NNRF Inc (NNRI)

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OTC Stock Review Issues Report On NUCON-RF, Inc


NUCON-RF, Inc., with offices in Moscow, Russia, and Berlin, Germany, provides cutting edge solutions for the management of nuclear waste and power quality challenges facing the Russian, European, Asian and other markets. NNRF recently acquired 50% of ZAO Electro Machinery Building Plant ATOLL, with more than 200 employees. ATOLL had 2006 revenue of $43,137,000 and is expected to realize revenue of $120 million and pre-tax profit of $22.2 million in fiscal 2007. NNRF owns 50% of ATOLL, the maximum permitted under Russian law.

The Russian State Duma recently focused on legislation to create the necessary legal framework for the implementation of a federal target program for the development of the nuclear power industry, a very high priority for the country. Russian President, Vladimir Putin, instructed the Federal Agency for Nuclear Power to develop the target program and personally set the objectives of national importance. Presently, only 16% of Russia's energy is produced by nuclear power plants, as compared to 80% of France's energy. The current minimum goal is to maintain this rate, a difficult task to accomplish since Russia has only been constructing, on average, one nuclear unit every five years. The priority task stipulated in the federal target program for the development of the nuclear power sector calls for two plants per year to be built. The optimistic scenario aims even higher, calling for the share of nuclear power in the national power grid to be 25%. Russia's federal target program also calls for large-scale expansion in the global markets, both in the field of power plant construction (40 to 60 nuclear power plants are to be constructed abroad between now and 2030) and in the fuel sector. The huge Russian nuclear power system, which employs more than 400,000 people, is still federal property. Since it does not look like the government has plans to sell it to anyone, the country needs a qualitative breakthrough to strengthen its position.

Nuclear power now provides about one-third of the European Union's electricity supply, making it the world's most dependent region on nuclear energy. At the 33rd G8 summit, which took place from June 6 to June 8, 2007, a landmark decision was made to include nuclear energy as a low CO2 emitting energy source. This was an unexpected boost for the role of nuclear power in Europe, which is the result of a commitment to reduce greenhouse gas emissions by 20% and switch to renewable fuels. While discussing its dependence on oil and gas imports, European Union Energy Commissioner Andris Piebalgs said Europe needs to ``look at nuclear power and at renewable energy.'' Nuclear power plants generate vast amounts of electricity without emitting toxic carbon dioxide. According to a 2007 story broadcast on ``60 Minutes,'' nuclear power gives France, which generates nearly 80 percent of its power in nuclear power plants, the cleanest air of any industrialized country, and the cheapest electricity in all of Europe. For the first time in 15 years, a European country has begun construction of a nuclear reactor, and six more are likely to be built in the next decade.

Potential to Benefit from the Recent G8 Meeting

In addition to positive decisions for nuclear power, up to 2012, the G8 states will be providing a total of 20 billion dollars for the destruction of chemical weapons, the disposal of nuclear submarines that have been retired from active service, and the disposal of weapons-grade nuclear materials. Germany will be contributing up to 1.5 billion dollars to the cost of decommissioning and disposing of Russian nuclear and chemical weapons. This makes it one of the most important donor countries. Russia has the largest arsenal of chemical weapons worldwide, with declared stocks of 40,000 metric tons of chemical weapons. Under the provisions of the Chemical Weapons Convention of 29 April 1997, Russia has until 29 April 2012 to destroy all of its chemical weapons. Germany is helping Russia to dispose of these. In our opinion, with the knowledge of NNRF's management and advisors in this area, we would expect the company to benefit from this decision. Also, keep in mind that NNRF has offices in both countries.

NUCON-RF, Inc. Management

CEO, Dr. Valery Lebedev, is currently the Advisor to the Russian Minister of Atomic Energy and Deputy General Director of the Mining Chemical Combine at Zhelesnogorsk where NNRF Inc. plans on conducting much of its nuclear waste storage business.

Lawrence McQuade serves as Chairman of the Board for NNRF Inc. Mr. McQuade was the founding partner of River Capital International, a financial services business focusing primarily on Russia and Eastern Europe and the manager of the Volga Fund, an open-ended limited partnership investing in Russian securities. Mr. McQuade was also Vice Chairman of Prudential Mutual Fund Management, Inc., chairing all board meetings of each of the 39 open-end and five closed-end mutual funds with close to $48 billion of assets under management.

Victor Akhunov is Head of Decommissioning Projects for NNRF and a member of its Board of Advisors. Mr. Akhunov was previously a department head for the Department for Decommissioning of Nuclear and Radiation Hazardous Facilities, which is part of the Russian Federation's Federal Agency for Atomic Energy. Mr. Akhunov is recognized as the most knowledgeable and experienced expert on current and future decommissioning projects in the Russian Federation by the European Union, the European Bank of Reconstruction and Development and the donor countries of the G-8.