You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Our business and financial condition may have changed since that date.

An investment in our common stock involves a high degree of risk. You should carefully consider the following risks, as well as other information contained in this prospectus before making an investment in our common stock. The risks described below are those that we believe are the material risks we face. Any of the risks described below could significantly and adversely affect our business, prospects, financial condition and results of operations. As a result, the trading price of our common stock could decline and you could lose all or part of your investment.

Our Carthage, Missouri facility was commissioned in 2005. From 2005 to 2007, we developed and refined the equipment, procedures and processes at our Carthage facility. We began commercial sales of our renewable diesel in 2007 and one of our fertilizers in the second quarter of 2008. As a result, we have a limited operating history from which you can evaluate our business and prospects. In addition, our prospects must be considered in light of the risks and uncertainties encountered by an early-stage company in the rapidly evolving renewable energy market, where supply and demand may change significantly over a short period. Some of these risks relate to our potential inability to:

If we cannot successfully mitigate these risks, our business, financial condition and results of operations will suffer.

We incurred net losses of $21.8 million for the year ended December 31, 2006, $19.9 million for the year ended December 31, 2007 and $18.8 million for the nine months ended September 30, 2008, and as of September 30, 2008, we had an accumulated deficit of $117.8 million. We will incur operating losses and continued negative cash flows for the foreseeable future as we invest in the development of TCP and build additional facilities to implement our expansion strategy. We may not achieve or sustain profitability on a quarterly or annual basis in the future. Our operations are subject to a number of risks inherent in the establishment of a new technology and in the development of new markets, as well as operating at an early stage of development. To be profitable we will have to

Under the Energy Policy Act of 2005, as amended by the Emergency Economic Stabilization Act of 2008, or the Energy Policy Act, we currently receive a $1.00 renewable diesel mixture tax credit for each gallon of renewable diesel sold. Because we have no fuel excise tax payable, we receive a direct cash payment from the U.S. Treasury. Without the renewable diesel mixture tax credit, or if it is reduced, we may not be able to compete with traditional energy suppliers or other suppliers of alternative or renewable diesel who could provide fuel to our customers at a lower cost than we do. Under the Energy Policy Act, the renewable diesel mixture tax credit is set to expire on December 31, 2009. If the renewable diesel mixture tax credit is not extended beyond 2009 or is reduced, it would have a material adverse effect on our business, financial condition and results of operations.

The operation of our Carthage facility and the operation of future facilities involve many risks, including:

If any of these risks were to materialize and our operations at our Carthage facility were significantly disrupted, it would have a material adverse effect on our business, financial condition and results of operations.

The operation of facilities involves many risks, including start-up problems, the breakdown of equipment and performance below expected levels of output and efficiency. For example, during our initial operations in Carthage, we dealt with a number of start-up equipment and process design issues and inadequate metallurgical selection. We have not operated at a consistent mechanical availability in excess of 80% for any fiscal quarter to date. In the first nine months of 2008, our Carthage facility achieved 80% average mechanical availability, which is the percentage of planned operating hours that the facility actually operated. We will make improvements to the design of our new facilities based on operating experience and knowledge we developed at Carthage, and we are seeking to improve the average mechanical availability at our Carthage facility. However, design and engineering issues may nonetheless occur and, as a result, we may not make improvements on our average mechanical availability at our Carthage facility. We have experienced periods where our Carthage facility was not operational, which required us to pay to divert or dispose of feedstock that we received but were unable to store or process. If our facility becomes non-operational in the future, we may face additional diversion and disposal costs related to the disposal of excess feedstock that we may be contracted to purchase but cannot store or process. In addition, we close our Carthage facility on an annual basis to conduct routine maintenance and equipment upgrades. These closures typically last two to four weeks and can affect our results of operations for the relevant period. We have also incurred costs in connection with the disposal of waste water at our Carthage facility. We may encounter new design and engineering challenges as we seek to expand the range of feedstock we use in TCP. Material, engineering, workmanship or design issues may result in diminished facility production capacity, increased costs of operations or cause us to temporarily or permanently halt facility operations, all of which could harm our business, financial condition and results of operations.

The negotiation of the large number of agreements necessary to operate and manage any new facilities involves a long development cycle and decision-making process. Delays in other parties’ decision-making processes are outside of our control and may have a negative impact on our cost of goods sold, operating expenses, receipt of revenues and sales projections.

We have one production TCP facility in Carthage, Missouri and one research and development facility in Philadelphia, Pennsylvania. We plan to grow our business by developing and constructing additional facilities.

Development, construction and expansion of TCP facilities are subject to a number of risks, any of which could prevent us from commencing or expanding operations at a particular facility as expected or at all. These risks include finding appropriate sites, regulatory and permitting matters, increased construction costs, construction delays, availability of financing and higher than anticipated financing costs.

We must obtain and maintain numerous regulatory approvals and permits in order to construct additional facilities. Obtaining these approvals and permits could be a time-consuming and expensive process, and we may not be able to obtain them on a timely basis or at all. For certain of our projects, we may begin development and construction and incur substantial development and construction costs prior to obtaining all of the approvals and permits necessary to operate a TCP facility at that site. In the event that we fail to ultimately obtain all necessary permits, we may be forced to delay operations of the facility and the receipt of related revenues or abandon the project altogether and lose the benefit of any development and construction costs already incurred, which would have an adverse effect on our results of operations. In addition, federal and state governmental

Our construction costs may materially exceed budgeted amounts that could adversely affect our results of operations and financial condition. We expect to spend an average of $30 million to $125 million per plant on construction and start-up operating costs for facilities that can convert from 150 to 2,000 tons of animal waste, food processing waste and greases per day. Although we intend to enter into fixed-price contracts for the construction of our facilities, we may be unable to negotiate or agree to a fixed price.

We believe that contractors, engineering firms, construction firms and equipment suppliers increasingly are receiving requests and orders from companies to build energy production facilities and other similar facilities and, therefore, we may not be able to secure their services or products on a timely basis or on acceptable financial or commercial terms, or at all. In addition, we may suffer significant construction delays or cost overruns as a result of a variety of factors, such as labor and material shortages, defects in materials and workmanship, adverse weather, transportation constraints, construction change orders, site changes, labor issues and other unforeseen difficulties, any of which could prevent us from completing the construction of our planned facilities. As a result, we may not be able to grow our business as quickly as we planned. Any delays or cost overruns may result in the renegotiation of our construction contracts which could increase our construction costs.

Additionally, we may not be able to obtain adequate financing to fund our expansion strategy on acceptable terms, a timely basis or at all, which could prevent, delay or significantly increase the related costs associated with the implementation of our expansion strategy.

If we are unable to address these risks in a satisfactory and timely manner, we may not be able to implement our expansion strategy as planned or at all. We intend to obtain and maintain insurance to protect against some of the risks relating to the construction of new projects, however such insurance may not be available or adequate to cover lost revenues or increased costs if we have construction problems, overruns or delays.

The principal performance metric that we use to evaluate our costs of goods sold is our cash production cost per gallon of renewable diesel. For the nine months ended September 30, 2008, our cash production cost at our Carthage facility was $11.18. To be profitable, we will have to reduce our cash production costs for our renewable diesel. Although we believe our future cash production costs will be substantially lower than our current cash production cost per gallon, we may not be able to reduce our cash production costs for our renewable diesel if we fail to:

If we are unable to reduce our cash production costs for our renewable diesel as anticipated, our financial condition and results of operations will be materially and negatively affected and we may not be profitable.

We have one production facility in Carthage, Missouri, and we anticipate only having a limited number of production facilities for the foreseeable future. As a result, our operations may be subject to material interruption if any of our facilities experiences a major accident or is damaged by severe weather or other natural disasters, such as fire, flood or earthquake. In addition, our operations may be subject to labor disruptions and other hazards inherent in our industry. Some of those hazards may cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage and may result in suspension or termination of operations, incurrence of liability and the imposition of civil or criminal penalties. Our precautions to safeguard our facilities, including insurance and health and safety protocols, may not be adequate to cover our losses in any particular case.

Moreover, our facilities may experience unscheduled downtime or may not otherwise operate as planned or expected. All of our facilities have or will have a specified nameplate capacity that represents the production capacity specified in the applicable construction agreement. The builder generally tests the capacity of the facility prior to the start of its operations. The operation of our facilities is and will be subject to various uncertainties relating to our ability to implement the necessary process improvements required to achieve optimal production capacities. As a result, our facilities may not produce renewable diesel at the levels we expect. For example, in the first nine months of 2008, our Carthage facility achieved 80% average mechanical availability. We are targeting operating our facilities at 86% to 90% average mechanical availability in the future to reduce our cash production costs and improve our operating performance. We may not be able to achieve our target mechanical availability. In addition, we close our facilities periodically to conduct routine maintenance and upgrades in order to operate at anticipated capacity levels. In the event any of our facilities do not run at their nameplate or any increased expected capacity levels or we fail to improve our average mechanical availability, our business, results of operations and financial condition may be harmed.

We may not be able to finance our expansion strategy. The development, construction and expansion of TCP facilities will require us to raise additional debt or equity financing. Additionally, we plan to work with governmental entities to secure grants and co-sponsorships of some of our projects, as well as take advantage of federal and state incentive programs to secure favorable financing. Our ability to secure financing and the costs of such capital are dependent on numerous factors, including general economic and capital market conditions, credit availability from lenders, investor confidence and the existence of regulatory and tax incentives that are conducive to raising capital. Current turmoil in the financial markets has caused banks and financial institutions to decrease the amount of capital available for lending and has significantly increased the risk premium of such borrowings. In addition, this turmoil has significantly limited the ability of companies to raise funds through the sale of equity or debt securities. If we are unable to raise additional funds, obtain capital on acceptable terms, secure government grants or co-sponsorships of some of our projects or take advantage of federal and state incentive programs to secure favorable financing, we may have to delay, modify or abandon some or all of our expansion strategies.

The amount of any indebtedness that we may raise in the future may be substantial, and we could be required to secure such indebtedness with our assets. If we default on any future secured indebtedness, our lenders may foreclose on any facilities securing such indebtedness. The incurrence of indebtedness could require us to meet financial and operating covenants, which could place limits on our operations and ability to raise additional capital, decrease our liquidity and increase the amount of cash flow required to service our debt. If we experience construction problems, overruns or delays which adversely affect our ability to generate revenues, we may not be able to fund principal or interest payments under any debt that we may incur.

Any effort to sell additional securities may not be successful or may not raise sufficient capital to finance additional facilities. The issuance of additional equity securities could result in dilution to our existing stockholders, including investors in this offering. If we are unsuccessful in raising sufficient capital to fund our expansion strategy, we may have to delay or abandon our expansion strategy, which could harm our business prospects, financial condition and results of operations.

As we expand our operations, we may be unable to continue to grow our business or manage future growth. Our planned expansion and any other future expansion will place a significant strain on our management, personnel, systems and resources. We plan to significantly expand our manufacturing capacity and hire additional employees to support an increase in engineering, manufacturing, research and development and our sales and marketing efforts. To successfully manage our growth and handle the responsibilities of being a public company, we believe we must effectively:

We may encounter difficulties in effectively managing these and other issues presented by rapid growth. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, research and further develop TCP, develop our renewable diesel and fertilizers, satisfy customer requirements, execute our business plan or respond to competitive pressures.

We expect to establish, and to expand over time, international operations and activities. We have entered into discussions with animal and food processors in Canada and Europe regarding potential construction of new TCP facilities and retrofitting existing facilities with TCP. International business operations are subject to a variety of risks, including:

We do not know the impact that these regulatory, geopolitical and other factors may have on our international business in the future.

We anticipate that, until we commence renewable diesel production at other facilities, we will sell our renewable diesel to a limited number of customers. For example, Schreiber accounted for approximately 72.9% and 78.1% of our revenues for the year ended December 31, 2007 and the nine months ended September 30, 2008, respectively. Although we recently began sales of our renewable diesel to a second customer, sales to Schreiber have accounted for most of our total revenues, and the loss of, or a significant reduction in orders from, Schreiber, if not immediately replaced, would significantly reduce our revenues and harm our results of operations. Although we seek to enter into supply contracts for our renewable diesel, any failure to do so could result in our inability to sell our renewable diesel on a timely basis or at favorable prices, which would harm our business, results of operations and financial condition.

As we seek broader market acceptance for our renewable diesel and fertilizers, it is possible that we may expend large sums of money to bring our renewable diesel and fertilizers to market without a commensurate increase in revenues. Sufficient markets may never develop for our renewable diesel and fertilizers, or develop more slowly than we anticipate. The development of sufficient markets for our renewable diesel and fertilizers may be affected by cost competitiveness of our renewable diesel and fertilizers, consumer reluctance to try a new product and emergence of more competitive products.

We anticipate that the market for our renewable diesel will require potential customers to switch from their existing heating oil and diesel fuel suppliers or switch from using natural gas, which requires new equipment or retrofitting existing equipment and requires new or additional permitting to burn our renewable diesel products. For example, fuel storage tanks and liquid fuel delivery systems need to be installed for natural gas fired boilers. The one-time cost for converting a boiler burning fuel oil or a similar boiler burning natural gas to burn renewable diesel is approximately $50,000 and $100,000, respectively. Initially, we intend to fund these boiler modifications or provide a price adjustment for our renewable diesel as a means of reimbursing the cost of modifications incurred by a customer. Because we only recently began selling our renewable diesel, potential customers may be skeptical as to supply reliability, quality control and our financial viability, which may prevent them from purchasing our renewable diesel or entering into long-term supply agreements with us. If the market for our renewable diesel does not develop as anticipated, we will have to ship and store our renewable diesel, which would be expensive. We cannot estimate whether demand for our renewable diesel will materialize at anticipated prices, or whether satisfactory profit margins will be achieved. If such pricing levels are not achieved or sustained, or if our technologies and business approach to our

We currently price our renewable diesel primarily based on the price of natural gas, and as we seek to increase our production and continue to develop the production of renewable diesel and fertilizers for sale as commodities, we will become increasingly exposed to market risk with respect to the commodity pricing applicable to diesel fuel and fertilizer. Realized commodity prices received for production of our renewable diesel and fertilizers are expected to be primarily driven by spot prices applicable to diesel fuel and fertilizer, respectively. Historically, diesel fuel prices have been volatile, and we expect such volatility to continue. Fluctuations in the commodity price of diesel or fertilizer may reduce our profit margins, especially if we do not have long-term contracts for the sale of our output of renewable diesel or fertilizer at fixed or predictable prices. At such time as our facilities begin to produce substantial quantities of renewable diesel or fertilizers for sale, we intend to explore various strategies, including long-term sale agreements, in order to mitigate the associated commodity price risk and volatility. For example, Schreiber has executed a three-year supply agreement with us for our renewable diesel at Schreiber’s Monnet and Mount Vernon, Missouri facilities. We have also entered into a two-year contract with another major customer in Carthage, Missouri for our renewable diesel. If we enter into fixed-price contracts for a significant portion of our renewable diesel and fertilizers, those contracts may be at a price level that is lower than the then prevailing price, and such a difference could have a negative effect on our revenues, results of operations and financial condition. In addition, prevailing prices for diesel oil or fertilizer could move in an unexpected manner which could result in adverse results. Any such risk management strategy may not be successful. As a result, our revenues and profit margins may decline which would have an adverse impact on our ability to service any indebtedness that we may incur to build our facilities and on our financial condition and results of operations.

We need to acquire a substantial amount of feedstock for our production of renewable diesel. In addition, the type of feedstock we are able to obtain can have significant impact on the yield of renewable diesel per ton of feedstock. For example, hog and beef processing waste and restaurant grease yield significantly more renewable diesel than turkey processing waste. We use animal and food processing waste to supply our Carthage facility, and we may use animal and food processing waste or other organic waste to operate any future facilities that we may develop. Consolidation within the animal and food processing industry has resulted in bigger and more efficient slaughtering operations, the majority of which utilize “captive” processors to handle their animal and food processing waste. Simultaneously, the number of small meat packers, which have historically provided their waste to independent processors and are a potential source of waste for us, has decreased significantly. Although the total amount of slaughtering may be flat or only moderately increasing, the availability, quantity and quality of raw materials available to non-captive processors from these sources have all decreased. Major competitors include large integrated animal and food processors and independent renderers such as Baker Commodities, Darling International and Griffin Industries. A significant decrease in animal and food processing waste or a change in the type of feedstock available to us could materially and adversely affect our business and results of operations.

The operation of our facilities is dependent on the availability of animal and other organic waste resources to produce our renewable diesel. We only have one binding agreement for the

Lack of animal and food processing waste or adverse changes in the nature, quantity or cost of such waste would seriously affect our ability to operate our facilities. As a result, our revenues and financial condition would be materially and negatively affected. Adequate quantities of feedstock may not be available at a price that makes it affordable or cost-effective for use in our facilities.

If we replicate the strategy we utilized in developing our Carthage facility and enter into arrangements with other agricultural and food processors where we co-locate our facility near their processing facilities, we will be dependent on such processors for feedstock. While we intend to enter into supply contracts, should any such processors choose alternate methods of disposal, cease its operations, have its operations interrupted by casualty or otherwise cease supplying feedstock, our ability to operate our other co-located facilities at capacity or in a cost-effective manner would be materially and adversely affected.

We expect that technological advances in the processes and procedures for producing renewable diesel will continue to occur. It is possible that those advances could make TCP less efficient or obsolete, causing the renewable diesel we produce to be of a lesser quality than competing renewable fuels or causing the yield of our renewable diesel to be lower than that for competing technologies. These advances could also allow our competitors to produce renewable diesel at a lower cost than ours. We cannot predict when new technologies may become available, the rate of acceptance of new technologies by our competitors or the costs associated with such new technologies. If we are unable to adopt or incorporate technological advances or adapt TCP to be competitive with new technologies, our cost of producing renewable fuels could be significantly higher than those of our competitors, which could make our facilities and technology uncompetitive or obsolete.

Competition in the traditional energy business from other energy companies is well established, with many substantial entities having multi-billion dollar, multi-national operations. Competition in the alternative fuels and renewable energy business is expanding with the growth of the industry and the advent of many new technologies. We also compete against traditional fertilizers produced by large companies that have greater financial and other resources. Larger companies, due to their better capitalization, will be better positioned to develop and commercialize new technologies and to install existing or more advanced equipment, which could reduce our market share and harm our business.

To expand our business and develop additional facilities, we may enter into joint ventures with animal or food processing or other industrial companies or waste processing companies in the future. Joint ventures involve a number of risks that could harm our business and result in any joint venture that we enter into not performing as expected, including:

In addition, to the extent that we enter into joint ventures with animal or food processing companies or waste processing companies, we may experience competition or channel conflict with our then existing and potential suppliers and customers. Specifically, existing and potential suppliers and customers may perceive that we are competing directly with them by virtue of such investment and may decide to reduce or eliminate their supply volume to us or order volume from us.

We may also decide that it is in our best interests to enter into joint ventures that may negatively impact our margins as a whole. In addition, joint ventures could require investment of significant financial resources and may require us to obtain additional equity financing, which may be dilutive to our then existing stockholders, or require us to incur indebtedness.

We may pursue acquisitions of companies, including animal or food processing companies, assets or complementary technologies in the future. However, we may not be successful in identifying acquisition opportunities, assessing the value, strengths and weaknesses of these opportunities and consummating acquisitions on acceptable terms or at all. Acquisitions may expose us to business and financial risks that include, but are not limited to:

If we are unable to successfully address the risks associated with acquisitions, or if we encounter unforeseen expenses, difficulties, complications or delays frequently encountered in connection with the integration of acquired entities and the expansion of operations, our growth may be impaired, we may fail to achieve acquisition synergies and we may be required to focus resources on integration of operations rather than on our primary business.

Our Carthage facility and our research and development facility in Philadelphia are, and any future facilities will be, subject to federal, state and local regulatory requirements regarding environmental, health and safety matters, including, but not limited to air emissions, wastewater discharge, waste disposal, odor, and occupational health and safety. In many cases, these regulations require a complex process of obtaining and maintaining licenses, permits, and approvals from federal, state, and local agencies. In addition, we must maintain and monitor our compliance with these regulatory requirements. Maintaining compliance with environmental and health and safety regulations is and will continue to be a significant cost to our business. In the event of any period of non-compliance, our operating facilities may be forced to shut down until the compliance issues are resolved, and we could incur significant liabilities, fines and penalties. For example, we received one cease and desist order in December 2005 from the Missouri Department of Natural Resources associated with alleged violations of Missouri’s odor standards by our Carthage facility. As a result, production at our Carthage facility was partially shut down from January 2006 to March 2006. Although we have resolved the issues in connection with the December 2005 cease and desist order, there can be no assurance that our operating facilities will not be forced to shut down in connection with any future event of non-compliance with environmental and health and safety regulations. Moreover, there is the risk that these laws will become more stringent, imposing new or stricter requirements on our current or future operations. To the extent new regulations are enacted or adopted, we cannot predict the effect of such regulations on our business. New regulatory requirements or our failure to maintain compliance with current standards could require modifications to operating facilities and significant capital and operating expenses. Also, we may be subject to third-party claims and common law liability if our facilities are found to cause nuisance conditions due to odor or other factors.

While our business currently has all necessary operating approvals material to our operations, we may not always be able to obtain all required regulatory approvals, or modifications to existing regulatory approvals, or maintain all required regulatory approvals. If there is a delay in obtaining any required regulatory approvals or if we fail to obtain and comply with any required regulatory approvals, the operation of our facilities or the sale of renewable diesel or fertilizers to third parties could be prevented, made subject to additional regulation or subject our business to additional costs such as fines or penalties. For example, many states require registration of fertilizer before it can be distributed in the state, and a failure to register our fertilizers would limit our ability to expand fertilizer sales into other markets. In addition, we may be required to make capital expenditures on an ongoing basis to comply with increasingly stringent federal, state, and local environmental, health and safety laws, regulations and permits.

Moreover, our customers may be subject to regulations, which vary by state, that limit annually the levels of emissions that result from burning fuels. If our renewable diesel is not compatible with a particular state’s emissions standards, customers may need to limit the amount of

Our success depends largely on maintaining the proprietary nature of our process and on our ability to protect our intellectual property rights. Although we rely on trade secret laws and contractual restrictions to protect TCP, our success and ability to compete in the future may also depend to a significant degree upon obtaining and maintaining patent protection for TCP. We are the exclusive, worldwide licensee under seven issued U.S. patents, five pending U.S. patent applications and 51 issued foreign patents and pending foreign patent applications, a subset of which are directed to our proprietary TCP technology as currently implemented, owned by AB-CWT, a related company, the terms of which patents will expire between November 1, 2011 and September 21, 2024. We seek to protect our proprietary renewable diesel production processes, documentation and other written materials under trade secret and copyright laws. We also typically require employees and consultants with access to our proprietary information to execute confidentiality agreements. The steps taken by us to protect our proprietary information may not be adequate to prevent misappropriation of our technology. In addition, our proprietary rights may not be adequately protected because:

Reverse engineering, unauthorized copying or other misappropriation of our proprietary technologies could enable third parties to benefit from our technologies without paying us for doing so. Any inability to adequately protect our proprietary rights could harm our ability to compete, to generate revenues and to grow our business.

The patent applications may not result in issued patents, and even if they result in issued patents, the patents may not have claims of the scope we seek. In addition, any issued patents may be challenged, invalidated or declared unenforceable. The term of any issued patents in the United States would be 20 years from their filing date and if the applications are pending for a long time period, we may have a correspondingly shorter term for any patent that may issue since the term of our exclusive license is for the duration of the last expiring licensed patents or patent application. In addition, given the costs of obtaining patent protection, protection may not be sought for certain innovations that later turn out to be important.

A substantial portion of our technology is protected by patents that are owned by AB-CWT. We are the exclusive, worldwide licensee under seven issued U.S. patents, five pending U.S. patent applications and 51 issued foreign patents and pending foreign patent applications owned by AB-CWT, a subset of which are directed to our proprietary TCP technology as currently implemented. AB-CWT is a Delaware limited liability company whose members include Brian S. Appel, our Chief Executive Officer, Jerome Finkelstein, a member of our board of directors, and one of our principal

Litigation regarding patents and other intellectual property rights is extensive in the technology industry. Although we are not currently aware of any parties pursuing or intending to pursue material infringement claims against us, we may be subject to such claims in the future. Also, because patent applications in the United States and many other jurisdictions are kept confidential for 18 months before they are published, we may be unaware of pending patent applications that relate to our technology. There may also be third-party patents and patent applications published or unpublished, of which we are unaware, but which relate to our technology.

We may also initiate claims to defend our intellectual property and maintain our intellectual property. Litigation is expensive, time-consuming, may require the cooperation of our licensor, could divert management’s attention from our business and could have a material adverse effect on our business, operating results or financial condition. If there is a successful claim of infringement against us, our customers or our third-party intellectual property providers, we may be required to pay substantial damages to the party claiming infringement, stop selling products or using technology that contains the allegedly infringing intellectual property, or enter into royalty or license agreements that may not be available on acceptable terms, if at all. All these judgments could materially damage our business. We may have to develop non-infringing technology, and our failure in doing so or obtaining licenses to the proprietary rights on a timely basis could have a material adverse effect on our business.

We have in the past been, and may in the future be, named as a defendant in lawsuits, claims and other legal proceedings during the ordinary course of our business. These actions may seek, among other things, compensation for alleged personal injury, workers’ compensation, employment discrimination, breach of contract, nuisance, negligence, property damage, punitive damages, civil penalties or other losses, consequential damages or injunctive or declaratory relief. In addition, pursuant to our customer arrangements, we generally indemnify our customers for claims related to property damage from retrofitting, the use, storage or burning characteristics of our renewable diesel, as well as intellectual property-related damages. In the event that such actions or indemnities are ultimately resolved unfavorably at amounts exceeding our accrued reserves, or at material amounts, the outcome could materially and adversely affect our reputation, business and results of operations. In addition, payments of significant amounts, even if reserved, could adversely affect our liquidity position.

Although we maintain insurance, obtain warranties from vendors and require contractors to meet certain performance levels, the proceeds of such insurance, warranties, performance

Our recurring losses from operations raise substantial doubt about our ability to continue as a going concern, and as a result, our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated financial statements for the years ended December 31, 2007, 2006 and 2005 with respect to this uncertainty. Future reports on our consolidated financial statements may include an explanatory paragraph with respect to this uncertainty. The December 31, 2007 financial statements do not include any adjustments that might result from the outcome of this uncertainty. In August 2008, we raised $7.5 million in a private placement, and in December 2008, we completed a secured debt and warrant financing for aggregate net proceeds of $2.0 million, which we expect will be sufficient to fund our operations through February 2009. If we successfully complete this offering, we will be able to fund our operations through 2009. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

Our quarterly revenues, expenses and results of operations are difficult to forecast. We may experience substantial fluctuations in revenues, expenses and results of operations from quarter to quarter. You should not rely on our results of operations in any prior reporting period to be indicative of our performance in future reporting periods. Many different factors could cause our results of operations to vary from quarter to quarter, including:

We base our current and future operating expense levels and our investment plans on estimates of future revenues and rate of growth. We expect that our expenses will increase in the future, and we may not be able to adjust our spending quickly enough if our revenues fall short of our expectations. Any shortfalls in our revenues or in our expected growth rates could result in decreases in our stock price.

Our future success depends to a significant extent on the continued services of Mr. Brian S. Appel, our Chief Executive Officer, Mr. Michael J. McLaughlin, our Chief Financial Officer, Mr. James H. Freiss, our Chief Operating Officer, and Mr. Dan F. Decker, our Executive Vice President, as well as

Our ability to construct additional facilities and further refine TCP is dependent on the experience and expertise of our employees, especially highly trained engineers, facility operations personnel and facility managers. We believe that our future success will depend in large part on our ability to attract and retain qualified personnel, particularly as we continue to secure additional sources of animal and food waste and implement our expansion strategy. Many of the companies with which we compete for experienced personnel have greater resources than we do and may be able to offer more attractive terms of employment. As competition for qualified employees grows, our cost of labor could increase, which could adversely impact our results of operations. In 2007, our then Chief Financial Officer and Chief Operating Officer resigned. We cannot predict our success in hiring or retaining the personnel we require for continued growth.

At December 31, 2007, we had a material weakness in our internal controls over financial reporting. Under standards established by the Public Company Accounting Oversight Board, or PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified was with respect to the technical expertise of our accounting staff, particularly our need to re-evaluate our current accounting staff to determine if we have sufficient accounting personnel with the requisite expertise to ensure our ability to properly, accurately and reliably prepare our consolidated financial statements in accordance with generally accepted accounting principles. As we prepare for the completion of this offering, we are in the process of addressing the issues. In September 2008, Michael J. McLaughlin joined our company as our Chief Financial Officer and Suzanne Wollman joined our company as our Controller. However, our remediation efforts may not enable us to remedy the material weakness or avoid other material weaknesses or significant deficiencies in the future. In addition, these and any other material weaknesses and significant deficiencies will need to be addressed as part of the evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and may impair our ability to comply with Section 404.

We have historically operated our business as a private company. In connection with this offering, we will become obligated to file with the Securities and Exchange Commission annual and quarterly information and other reports that are specified in Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we will also become subject to other new financial and other reporting and corporate governance requirements, including the requirements

We may not be successful in complying with these obligations, and compliance with these obligations could be time-consuming and expensive.

As a private company, our internal control over financial reporting does not currently meet all the standards contemplated by Section 404 of the Sarbanes-Oxley Act of 2002 that we will eventually be required to meet. We currently rely primarily upon a substantive review by our management to help ensure the accuracy of our financial reports. We will be required to evaluate, test and implement internal controls over financial reporting to enable management to report on, and our independent registered public accounting firm to attest to, such internal controls as required by Section 404 of the Sarbanes-Oxley Act of 2002. While we anticipate being compliant with the requirements of Section 404 for our year ending December 31, 2009, we cannot be certain as to the timing of the completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal control over financial reporting. This result may cause us to be unable to report on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by regulatory authorities, such as the Securities and Exchange Commission. Our failure to comply with Section 404 on a timely basis could result in the diversion of management time and attention from operating our business and the expenditure of substantial financial resources on remediation activities. In addition, such failure may make it more difficult and costly to attract and retain independent board and audit committee members. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. We could also suffer a loss of confidence in the reliability of our financial statements if our independent registered public accounting firm reports a material weakness in our internal control over financial reporting. We will incur incremental costs in order to improve our internal control over financial reporting and comply with Section 404, including increased auditing and legal fees and costs

A principal factor in determining the initial public offering price for the shares sold in this offering will be the clearing price resulting from an auction conducted by us and the underwriters. The clearing price is the highest price at which all of the shares offered, including the shares subject to the over-allotment option, may be sold to potential investors. Although we and the underwriters may elect to set the initial public offering price below the clearing price, the public offering price may be at or near the clearing price. If there is little to no demand for our shares at or above the initial public offering price once trading begins, the price of our shares could decline following our initial public offering. If your objective is to make a short-term profit by selling the shares you purchase in the offering shortly after trading begins, you should not submit a bid in the auction.

The underwriters may require that bidders confirm their bids before the auction for our initial public offering closes. If a bidder is requested to confirm a bid and fails to do so within a required time frame, that bid will be rejected and will not receive an allocation of shares even if the bid is at or above the initial public offering price. Further, if the auction process leads to a pro rata reduction in allocated shares and a rounding down of share allocations pursuant to the rules of the auction, a bidder may not receive any shares in the offering despite having a bid at or above the initial public offering price range. In addition, we, in consultation with the underwriters, may determine, in our sole discretion, that some bids that are at or above the initial public offering price are manipulative or disruptive to the bidding process or are not creditworthy, or otherwise not in our best interest, in which case such bids will be reduced or rejected. Other conditions for valid bids, including suitability, eligibility and account opening and funding requirements of participating dealers may vary. As a result of these varying requirements, a bidder may have its participation or bid rejected by the underwriters or a participating dealer while another bidder’s identical bid is accepted.

If the initial public offering price is at or near the clearing price for the shares offered in this offering, the number of shares represented by successful bids will equal or nearly equal the number of shares offered by this prospectus. Successful bidders may therefore be allocated all or nearly all of the shares that they bid for in the auction. Therefore, we caution investors against submitting a bid that does not accurately represent the number of shares of its common stock that they are willing and prepared to purchase.

The public offering price for this offering is ultimately determined by negotiation between the underwriters and us after the auction closes and does not necessarily bear any direct relationship to our assets, current earnings or book value or to any other established criteria of value, although these factors are considered in establishing the initial public offering price. As a result, our initial public offering price may not be sustainable once trading begins, and the price of our common stock may decline.

Prior to this offering, there has not been a public market for shares of our common stock. We intend to apply to list as common stock on the NYSE Alternext. However, we cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the NYSE Alternext or otherwise or how liquid that market may become. If an active trading market does not develop, you may have difficulty selling any of our common stock that you purchase. The initial public offering price may not be indicative of the price at which our common stock will trade following completion of this offering. Consequently, the market price of shares of our common stock may decline below the initial public offering price, and you may not be able to resell your shares of our common stock at or above the price you paid in this offering.

Securities markets worldwide experience significant price and volume fluctuations. This market volatility as well as general economic, market or political conditions could reduce the market price of our common stock in spite of our operating performance. The trading price of our common stock is likely to be volatile and subject to wide price fluctuations in response to various factors, including:

These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have often instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.

The trading market for our common stock will in part be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrade our stock, or if our results of operations do not meet their expectations, our stock price could decline.

If our existing stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decrease significantly. The perception in the public market that our existing stockholders might sell shares of common stock could also depress our market price. These sales, or the possibility that these sales may occur, also might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities at a time and at a price we deem appropriate. We, our officers, directors and holders of substantially all of our common stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 360 days, 270 days or 180 days, as applicable, after the date of this prospectus, except with the prior written consent of the underwriters’ representatives. See “Plan of Distribution.”

Upon completion of this offering, we will have 12,389,791 shares of common stock outstanding. In addition, exercisable options for 249,560 shares of our common stock will be held by our employees and others. Our directors, executive officers and additional other holders of our common stock will be subject to the lock-up agreements described in “Plan of Distribution” and the Rule 144 holding period requirements described in “Shares Eligible for Future Sale.” After all of these lock-up periods have expired and the holding periods have elapsed, 8,457,412 additional shares will be eligible for sale in the public market. The market price of shares of our common stock may drop significantly when the restrictions on resale by our existing stockholders lapse.

Our principal stockholders, directors and executive officers and entities affiliated with them will own approximately 61.7% of the outstanding shares of our common stock after this offering. As a result, these stockholders, if acting together, would be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

Provisions contained in our amended and restated certificate of incorporation, amended and restated bylaws and our license agreement with AB-CWT and in Delaware law could make it more difficult for a third party to acquire us. Provisions of our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law impose various procedural and other requirements, which could make it more difficult for stockholders to effect certain corporate actions. Our amended and restated certificate of incorporation and bylaws provide for, among other things:

These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it

Further, we are the exclusive, worldwide licensee of patents and patent applications, a subset of which are directed to our proprietary TCP technology. We license these patents from AB-CWT, and AB-CWT has the right to terminate this license in the event we transfer or assign any of our exclusively licensed rights without prior written consent from AB-CWT, which may deter third parties from acquiring us.

We currently intend to retain our future earnings, if any, for the foreseeable future, to repay future indebtedness and to fund the development and growth of our business. We do not intend to pay any dividends in the foreseeable future to holders of our common stock. As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in our common stock.

The initial public offering price of our common stock will be substantially higher than the pro forma net tangible book value per share of the outstanding common stock immediately after the offering. Based on an assumed initial public offering price of $10.00 per share, the midpoint of the price range set forth on the cover of this prospectus, and our net tangible book value as of September 30, 2008, if you purchase our common stock in this offering you will pay more for your shares than the current net tangible book value and you will suffer immediate dilution of $5.73 per share in pro forma as adjusted net tangible book value. As a result of this dilution, investors purchasing stock in this offering may receive significantly less than the full purchase price that they paid for the shares purchased in this offering in the event of a liquidation because you may pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. If we grant options in the future to our employees, and those options are executed or other issuances of common stock are made, there will be further dilution.

This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and other words and terms of similar meaning or the negative of such terms.

These forward-looking statements are based on management’s expectations and beliefs concerning future events impacting us made in light of our industry experience and on our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among others:

There may be other factors that may cause our actual results to differ materially from the forward-looking statements.

Because of these factors, we caution that you should not place undue reliance on any of our forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Except as required by law, we have no duty to, and do not intend to, update or revise the forward-looking statements in this prospectus after the date of this prospectus.

This prospectus also contains market data related to our business and industry. This market data includes projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results may differ from the projections based on these assumptions. As a result, our markets may not grow at the rates projected by these data, or at all. The failure of these markets to grow at these projected rates may have a material adverse effect on our business, financial condition, results of operations and the market price of our common stock.

We estimate that the net proceeds from the sale by us of the shares of common stock being offered hereby, after deducting (i) underwriting discounts and commissions (ii) estimated expenses payable by us in connection with this offering and (iii) repayment of the promissory note issued to Weil, Gotshal & Manges LLP described below, will be approximately $24.5 million, assuming an initial public offering price of $10.00 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus. We intend to use approximately $2.1 million of the net proceeds of this offering to repay the promissory notes, including accrued interest, issued to Sterling Acquisitions, LLC in the principal amount of $615,000, Jerome Finkelstein in the principal amount of $417,500, Harold Finkelstein in the principal amount of $417,500, Gas Technology Institute in the principal amount of $150,000 and Eizel 33, LLC in the principal amount of $400,000. Each of the foregoing promissory notes has an interest rate of 18% per annum and will mature on the earlier to occur of March 31, 2009 or the consummation of this offering. These promissory notes were issued in connection with short-term borrowings used for working capital. See “Certain Relationships and related Person Transactions-Certain Related Party Transactions.” We intend to use approximately $1.0 million of the proceeds of this offering to repay the promissory note, including accrued interest, issued to Weil, Gotshal & Manges LLP in lieu of payment of accrued legal fees and expenses. The estimated net proceeds of approximately $24.5 million are net of this payment. The promissory note issued to Weil, Gotshal & Manges LLP has an interest rate of 3% per annum and will mature on the earlier to occur of March 31, 2009 or the consummation of this offering. See “Legal Matters.” We intend to use the remaining net proceeds of this offering for general corporate and working capital purposes, including the initial development of new facilities. We currently have no agreements or commitments with respect to the development or construction of new facilities and, accordingly, we are unable to estimate the amount of proceeds that will be used for any particular project. Pending the use of the net proceeds described above, we intend to invest the net proceeds in short-term investment grade, interest-bearing instruments.

We have never declared or paid cash dividends on our common stock. We currently intend to retain earnings, if any, to finance the growth and development of our business, and we do not expect to pay any cash dividends on our common stock in the foreseeable future. Any decision to declare and pay dividends in the future will be at the discretion of our board of directors and will depend on many factors, including general economic and business conditions, our strategic plans, our financial results and condition, legal requirements, contractual restrictions and other factors as our board of directors deems relevant.

The following table sets forth our cash and cash equivalents and our capitalization as of September 30, 2008 on (i) an actual basis, after giving effect to the seven for one stock split and a subsequent one for three reverse stock split of our common stock, (ii) a pro forma basis after giving effect to:

This table should be read in conjunction with “Use of Proceeds,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus.

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of common stock immediately upon the completion of this offering.

Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the existing stockholders for the presently outstanding stock. Our net tangible book value after giving effect to the seven for one stock split and a subsequent one for three reverse stock split of our common stock represents our total tangible assets (total assets less intangible assets) less total liabilities as of September 30, 2008, divided by the total number of shares of common stock outstanding.

Pro forma net tangible book value adjusts net tangible book value to give effect to: (i) the completion of a secured debt and warrant financing for aggregate net proceeds of $2.0 million, which was completed in December 2008; (ii) the automatic conversion of all outstanding shares of preferred stock into 455,189 shares of common stock in connection with this offering; and (iii) our amended and restated certificate of incorporation. Our pro forma net tangible book value as of September 30, 2008 was $28.9 million, or $3.00 per share.

After giving effect to (i) the sale by us of 2,750,000 shares of our common stock in this offering, assuming an initial public offering price of $10.00 per share, the midpoint of the estimated price range shown on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions, estimated offering expenses and the repayment of the promissory note issued to Weil, Gotshal & Manges LLP; (ii) the receipt of the net proceeds from this offering; and (iii) the repayment of the promissory notes issued to certain affiliates in connection with the secured debt and warrant financing, which was completed in December 2008, our pro forma as adjusted net tangible book value as of September 30, 2008 would have been approximately $52.9 million, or $4.27 per share. This represents an immediate increase in pro forma net tangible book value of $1.27 per share to our existing stockholders and an immediate dilution in net tangible book value of $5.73 per share to new investors purchasing shares of common stock in this offering at the initial offering price.

The following table illustrates this substantial and immediate dilution to new investors on a per share basis:

The following table summarizes, on the same pro forma basis as of September 30, 2008, the total number of shares of our common stock purchased from us, the total consideration paid to us, assuming an initial public offering price of $10.00 per share, the midpoint of the initial public offering

The above discussion and tables:

If the underwriters’ option to purchase additional shares of our common stock is exercised in full:

Assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, a $0.25 increase (decrease) in the assumed initial public offering price of $10.00 per share, the midpoint of the range set forth on the cover page of this prospectus, would:

In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

The following table sets forth our selected historical consolidated financial and other data for the periods and at the dates indicated. The selected historical consolidated financial data for the years ended December 31, 2005, 2006 and 2007 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical financial data for the year ended December 31, 2004 is derived from our audited consolidated financial statements that are not included in this prospectus. The selected historical financial data for the year ended December 31, 2003 is derived from our unaudited financial statements that were not included in this prospectus. The selected historical consolidated financial data for the nine months ended September 30, 2007 and 2008 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our operating results and financial position for those periods and as of such dates. The results for any interim period are not necessarily indicative of the results that may be expected for a full year.

The consolidated financial data for the year ended December 31, 2005 reflects our acquisition of the portion of the RES, our joint venture with ConAgra, that we did not already own in July 2005. Prior to the RES acquisition we used the equity method of accounting for our 50% investment in RES. Commencing August 1, 2005, RES became a wholly-owned subsidiary and is included in our consolidated financial statements.

The results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this information together with “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes.

The following discussion should be read in conjunction with the information contained elsewhere in this prospectus under the caption “Selected Historical Consolidated Financial Data,” and our consolidated financial statements and related notes thereto. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those set forth in the sections entitled “Risk Factors” and “Forward-Looking Statements” and elsewhere in this prospectus.

We sell renewable diesel fuel oil and organic fertilizers which we currently produce from animal and food processing waste using TCP. TCP can convert a broad range of organic wastes, or feedstock, including animal and food processing waste, trap and low-value greases, mixed plastics, rubber and foam, into our products. We began development of TCP in 1997. In 1999, we commenced operations of our seven ton per day pilot facility for animal and food processing waste located at our research and development facility in Philadelphia, Pennsylvania. We commenced development of our first production facility in Carthage, Missouri in 2002. The Carthage facility was commissioned in 2005. From 2005 to 2007, we developed and refined the equipment, procedures and processes at our Carthage facility to bring TCP from demonstration status to production. Our Carthage facility currently has the capacity to convert 78,000 tons of animal and food processing waste into approximately 4 million to 9 million gallons of renewable diesel per year, depending on the feedstock mix. We commenced commercial sales of our renewable diesel in 2007. In the nine months ended September 30, 2008, we produced approximately 1,095,000 gallons of renewable diesel. In 2007, we commenced production of our fertilizers. In the nine months ended September 30, 2008, we produced approximately 223,000 gallons of liquid nitrogen concentrate fertilizer and approximately 3,300 tons of solid mineral phosphate fertilizer. We commenced sales of our liquid nitrogen concentrate fertilizer in the second quarter of 2008. We are in our initial phase of introducing our solid mineral phosphate fertilizer into the marketplace, and the costs of producing our solid mineral phosphate fertilizer has been written off until a market and pricing structure can be established.

In December 2000, we entered into a license agreement with ConAgra for the development of TCP for the conversion of animal and food processing waste into renewable diesel and fertilizers. A license fee of $2.3 million was paid to us under that agreement. Simultaneously, we entered into an exclusive joint venture and formed Renewable Environmental Solutions, LLC., or RES, with ConAgra Poultry Company, or CPC, as equal partners, to commercialize the use of TCP under the license agreement with our subsidiary Resource Recovery Corporation, or RRC, for processing animal and food processing waste worldwide. In July 2003, CPC assigned its ownership interest in RES to ConAgra Foods Refrigerated Foods Co., Inc., or CRF, in conjunction with the sale of CPC to Pilgrim’s Pride Corporation. In July 2005, CRF’s 50% interest in RES, plus cash in the amount of $2.0 million was exchanged for 978,689 shares of our common stock and a warrant, expiring July 2010, to purchase 327,488 shares of our common stock at $30.54 per share. As a result of this exchange, RES became our wholly-owned subsidiary and the licensing agreement was terminated. The RES acquisition was accounted for under the purchase method of accounting. We allocated the purchase price to the tangible and intangible assets and liabilities, which were recorded at their respective fair values. The excess of cost over the fair value of the identifiable assets and liabilities was recorded as goodwill. In 2005, we recorded an impairment of goodwill of $13.7 million, the entire amount of the purchase price of the RES acquisition that was allocated to goodwill. During the nine months ended September 30, 2008, we identified certain property, plant and equipment which are no longer being utilized due to process improvements implemented during 2008. We recorded a charge for the remaining net book value of the assets of approximately $1.2 million during the nine months ended September 30, 2008. Prior to the RES acquisition, we used the equity method of accounting for our

Our Carthage facility is located next to a Butterball turkey processing plant, which is the principal source of our feedstock. We have a supply agreement for turkey food processing waste for our Carthage facility, which expires in May 2010. Pursuant to our take or pay contract with Butterball, we paid Butterball $1.3 million, $788,000, $1.7 million and $2.7 million in 2005, 2006 and 2007 and the nine months ended September 30, 2008, respectively.

We sell our renewable diesel in the industrial fuel oil market. Through December 31, 2007, we sold approximately 3.1 million gallons of renewable diesel produced at our Carthage facility. In 2008, we entered into agreements with two customers for 100% of our current renewable diesel production capacity. One customer, Schreiber, accounted for approximately 72.9% and 78.1% of our revenues in 2007 and the nine months ended September 30, 2008, respectively. Dyno Nobel accounted for approximately 14.3% of our revenues in the nine months ended September 30, 2008. We commenced the sale of our liquid nitrogen concentrate fertilizer in the second quarter of 2008.

Our consolidated results of operations reflect principally the activity in our Carthage facility, which has not operated at full capacity for the following reasons:

Revenues.  Our revenues are principally derived from sales of our renewable diesel. We sell our renewable diesel on a Btu pricing basis that is competitive with other burner fuels such as diesel oil or natural gas. The average price per gallon of renewable diesel we received in 2005, 2006 and 2007 and the nine months ended September 30, 2008 was $0.48, $0.14, $0.64 and $1.19, respectively. Although we currently base the price of our renewable diesel primarily on the prevailing market price of natural gas, which is the principal industrial boiler fuel used in the geographic market in which we sell our renewable diesel, in the future we plan to sell our renewable diesel in geographic markets where the principal industrial boiler fuel is No. 2 Heating Oil and, accordingly, set the price based on the prevailing market price for No. 2 Heating Oil in these markets. We sold approximately 367,000, 1.8 million, 911,000 and 684,000 gallons of our renewable diesel, respectively, in 2005, 2006 and 2007 and the nine months ended September 30, 2008. Sales of our renewable diesel will be the principal source of revenues for the foreseeable future. In the third quarter of 2008, we also generated revenues from the sale of our liquid nitrogen concentrate fertilizer. Revenues from the sale of fertilizer are accounted for on a cash basis as collectability is uncertain. For the nine months ended September 30, 2008, we sold approximately 235,000 gallons of our liquid nitrogen concentrate fertilizer at an average price per gallon of $0.28.

Cost of Goods Sold.  Cost of goods sold primarily consists of the cost of obtaining feedstock. Our primary feedstock is the turkey food processing waste that we obtain under our Butterball supply agreement. We also purchase other animal and food processing waste and trap and low-value greases, depending on availability and cost. In certain circumstances, we do not have to pay for

The other major components of cost of goods sold, which principally relate to our Carthage facility, include:

The principal performance metric that we use to evaluate our costs of goods sold is our cash production cost per gallon of renewable diesel. Our cash production cost per gallon is calculated by dividing our total cost of goods sold less non-cash charges, such as depreciation and amortization, by the number of gallons of renewable diesel produced. For the nine months ended September 30, 2008, our cash production cost per gallon at our Carthage facility was $11.18. Our Carthage facility is our first production facility and was initially designed to demonstrate the viability and scalability of TCP. Our Carthage facility was also initially designed to produce commercial quantities of renewable diesel that would be sufficient to demonstrate that customers would be willing to purchase our renewable diesel if sufficient quantities were available and that our renewable diesel meets performance characteristics for use in industrial boilers. Our current cash production cost reflects our relatively high feedstock costs due to the commercial terms of our historical arrangements with Butterball and the relatively low output provided by turkey food processing waste, our current primary feedstock. In addition, operational inefficiencies caused by the initial design of, and sub-optimal performance of various equipment initially used at, our Carthage facility limited the operational availability. This required us to redesign our plant processes, install replacement equipment and incur significant labor and maintenance costs. These operational inefficiencies also required us to dispose of, rather than process, our feedstock and incur related costs.

In the future, we believe our cash production cost will be lower than our current cash production cost per gallon as we:

The demand for our renewable diesel is still emerging and does not currently coincide with our production cycle. While we are seeking to increase our customer base and demand for our renewable diesel, we are currently required to hold excess renewable diesel in inventory. Inventory items are stated at the net amount that we expect to realize from the sale of our inventory, which is determined based on the lower of production cost or the market value of the renewable diesel held in inventory and is charged to cost of goods sold. Since our production costs are relatively high at our current stage of development and the price we receive for our renewable diesel in the market is relatively low given that the demand and market acceptance for our renewable diesel is still emerging, the adjustments to the value of our renewable diesel inventory have been significant. We expect that the adjustment will decrease in future periods as we decrease our production costs. In addition, as demand for our renewable diesel and fertilizers increase, we anticipate that the market value of our products will increase and will ultimately exceed our production costs, further reducing or eliminating the inventory adjustment.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses consist primarily of salaries and benefits for general and administrative and sales and marketing personnel, sales and marketing costs, rent and other occupancy costs, travel and entertainment costs and professional fees. We anticipate adding office space in the next several years, which will increase our rent and associated occupancy costs. We expect our selling, general and administrative expenses to increase significantly as we hire additional personnel to manage our anticipated facility expansion. We also anticipate incurring additional expenses as a public company following the completion of this offering, including additional legal and corporate governance expenses, such as costs associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002, salary and payroll-related costs for additional accounting and internal audit personnel, and listing and transfer agent fees.

Research and Development Expenses.  Research and development expenses consist primarily of salaries and benefits for our research and development personnel and costs associated with operating our engineering research facility and pilot facility in Philadelphia. We anticipate that research and development expenses will increase modestly as we develop TCP to handle other types of feedstock and seek to improve the performance and efficiency of TCP.

Other Operating Expenses.  Other operating expenses consist of impairment to property, plant and equipment and impairment of goodwill associated with the RES acquisition. As of September 30, 2008, we had no goodwill on our balance sheet.

Other Income.  Other income consists primarily of renewable diesel mixture tax credit and interest income. We receive a $1.00 per gallon excise renewable diesel mixture tax credit from the U.S. government for each gallon of renewable diesel we sell in the United States. Because we have no fuel excise tax payable, we receive a direct cash payment in the amount of the renewable diesel mixture tax credit. Interest income is based on the amount of our invested cash balances and prevailing interest rates. We also record grant monies that we receive in other income.

Our consolidated financial statements included in this prospectus have been prepared in accordance with accounting principles generally accepted in the United States. Note 1 of our consolidated financial statements includes a summary of our significant accounting policies, certain of which require the use of estimates and assumptions. Accounting estimates are an integral part of the preparation of financial statements and are based on judgments by management using its knowledge and experience about the past and current events and assumptions regarding future events, all of which we consider to be reasonable. These judgments and estimates reflect the effects of matters that are inherently uncertain and that affect the carrying value of our assets and liabilities, the disclosure of contingent liabilities and reported amounts of expenses during the reporting period.

The accounting estimates and assumptions discussed in this section are those that involve significant judgments and the most uncertainty. Changes in these estimates or assumptions could materially affect our financial position and results of operations.

Our inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market. We evaluate our inventories to determine excess or slow moving products based on quantities on hand, current orders and expected future demand. Inventory items, of which we have an excess supply, are stated at the net amount that we expect to realize from the sale of such products. The difference between our carrying cost and the net amount we expect to realize from the sale of our inventory, which is determined based on the lower of production cost or the market value of the renewable diesel held in inventory, is charged to cost of sales.

We account for our investments in long-lived assets in accordance with Statement of Financial Accounting Standards, or SFAS, No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS No. 144. SFAS No. 144 requires a company to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors we consider important, which could trigger an impairment review, include, among others, the following:

We periodically evaluate the recoverability of the net carrying value of our long lived assets. An impairment loss is recognized when the carrying value of the long-lived assets exceeds its undiscounted future cash flows and its fair value. A loss on impairment would be recognized through a charge to operating loss.

In early 2005, RES identified certain facility equipment that was no longer in usable condition or related to an operating activity that it decided not to pursue. Accordingly, RES recorded an impairment loss of $5.0 million in 2005. The assets that were deemed to be impaired were determined to have no value to RES.

We account for income taxes using the liability method of accounting for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” or SFAS 109. Under this method, deferred income taxes are recognized for the future tax consequence of differences between the tax and financial reporting basis of assets and liabilities at each reporting period. A valuation allowance is established to reduce deferred tax assets to the amounts expected to be realized.

On January 1, 2007, we adopted Financial Accounting Standards Board, or FASB, Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” or FIN 48, which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS 109. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosure and transition. We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. However, we cannot predict with certainty the interpretations or positions that tax authorities may take regarding specific tax returns filed by us and, even if we believe our tax positions are correct, we may determine to make settlement payments in order to avoid the costs of disputing particular positions taken. No reserves for uncertain income tax positions have been recorded pursuant to FIN 48. In addition, we did not record a cumulative effect adjustment related to the adoption of FIN 48.

Effective January 1, 2006, we adopted SFAS No. 123(R), “Share-Based Payment,” or SFAS 123(R), and related interpretations, which superseded the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” or APB 25, and related interpretations. SFAS 123(R) requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award. SFAS 123(R) was adopted using the modified prospective method, which requires us to recognize compensation expense on a prospective basis. Therefore, prior period financial statements have not been restated. Under this method, in addition to reflecting compensation expense for new share-based awards, expense is also recognized to reflect the remaining service period of awards that had been granted in prior periods.

With the adoption of SFAS 123(R), we are required to record the fair value of stock-based compensation awards as an expense. In order to determine the fair value of stock options on the date of grant, we utilize the Black-Scholes option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility, option life, risk-free interest rate and dividend yield. While the risk-free interest rate and dividend yield are less subjective assumptions, typically based on factual data derived from public sources, the expected stock-price volatility and option life assumptions require a greater level of judgment which makes them critical accounting estimates. We use an expected stock-price volatility assumption which is primarily based on the average implied volatility of the stock of a group of comparable alternative energy companies, whose stocks are publicly traded.

The weighted average assumptions used for stock-based compensation awards for each of the periods presented are as follows:

The following table sets forth the amount of expense related to stock-based payment arrangements included in specific line items in the accompanying consolidated statement of operations for the following periods:

As of December 31, 2007, there was $208,330 of total unrecognized compensation cost related to nonvested, stock-based compensation granted under our stock option and restricted stock plans, which will be recognized using the fair value method over a weighted average remaining life of approximately 1.5 years.

On August 11, 2008, we issued options to purchase 210,466 shares of common stock of which options to purchase 110,833 shares of common stock are performance based. We determined the fair value of the stock options using the Black-Scholes option pricing model with the following assumptions: fair market value of common stock of $26.25, exercise price of $30.54, risk free interest of 3.27%, volatility of 65%, dividend yield of $0 and life of five years. The fair market value of common shares was determined using a discounted cash flow approach that uses recent historical and projected cash flow, comparables to similar companies and certain discount factors based on comparable companies. The non-performance based stock options vest immediately upon issuance. As such, we have recorded an expense of approximately $1.4 million during the nine months ended September 30, 2008.

We recognize revenue on the sale of our products when title and risk of loss has passed to our customer, the sales price is fixed or determinable and collectibility is reasonably assured, which is generally upon shipment to the customer.

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” or SFAS 142, we review the carrying value of goodwill annually and whenever indicators of impairment were present. We measure impairment losses by comparing the carrying value of our reporting units to the fair value of our reporting units determined using a discounted cash flow method.

At December 31, 2005, we reviewed the goodwill resulting from the acquisition of RES and determined that the value was fully impaired. We followed the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” or SFAS 142, and performed our annual goodwill impairment test on the first day of the fourth quarter of 2005. The goodwill of RES was determined to be impaired as the carrying amount of RES exceeded its estimated fair value. The fair value was determined using a discounted cash flows method.

Total Revenues.  Revenues increased 77.9% to $863,000 for the nine months ended September 30, 2008 from $485,000 for the nine months ended September 30, 2007. The increase was attributable to increased sales to an existing customer pursuant to an agreement entered into with Schreiber in March 2008, sales to a new customer pursuant to an agreement entered into with Dyno Nobel in May 2008, and an increase in the price of our renewable diesel due to an increase in the price of natural gas. In the nine months ended September 30, 2008, we sold approximately 684,000 gallons of renewable diesel at an average price per gallon of $1.19, without giving effect to the renewable diesel mixture tax credit. In the nine months ended September 30, 2007, we sold approximately 768,000 gallons of renewable diesel for an average price of $0.63 per gallon, without giving effect to the renewable diesel mixture tax credit. In addition, during the nine months ended September 30, 2008, we sold approximately 235,000 gallons of our liquid nitrogen concentrate fertilizer at an average price of $0.28 per gallon. Fertilizer sales are recognized on a cash basis due to the uncertainty in collectability and represented 7.6% of revenues, or $65,000, for the nine months ended September 30, 2008.

Cost of Goods Sold.  Cost of goods sold increased 20.8% to $14.5 million for the nine months ended September 30, 2008 from $12.0 million for the nine months ended September 30, 2007. The increase was attributable to increased feedstock, disposal and transportation costs, as well as an increase in cost of natural gas. We produced approximately 1,095,000 gallons of renewable diesel for the nine months ended September 30, 2008 from 825,000 gallons of renewable diesel for the nine months ended September 30, 2007. For the nine months ended September 30, 2008, feedstock, disposal and transportation costs totaled $3.6 million and plant operating expenses totaled $10.9 million. For the nine months ended September 30, 2007, feedstock, disposal and transportation costs totaled $3.0 million and plant operating expenses totaled $9.0 million. The cost of natural gas used to operate our Carthage facility as a percentage of cost of goods sold was 6.2%, or $893,000, for the nine months ended September 30, 2008 as compared to 6.9%, or $827,000, for the nine months ended September 30, 2007.

Selling, General and Administrative Expenses.  Selling, general, and administrative expenses increased 26.2% to $5.3 million for the nine months ended September 30, 2008 from $4.2 million for the nine months ended September 30, 2007. The increase was principally due to increased stock-based compensation expense from the issuance of stock options on August 11, 2008. In 2007, we incurred less substantial professional fees related to a proposed financing transaction that was not completed.

Research and Development Expenses.  Research and development expenses remained relatively consistent and was $878,000 for the nine months ended September 30, 2008 as compared to $870,000 for the nine months ended September 30, 2007. The increase was a result of the timing of research and development activities.

Other Income.  Other income decreased 38.0% to $989,000 for the nine months ended September 30, 2008 from $1,596,000 for the nine months ended September 30, 2007. The decrease was primarily due to approximately $400,000 in grant monies which were received for the nine months ended September 30, 2007 but were not received in the nine months ended September 30, 2008. The renewable diesel mixture tax credit decreased 11% to $684,000 for the nine months ended September 30, 2008 from $768,000 for the nine months ended September 30, 2007. Interest income received on our available cash decreased $104,000, which was $219,000 for the nine months ended September 30, 2008 compared to $323,000 for the nine months ended September 30, 2007. The decrease was primarily due to a lower cash balance available for investment.

Total Revenues.  Revenues increased 125.7% to $589,000 for the year ended December 31, 2007 from $261,000 for the year ended December 31, 2006. The increase was attributable to $429,000 in sales to a new customer 2007. In 2007, we sold 911,000 gallons at an average price per gallon of $0.64. In 2006, we sold approximately 1.8 million gallons at an average price per gallon of $0.14. The average price per gallon in 2006 was lower than 2007 because we discounted our prices significantly in 2006 for off-specification fuel sold to our customers. During the development and commissioning phases of our Carthage facility and for periods thereafter, we were unable to obtain consistent quantities of suitable feedstock and, therefore, were unable to establish sales contracts with large customers, which caused wide variations in our revenues.

Cost of Goods Sold.  Cost of goods sold decreased 3.1% to $15.9 million for the year ended December 31, 2007 from $16.5 million for the year ended December 31, 2006. The decrease was primarily a result of reduction in diversion and disposal costs resulting from improved reliability of our Carthage facility and the availability of lower cost disposal options. For the year ended December 31, 2007, cost of goods sold included retrofitting the boiler for a new customer. We produced approximately 1.1 million gallons in 2007 as compared to 1.6 million gallons in 2006. For the year ended December 31, 2007, feedstock, disposal and transportation costs totaled $4.0 million and facility operating expenses totaled $12.0 million. For the year ended December 31, 2006, feedstock, disposal and transportation costs totaled $4.4 million and facility operating expenses totaled $12.0 million. The cost of natural gas used to operate our Carthage facility as a percentage of cost of goods sold was 7.0%, or $1.1 million, for the year ended December 31, 2007 as compared to 6.7%, or $1.1 million, for the year ended December 31, 2006.

Selling, General and Administrative Expenses.  Selling, general, and administrative expenses decreased 9.3% to $5.3 million for the year ended December 31, 2007 from $5.9 million for the year ended December 31, 2006. The decrease was a result of reduced salary costs due to management personnel changes.

Research and Development Expenses.  Research and development expenses decreased 30.1% to $1.2 million for the year ended December 31, 2007 from $1.7 million for the year ended December 31, 2006. The decrease was primarily the result of costs in 2006 associated with the development of TCP to handle other feedstock which were not incurred in 2007.

Other Income.  Other income decreased 9.4% to $2.0 million for the year ended December 31, 2007 from $2.2 million for the year ended December 31, 2006. The decrease was

Total Revenues.  Revenues increased 96.2% to $261,000 for the year ended December 31, 2006 from $133,000 for the year ended December 31, 2005. The increase was attributable to increased sales of renewable diesel during 2006 and our accounting of the results of RES on an equity basis rather than a consolidated basis for the first seven months of 2005. In 2006, we sold approximately 1.8 million gallons of renewable diesel at an average price per gallon of $0.14. In 2005, we sold approximately 367,000 gallons at an average price per gallon of $0.48.

Cost of Goods Sold.  Cost of goods sold increased 170.9% to $16.5 million for the year ended December 31, 2006 from $6.1 million for the year ended December 31, 2005. Prior to August 2005, we did not record costs of goods sold. The cost of goods sold incurred prior to August 2005 was recorded by RES. We produced approximately 1.6 million gallons in 2006 and 949,000 gallons in 2005. For the year ended December 31, 2006, feedstock, disposal and transportation costs totaled $4.4 million and facility operating expenses totaled $12.0 million. For the year ended December 31, 2005, feedstock, disposal and transportation costs totaled $2.7 million and facility operating expenses totaled $3.3 million. The cost of natural gas used to operate our Carthage facility as a percentage of cost of goods sold was 6.7%, or $1.1 million, for the year ended December 31, 2006 as compared to 5.1%, or $313,000, for the year ended December 31, 2005.

Selling, General and Administrative Expenses.  Selling, general, and administrative expenses increased 73.1% to $5.9 million for the year ended December 31, 2006 from $3.4 million for the year ended December 31, 2005. In 2005 we recorded selling, general and administrative expenses for the five month period after the RES acquisition, as compared to the full year in 2006.

Research and Development Expenses.  Research and development expenses decreased 15.5% to $1.7 million for the year ended December 31, 2006 from $2.0 million for the year ended December 31, 2005. The decrease was the result of a decrease in staffing at our Philadelphia facility in 2006 which was offset in part by the fact that research and development expenses for 2005 only reflect expenses for the five month period after the RES acquisition.

Impairment of Long-lived Assets.  The impairment of long-lived assets increased to $157,000 for the year ended December 31, 2006 from $1,000 for the year ended December 31, 2005 and were both due to write-offs of property, plant and equipment.

Impairment of Goodwill.  There was no recorded goodwill for the year ended December 31, 2006. The impairment of goodwill for the year ended December 31, 2005 of $13.7 million related to impairment of goodwill associated with the RES acquisition.

Other Income.  Other income increased to $2.2 million for the year ended December 31, 2006 from $458,000 for the year ended December 31, 2005. The increase in other income was primarily due to higher renewable diesel mixture tax credit payments as a result of the increase in gallons sold. Renewable diesel mixture tax credit totaled $1.8 million in 2006, and we did not receive any renewable diesel mixture tax credit payments in 2005. The remaining variance in other income was the result of increased interest income and the elimination of management fees paid by RES prior to the RES acquisition.

We have incurred substantial operating losses since our inception due in large part to expenditures for our research and development activities, including the development of our Carthage facility. Our recurring losses from operations raise substantial doubt about our ability to continue as a going concern. As of September 30, 2008 (unaudited) and December 31, 2007, we had an accumulated deficit of $117.8 million and $99.0 million, respectively. We have financed our operations through the proceeds from the sales of equity securities, revenues from sales of renewable diesel and fertilizer, renewable diesel mixture tax credits and grants. From 2005 through September 30, 2008, we raised an aggregate of $75.7 million in private placements of equity securities. In December 2008, we completed a secured debt and warrant financing for aggregate net proceeds of $2.0 million whereby we issued promissory notes in an aggregate principal amount of $2.0 million that will mature on the earlier to occur of March 31, 2009 or the consummation of this offering and warrants to purchase an aggregate of 116,667 shares of our common stock at an exercise price of $30.54 per share. The promissory notes are fully secured by all of our assets and have an interest rate of 18% per annum. The warrants are exercisable beginning January 2010 and expire in December 2013. We determined the fair value of the warrants, $653,333, using the Black-Scholes option-pricing model with the following assumptions: a fair market value of common stock of $11.00 per share, exercise price of $30.54 per share, risk free interest rate of 1.47%, volatility of 88.13%, dividend yield of $0 and life of five years. The promissory notes will be recorded at their relative fair value of $1.5 million and the warrants will be recorded as additional paid in capital at their relative fair value of $492,462. Without the proceeds of this offering, we will need to obtain additional debt and equity financing to fund our operations after February 2009. We believe that our existing cash, together with the proceeds of this offering, will be sufficient to fund our operations through 2009. We will need to obtain additional debt and equity financing to develop and construct new facilities and further implement our expansion strategy in the future.

In December 2008, we issued a promissory note to Weil, Gotshal & Manges LLP in the principal amount of $1.0 million in lieu of payment of accrued legal fees and expenses. The promissory note issued to Weil, Gotshal & Manges LLP has an interest rate of 3% per annum and will mature on the earlier occur of March 31, 2009 or the consummation of this offering.

In connection with a permitting process for our research and development facility in Philadelphia, certificates of deposit in the amount of $156,000 were placed as security for potential environmental expenses with Pennsylvania’s Department of Environmental Protection, Bureau of Land Recycling and Waste Management.

The following table summarizes our cash flow activities from January 1, 2005 through September 30, 2008.

Net cash used in operating activities was $14.9 million, $12.7 million, $17.8 million, $17.9 million and $10.1 million for the nine months ended September 30, 2008 and 2007 and for the years ended December 31, 2007, 2006 and 2005, respectively. The primary increase in the amount of cash used in operating activities subsequent to 2005 was due to the RES acquisition. Prior to August 2005, all cash

Net cash used in investing activities was $1.6 million, $1.8 million, $2.3 million, $3.1 million and $8.2 million for the nine months ended September 30, 2008 and 2007 and for the years ended December 31, 2007, 2006 and 2005, respectively. In 2005, $6.2 million in cash was used to fund RES. During the nine months ended September 30, 2008 and 2007 and for the years 2007, 2006 and 2005, cash used to purchase property, plant and equipment amounted to $1.6 million, $1.8 million, $2.3 million, $3.1 million and $2.0 million, respectively.

Net cash provided by financing activities was $7.5, $28.3, $28.3 million, $17.1 million and $25.0 million for the nine months ended September 30, 2008 and 2007 and for the years ended December 31, 2007, 2006 and 2005, respectively. In 2005 and 2006, cash provided by financing activities reflected the net proceeds from the sale of equity securities. In 2007, our cash flows from financing activities reflected the net proceeds from the sale of equity securities as well as net proceeds from issuance of convertible debt which were converted in 2007 and proceeds from the exercise of stock options.

We have no off-balance sheet arrangements.

The following summarizes our contractual obligations as of December 31, 2007:

We and AB-CWT, a related party, are jointly and severally liable under a settlement agreement to pay $10,000 per month to Paul T. Baskis, one of the original inventors of the technology underlying TCP, until the last to expire of certain patents licensed to us by AB-CWT. We are liable for this payment through October 2012. AB-CWT has acknowledged that it is the primary obligor under that settlement, has made all payments under that settlement and has stated its intention to continue to make the payments required under that settlement. However, since we are the principal source of revenue for AB-CWT, we have determined that we should record the payment obligations as a liability. As of December 31, 2007, we have a liability of approximately $437,000 recorded. As AB-CWT makes the required settlement payments, we record the reversal of the prior charge under selling, general and administrative expenses. We reversed approximately $34,000, $23,000, $28,000 and $112,000 for the years ended December 2005, 2006 and 2007, and the nine months ended September 30, 2008, respectively.

In December 2008, we completed a secured debt and warrant financing for aggregate net proceeds of $2.0 million whereby we issued promissory notes in an aggregate principal amount of $2.0 million that will mature on the earlier to occur of March 31, 2009 or the consummation of this offering and warrants to purchase an aggregate of 116,667 shares of our common stock at an exercise price of $30.54 per share. The promissory notes are fully secured by all of our assets and have an interest rate of 18% per annum. The warrants are exercisable beginning January 2010 and expire in December 2013. We determined the fair value of the warrants, $653,333, using the Black-Scholes option-pricing model with the following assumptions: a fair market value of common stock of $11.00 per share, exercise price of $30.54 per share, risk free interest rate of 1.47%, volatility of 88.13%, dividend yield of $0 and life of five years. The promissory notes will be recorded at their relative fair value of $1.5 million and the warrants will be recorded as additional paid in capital at their relative fair value of $492,462.

In December 2008, we issued a promissory note to Weil, Gotshal & Manges LLP in the principal amount of $1.0 million in lieu of payment of accrued legal fees and expenses. The promissory note issued to Weil, Gotshal & Manges LLP has an interest rate of 3% per annum and will mature on the earlier occur of March 31, 2009 or the consummation of this offering.

We are subject to market risk with respect to changes in prices for natural gas used in our Carthage facility, fuel oil and natural gas market prices and feedstock prices.

We are subject to market risk with respect to natural gas which is consumed in the conversion of waste and has historically been subject to volatile market conditions. Natural gas prices and availability are affected by weather conditions, overall economic conditions and foreign and domestic governmental regulation and relations. The price fluctuation of natural gas over the last three years from December 31, 2005 to December 31, 2008, based on the New York Mercantile Exchange daily futures data, has ranged from a low of $4.89 per MMBtu in September 2006 to a high of $13.58 per MMBtu in July 2008. Natural gas costs comprised about 8% of our total cost of sales for the year ended December 31, 2007. Further, we are exposed to market risk with respect to natural gas as we currently price our renewable diesel primarily based on the price of natural gas.

We are exposed to market risks with respect to our renewable diesel sales related to the volatility of No. 2 Heating Oil and natural gas prices, as we intend to price our renewable diesel at parity with No. 2 Heating Oil on a Btu basis. Our financial results can be affected significantly by fluctuations in these prices, which depend on many factors, including demand for boiler fuels, prevailing economic conditions, worldwide production levels, worldwide inventory levels and governmental relations, regulatory initiatives and weather conditions. The price fluctuation of No. 2 Heating Oil over the last three years from December 31, 2005 to December 31, 2008, based on the New York Mercantile Exchange daily futures data, has ranged from a low of $1.27 per gallon in December 2008 to a high of $4.11 per gallon in July 2008. The price fluctuation of natural gas over the last three years from December 31, 2005 to December 31, 2008, based on the New York Mercantile Exchange daily futures data, has ranged from a low of $4.89 per MMBtu in September 2006 to a high of $13.58 per MMBtu in July 2008.

In order to manage the uncertainty relating to price volatility, we have applied a policy of avoiding inventory build and to sell our renewable diesel as manufactured to meet our commitments.

We are subject to market risk with respect to the price and availability of feedstock. In general, feedstock prices in the United States are influenced by the rate of food processing by our suppliers, seasonality, weather conditions and impact on transportation and facility operations, the supply and demand for use in the animal feed industry, as well as the availability and pricing of substitute feedstock. Additionally, the effect of laws and regulations for the use of feedstock in the animal feed industry will also impact its pricing. Higher feedstock costs result in higher cost of goods sold and lower profit margins.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles,” or “SFAS No. 162.” SFAS No. 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles. SFAS No. 162 will become effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company does not anticipate the adoption of SFAS No. 162 will have a material impact on its results of operations, cash flows or financial condition.

On April 25, 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, “Determination of the Useful Life of Intangible Assets.” This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets,” or SFAS 142. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other generally accepted accounting principles. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. We are currently evaluating the impact, if any, that this FSP will have on our results of operations, financial position or cash flows.

Effective January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements,” or SFAS 157, for assets and liabilities measured at fair value on a recurring basis. SFAS 157 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of SFAS 157 did not have an impact on our financial position or operating results, but did expand certain disclosures. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, SFAS 157 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

We did not have any Level 2 or Level 3 assets or liabilities as of September 30, 2008. Cash and cash equivalents and restricted cash of approximately $3.7 million and $156,000, respectively, included money market securities and short-term certificate of deposits that are considered to be highly liquid and easily tradable as of September 30, 2008. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

In addition, SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” or SFAS 159, became effective on January 1, 2008. SFAS 159 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. We did not elect the fair value options for any of our qualifying financial instruments.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations,” or SFAS 141R, a replacement of FASB Statement No. 141. SFAS 141R is effective for fiscal years beginning on or after December 15, 2008 and applies to all business combinations. SFAS 141R provides that, upon initially obtaining control, an acquirer shall recognize 100% of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100% of its target. As a consequence, the current step acquisition model will be eliminated. Additionally, SFAS 141R changes current practice, in part, as follows: (1) contingent consideration arrangements will be recorded at fair value at the acquisition date and included on that basis in the purchase price consideration; (2) transaction costs will be expensed as incurred, rather than capitalized as part of the purchase price; (3) pre-acquisition contingencies, such as legal issues, will generally have to be accounted for in purchase accounting at fair value; and (4) in order to accrue for a restructuring plan in purchase accounting, the requirements in FASB Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” would have to be met at the acquisition date. While there is no expected impact to our consolidated financial statements on the accounting for acquisitions completed prior to December 31, 2008, the adoption of SFAS 141R on January 1, 2009 could materially change the accounting for business combinations consummated subsequent to that date.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51,” or SFAS 160. SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the non-controlling equity investment on the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The impact, if any, from the adoption of SFAS to us in 2009 will depend on the development of our business at that time.

We sell renewable diesel fuel oil and organic fertilizers which we currently produce from animal and food processing waste using our proprietary Thermal Conversion Process, or TCP. TCP can convert a broad range of organic wastes, or feedstock, including animal and food processing waste, trap and low-value greases, mixed plastics, rubber and foams, into our products. TCP emulates the earth’s natural geological and geothermal processes that transform organic material into fuels through the application of water, heat and pressure in various stages. Our renewable diesel has a significantly higher net energy balance, which is defined as the ratio of the amount of energy contained in a fuel to the energy required to produce that fuel, than conventional diesel, ethanol or other biofuels. Our renewable diesel does not compete for food crops, uses fewer natural resources than conventional diesel, ethanol or other biofuels, and does not contain alcohol. TCP uses conventional processing equipment, which we believe requires a comparatively small operating footprint and is relatively easy to permit compared to other waste processing technologies.

Our first production facility, located in Carthage, Missouri, has demonstrated the scalability of TCP in an approximately 250 ton per day production operation. Our Carthage facility has the capacity to convert 78,000 tons of animal and food processing waste into approximately 4 million to 9 million gallons of renewable diesel per year, depending on the feedstock mix used. We also produce fertilizers through TCP. We currently sell the renewable diesel produced at our Carthage facility as a fuel for the industrial boiler market, and we sell our fertilizers to a number of farms in the Carthage area. During the nine months ended September 30, 2008, we produced approximately 1,095,000 gallons of renewable diesel and sold approximately 684,000 gallons of renewable diesel. We commenced the sale of one of our fertilizers in the second quarter of 2008. We received an average price of $1.19 per gallon of renewable diesel sold in the nine months ended September 30, 2008.

The markets for our products are large. The industrial fuel oil market in the United States consumes approximately 62 billion gallons of diesel per year in addition to large quantities of other fuels. We target the industrial steam boiler and off-road engine portions of this market which consumes approximately 23 billion gallons of diesel per year. The North American nitrogen and phosphate fertilizer market is approximately 26 million tons per year. Because quantities of renewable diesel and fertilizers produced from each TCP facility will be relatively small compared to the combined energy and fertilizer demand of local industrial consumers and farmers, we anticipate that all of the products from each of our facilities will be sold within a 100-mile radius of each TCP facility. In addition, due to evolving federal and state renewable energy mandates, we believe there is a significant market opportunity to sell our renewable diesel into the 43 billion gallon equivalent electrical power generation market.

We believe that we will be able to achieve profitability by offering competitively priced renewable diesel and fertilizers to our customers. As more customers purchase and validate our renewable diesel, we intend to price our product at parity, on a per-British thermal unit, or Btu, basis, with No. 2 Heating Oil. The price of No. 2 Heating Oil on the New York Mercantile Exchange was $1.44 per gallon as of December 31, 2008, and the average price of No. 2 Heating Oil over the last three years from December 31, 2005 to December 31, 2008 was $2.25 per gallon. Our renewable diesel contains approximately 9% fewer Btus than No. 2 Heating Oil on a volumetric basis, and, at parity, we believe our renewable diesel will sell for a price that will be 9% lower than the market price for No. 2 Heating Oil. We estimate that our cash production cost of renewable diesel will ultimately be in the range of $0.85 to $1.60 per gallon for our larger production facilities. We believe that our cost of feedstock conversion, which we define as our cash production cost less the cost of feedstock, will be between $0.30 and $0.80 per gallon of renewable diesel for our larger production facilities. We believe

We intend to establish additional facilities close to sources of feedstock, initially focusing on animal and food processing waste and trap and low-value greases in North America and Europe. There are approximately 23.5 million tons of animal and food processing waste generated annually in North America and 18.7 million tons generated annually in Europe. There are approximately 4.7 million tons of trap grease generated annually in North America. Based on our analysis of optimal facility sizes, we initially intend to establish TCP animal and food processing waste facilities that process approximately 500 to 2,000 tons of waste per day and TCP grease facilities that process approximately 150 to 600 tons of waste per day.

We have entered into discussions with several animal and food processors in North America and Europe and with municipal treatment facilities and trap grease aggregators in the Northeast United States regarding potential construction of new TCP facilities and retrofitting existing facilities with TCP. Our growth strategy includes:

We began development of TCP in 1997. In 1999, we commenced operations of our seven ton per day pilot facility for animal and food processing waste located at our research and development facility in Philadelphia, Pennsylvania. We commenced development of our Carthage facility in 2002 and, from 2005 to January 2007, we developed and refined the equipment, procedures and processes at our Carthage facility to bring TCP from demonstration status to production. We commenced commercial sales of our renewable diesel in January 2007, and we commenced sales of one of our fertilizers in the second quarter of 2008. Our Carthage facility is currently our only production facility.

We believe that a number of trends in our markets are converging to increase demand for TCP and our renewable diesel and fertilizers.

We believe we have entered a period of volatile crude oil and natural gas prices which we believe is driven in part by changes in demand for industrial fuels. Geopolitical instability within the Middle East and other oil exporting regions, along with risks inherent in long-distance transportation associated with exporting from these regions, continue to result in risk-related price premiums. In addition, increased long-term global demand for industrial fuels from rapidly developing nations, such as China and India, have further affected energy prices. As a result, there is increased focus on the development of alternative domestic energy supplies, particularly through the development of renewable sources.

The rising use of land to grow crops for fuel rather than for food has increased competition for acreage. A report released in 2008, prepared by the Food and Agricultural Organization of the United Nations and the Organization for Economic Cooperation and Development, stated that “the energy security, environmental and economic benefits of biofuels production based on agricultural commodity feedstocks are at best modest, and sometimes even negative.” By diverting crops, which have traditionally been a source for the world’s food supply, to be used as sources of energy, ethanol and biofuels are driving up prices and creating food shortages around the world.

As the world seeks to address increasing levels of greenhouse gases, particularly carbon dioxide emissions, there is a growing public policy emphasis on developing sustainable “green” energy sources. For example, renewable portfolio standards that obligate retail electricity suppliers to include renewable resources in their electricity generation portfolio have been established in 24 states. In addition to these programs, electricity suppliers producing electricity through renewable sources are eligible to receive a federal production tax credit of $0.019/kWh. Renewable fuels standards have also been implemented on a federal level which mandate increases in the percentage of biofuels required to be blended into fossil fuels sold in the United States. As a result, we believe there is a significant market opportunity for producers of renewable diesel.

In recent years, there has been a sharp increase in global demand for fertilizer, driven primarily by population growth and changes in dietary habits. As populations and incomes continue to grow, more food is required from a decreasing per capita supply of arable land. This requires higher crop yields and, therefore, more plant nutrients or fertilizers. This trend, combined with a fixed supply of certain inputs for commercial fertilizers, including phosphate rock, has led to a steady global increase in the price of fertilizers. As a result, we believe there is a significant market opportunity for organic fertilizers.

The animal and food processing industry is under significant market and regulatory pressure as consumers and regulators address the growing concerns related to pathogenic and toxic contamination of the food chain. In particular, the spread of bovine spongiform encephalopathy, BSE or mad cow disease, is believed to be caused by the consumption of meat and bone meal by cattle, which is made from animal carcasses and incorporated in cattle feed. To strengthen existing safeguards against BSE, on April 25, 2008, the U.S. Food and Drug Administration enacted a more stringent law redefining the categories of cattle-derived products that can be used for animal and pet feed. In addition, U.S. beef exports have been negatively affected by U.S. policy regarding animal rendering. Accordingly, we believe animal and food processors will seek cost-effective methods for disposal of this waste to address market and regulatory concerns, thus increasing the supply of animal and food processing waste. Further, as producers of organic waste look for other waste processing solutions, we believe the cost of our feedstock will decrease.

The discharge of fats, oils and greases, or FOG, from food service establishments and other industrial processing facilities creates significant environmental, public health and operational problems in wastewater treatment facilities throughout the country. When FOG is dumped into sewers, wastewater treatment facilities are negatively impacted due to the hardening of greases in sewer lines and treatment systems. FOG collected from traps is often mixed with absorbents and then disposed

Our goal is to further expand our production and sale of renewable diesel and fertilizers from waste. The key elements of our strategy to achieve this goal include:

Develop New Facilities.  We believe that our success will be driven by producing significant quantities of renewable diesel. Based on our analysis of optimal plant sizes, initially we intend to establish TCP facilities that can convert from 500 to 2,000 tons of animal and food processing waste per day and produce approximately 8 million to 86 million gallons of renewable diesel per year, depending on the size of the facility and the composition of the feedstock. We also intend to establish grease facilities that can convert from 150 to 600 tons of feedstock per day and produce 3 million to 46 million gallons of renewable diesel per year, depending on the size of the facility and the composition of the feedstock. Due to more stringent regulations in Canada and Europe regarding animal and food processing waste disposal, we believe there is greater urgency in these regions to find effective alternatives to conventional technologies, and the cost of feedstock will be lower in these regions. Accordingly, we focus our efforts in these areas. We expect to work closely with various third-party engineering and construction specialists to develop and execute plant-specific engineering procurement and construction plans. Further, we expect to internally develop a full engineering bid package that can be used to achieve best costs for procurement and construction through key processes for TCP-specific construction, including process flow diagrams, heat and material balances, piping and instrumentation diagrams and process specific equipment, which will be used in developing facility construction plans. We expect to locate future facilities near sources of feedstock and suitable markets for our renewable diesel and fertilizers. In addition, we may sub-license TCP to third parties to enable them to build and operate their own facilities.

Secure Additional Sources of Animal and Food Processing Waste.  Securing steady supplies of feedstock is critical to our growth and future success. We have targeted animal and food processing waste as our primary feedstock and entered into a supply agreement to convert wastes from a Butterball turkey processing facility in Carthage. We believe the animal and food processing industries are good sources of feedstock because they generate significant quantities of organic wastes that can be converted to renewable diesel using TCP and are under increasing market and regulatory pressures to change how animal wastes are handled and utilized. To secure large and steady supplies of feedstock, we are seeking to enter into supply agreements with other animal and food processors in North America and Europe. We may replicate the strategy we utilized in developing our Carthage facility and enter into arrangements with other animal and food processors where we co-locate one of our TPC facilities near their facility to provide a cost-effective waste management alternative.

Expand our Sales and Marketing Efforts.  As production of our renewable diesel and fertilizers increases, we plan to expand our sales and marketing infrastructure as well as begin to collaborate with third parties that have local sales and marketing expertise near our facilities. The market value of our renewable diesel will vary, to some degree, by location based on local market conditions and regulatory regimes. We intend to make decisions regarding sales and marketing of our products based on the specific products and locations of our facilities.

Secure Financing for Future Facilities on Favorable Terms.  Construction of new TCP facilities requires significant capital investment. We plan to finance our construction costs through a variety of sources, including debt and equity financings. Additionally, we plan to work with governmental entities to secure grants and co-sponsorships of some of our projects. We believe that the sustainable and renewable aspects of our business model will be appealing to these entities and

Improve Efficiency and Reduce Costs.  We are continually seeking to optimize TCP to improve the efficiency of our facilities and to reduce the per-Btu costs of producing our renewable diesel. We have developed a substantial amount of experience during the development, construction, operation and scale-up of our Carthage facility, and we are continually seeking to improve our technology and facility operations. We are seeking to improve our average mechanical availability of our new and existing facilities. In the first nine months of 2008, our Carthage facility achieved 80% average mechanical availability. We are targeting operating our facilities at 86% to 90% average mechanical availability in the future. We believe that as we start to operate facilities that are designed to handle approximately 500 to 2,000 tons of animal and food processing waste per day and 150 to 600 tons of grease per day, we should benefit from substantial economies of scale and improve our operating margins because the majority of our operating costs are fixed and do not vary with production levels.

Develop Potential Future Markets and Applications of TCP.  We believe that there are significant opportunities to use TCP in different markets and convert other suitable waste streams into renewable diesel and fertilizers. As we continue to expand our operations, we expect to make efforts to penetrate these other areas.

We produce renewable diesel fuel oil, a liquid nitrogen concentrate fertilizer and a solid mineral phosphate fertilizer. The following table demonstrates the varying numbers of gallons of renewable diesel, gallons of liquid nitrogen concentrate fertilizer and pounds of solid mineral phosphate fertilizer yielded by one ton of different types of feedstock. The physical properties and qualities of renewable diesel and fertilizers resulting from TCP, as well as the yield of renewable diesel and fertilizers, will vary according to the type of organic waste used due to differing levels of moisture, density and composition of feedstock. Accordingly, the prices for feedstock can vary significantly.

Renewable diesel generated via TCP is similar to other liquid fuels with respect to its physical properties and combustion performance as demonstrated by the table below.