Zeons Corporation (ZEON)

[PaperProphet]

Mr. Davis, I can tell you all the places where you went wrong with your calculations.

However, first I want to clear a first things up, I noticed you said, "128,000 BTU's x 5 gallons = 640,000 BTUs."

Does that mean that you're officially saying that the biofuel produced from a standard bushel of soybeans using the Rivera process has 640,000 BTU's?? Right now you're just suggesting that. Can you please rephrase that as an official statement and maybe explain how USSE appears to violate the conservation of energy law with that statement?

Second, you said, "Power plant units are expressed in efficiency ratios, the combined cycle plants we have earmarked achieving typically 48 to 54%. Utilizing the 50% combined cycle, you would end up 93.75 kWH."

That certainly implies that USSE would be using all their fuel in an internal combustion engine since steam plants are around 30%. Would you also be good enough to make the official statement that one bushel of soybeans produces five gallons of biofuel in the Rivera process which can be burned at a minimum of 48% thermal efficiency. Only suggesting as you are doing indicates you're only making wild assumptions.

Now I can tell you where you went wrong with most of your reasoning and math...

The comparison to coal that I use is because USSE is focusing on selling electrical power. Electrical power is sold at a market. Any additional revenues produced from green sources are received in the form of REC's/green tags. Your assumption that there's a premium and then green tags are additional even on top of that premium is an uninformed statement.

Second, REC's are about $0.015 to $0.02/kWh, not $0.07 like you optimistically assume. Here's a link with a short research report: http://www.researchreportsintl.com/products/samples/RECES5.pdf Can you tell shareholders how you came up with $0.07 minimum? ($0.15 - $0.08)

Third, I don't know if you've noticed those ubiquitous power lines that run around the country. Maybe you've seen substations and other distribution networks and possibly even an electric utility. You may not know this but all that costs money. When you told shareholders the highly exaggerated number of what you perceive to be the value of the fuel, you forgot to include that little fact. That's like saying gasoline is worth $45/gallon since that's the typical revenues a taxi driver receives while using a gallon.

So, don't double count your green tags, include the cost of production of power (or appropriately compare it with other fuel) and adjust your $0.07 down to $0.02 for green tags. You'll come up with a much more realistic number if your company continues to focus on electrical power production. Maybe you could have some of those freshmen help you with the math? You'll find USSE would be operating at a substantial loss if they start producing.