for more than six years. The project is a consequent further step in our partnership and offers a great potential to improve technology based on HT-PEM," said Dr. Michel Brosset, Vaillant Group's Managing Director. "We are looking forward to this very interesting international collaboration."




Danny Deadlock
Microcap.com

--------------------------------------------------------------------------------

email: [e-mail]
web: http://www.microcap.com