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 2006, $19.9 million for 2007 and $5.1 million for the three months ended March 31, 2008, and as of March 31, 2008, we had an accumulated deficit of $104.0 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 significantly increase our revenues and reduce our cost

Under the Energy Policy Act of 2005, we currently receive a $1.00 renewable diesel mixture tax credit for each gallon of renewable diesel sold until December 31, 2008. Because we have no 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. If the renewable diesel mixture tax credit is not extended beyond 2008 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 problems relating to initial process design shortcomings, inadequate metallurgical selection and suboptimal equipment design. We have not operated at a consistent mechanical availability in excess of 80% for any fiscal quarter to date. In 2008, our Carthage facility achieved 77% 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, but design and engineering shortcomings may nonetheless occur. 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. 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. Shortcomings in material, engineering, workmanship or design 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 and financing and construction delays.

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 $38 million to $125 million per plant to construct facilities that can convert from 500 to 2,000 tons of animal and food processing waste per day and produce approximately 13 million to 54 million gallons, respectively, of renewable diesel per year. 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.

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.

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 unscheduled downtime or 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 not 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. In the event any of our facilities do not run at their nameplate or any increased expected capacity levels, 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 debt or additional equity 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. 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.

We may also finance our expansion strategy by selling additional equity securities. 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 72.8% and 100% of our revenues in 2007 and the three months ended March 31, 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 markets do not achieve or sustain broad acceptance, our business, operating results and financial condition will be materially and negatively impacted.

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

We need to acquire a substantial amount of feedstock for our production of renewable diesel. 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 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 supply of animal and food processing waste. ButterBall is the key feedstock supplier for our Carthage facility. The feedstock supply agreement with ButterBall requires ButterBall to deliver 100% of the animal and food processing waste produced by its facility in Carthage, Missouri less 40 tons per week, and it has a two-year initial term, which expires in May 2010. The agreement automatically renews for subsequent one-year terms, unless either party terminates with a six-month notice. However, should ButterBall cease its operations, have its operations interrupted by casualty or otherwise cease supplying feedstock, our ability to operate our Carthage facility would be materially and adversely affected.

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 Carthage facility. As a result, our revenues and financial condition would be materially and negatively affected. Adequate 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,

Failure to obtain regulatory approvals or meet state standards could adversely affect our operations.

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 renewable diesel they burn or not burn it at all. States may also adopt more stringent standards, which could also affect the amount of renewable diesel we can sell. If customers are not able to burn our renewable diesel or are required to limit the amounts they burn to comply with state standards, our business, results of operations and financial condition may be harmed.

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 primarily 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 six issued U.S. patents, six pending U.S. patent applications and 51 issued foreign patents and pending foreign patent applications, a subset of which are directed to 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 primarily 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

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 six issued U.S. patents, six 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 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 stockholders, an entity of Sterling Equities. Together, Mr. Appel, Mr. Finkelstein and an entity of Sterling Equities hold over 79% of AB-CWT’s membership interests. We cannot be certain that our rights to use these patents will continue. We have an exclusive license to the patents owned by AB-CWT through Resource Recovery Corporation, or RRC, our wholly-owned subsidiary. AB-CWT has the right to terminate this exclusive license for our nonpayment of royalties or our breach of agreement, if either of which default remains uncured, or in the event we transfer or assign any of our exclusively licensed rights without the prior written consent from AB-CWT. Additionally, upon a change of control of our company, AB-CWT has the right to terminate our exclusive license. The expiration of patents licensed from AB-CWT or the termination of that license with AB-CWT would have a material adverse effect on our business.

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

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 guarantees or risk sharing arrangements may not be adequate to cover lost revenues, increased expenses or liquidated damages payments.

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. 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 rights offering, which we expect will be sufficient to fund our operations through 2008. If we successfully complete this offering, we will be able to fund our development efforts and to meet our obligations through 2009. The perception that we may not be

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. James H. Freiss, our Chief Operating Officer, and Mr. Dan F. Decker, our Executive Vice President, as well as other key personnel. Messrs. Appel, Freiss and Decker serve key roles in the development and operations of our business, including application of their market and operational expertise to our day-to-day operations, and the loss of any one of them could disrupt our operations. We intend to enter into employment agreements with each of these officers. If, however, we were to lose the services of any of these officers for any reason, including voluntary resignation or retirement, we may not be able to find a replacement who has equal skill or ability, and our business may be adversely affected. We maintain key-man insurance for Mr. Appel.

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

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, 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 of NASDAQ Global Market or NYSE Arca and certain provisions of the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder, which will impose significant compliance obligations upon us. These obligations will require a commitment of additional resources and result in the diversion of our senior management’s time and attention from our day-to-day operations. In particular, we will be required to:

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 associated with hiring additional accounting and administrative staff. Any such actions could increase our operating expenses and negatively affect our results of operations.

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 underwriter. The clearing price is the highest price at which all of the shares offered, including the shares subject to the underwriter’s over-allotment option, may be sold to potential investors. Although we and the underwriter 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

The underwriter 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 underwriter, 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 underwriter 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 underwriter 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 NASDAQ Global Market or NYSE Arca. However, we cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the NASDAQ Global Market or NYSE Arca 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

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

Upon completion of this offering, we will have           shares of common stock outstanding. In addition, exercisable options for           shares 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,           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     % 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 more difficult for stockholders to elect directors of their choosing and cause us to take other corporate actions than those stockholders desire.

Further, we are the exclusive, worldwide licensee of patents and patent applications, a subset of which are directed to 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 $      per share (the midpoint of the price range set forth on the cover of this prospectus) and our net tangible book value as of March 31, 2008, if you purchase our common stock in this offering you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $      per share in pro forma 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 underwriting discounts and commissions and estimated expenses payable by us in connection with this offering, will be approximately $      million, assuming an initial public offering price of $      per share (the midpoint of the estimated price range set forth on the cover page of this prospectus). We intend to use the net proceeds of this offering for general corporate and working capital purposes.

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 March 31, 2008 on (i) an actual basis and (ii) an as adjusted basis after giving effect to:

This table should be read in conjunction with “Use of Proceeds,” “Selected Historical Consolidated Financial and Other 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 net tangible book value per share of common stock 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 represents our total tangible assets (total assets less intangible assets) less total liabilities as of March 31, 2008, divided by the total number of shares of common stock outstanding. As of March 31, 2008, prior to giving effect to this offering, our net tangible book value was approximately $33.2 million, or $9.33 per share.

Pro forma net tangible book value adjusts net tangible book value to give effect to: (i) the completion of the private placement of           shares of our common stock for aggregate net proceeds of $7.5 million, which was completed in August 2008; (ii) the automatic conversion of all outstanding shares of preferred stock into shares of common stock in connection with this offering; (iii) the           for one stock split of our common stock; (iv) our amended and restated certificate of incorporation; (v) the sale by us of          shares of our common stock in this offering, assuming an initial public offering price of $      per share (the midpoint of the estimated price range shown on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses; and (vi) the receipt of the net proceeds from this offering.

This represents an immediate increase in net tangible book value of $      per share to our existing stockholders and an immediate dilution of $      per share to new investors purchasing shares of common stock in this offering at the initial public 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 March 31, 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 $      per share (the midpoint of the initial public offering price range on the cover of this prospectus) the average price per share paid to us by our existing stockholders and to be paid by new investors purchasing shares of our common stock in this offering.

The above discussion and tables:

If the underwriter’s 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 $      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, which have been audited by Ernst & Young LLP. 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, which have been audited by Ernst & Young LLP. 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 three months ended March 31, 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 three months ended March 31, 2008, we produced 391,000 gallons of renewable diesel. In 2007, we commenced production of our fertilizers. We produced approximately 184,000 gallons of liquid nitrogen concentrate fertilizer and approximately 1,200 tons of solid mineral phosphate fertilizer. We commenced sales of one of our fertilizers in the second quarter of 2008.

In December 2000, we entered into a license agreement with ConAgra Foods Inc., or 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          shares of our common stock and a warrant to purchase           shares of our common stock. 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. In June 2008, we identified certain impairments to property, plant and equipment which are no longer being utilized due to process improvements implemented during 2008. We will record a related charge in our consolidated financial statements of approximately $1.2 million during the second quarter of 2008. Prior to the RES acquisition, we used the equity method of accounting for our 50% investment in RES and, as a result, we did not record revenues or expenses from the operations of RES prior to the acquisition and only recorded our portion of the net loss of RES, $7.2 million, for the period in 2005 prior to the RES

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 $1.2 million, $694,000, $1.6 million and $777,000 in 2005, 2006 and 2007 and the three months ended March 31, 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 72.8% and 100% of our revenues in 2007 and the three months ended March 31, 2008, respectively. We commenced the sale of one of our fertilizers 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 three months ended March 31, 2008 was $0.48, $0.14, $0.65 and $0.99, respectively. We sold approximately 367,000, 1.8 million, 911,000 and 93,000 gallons, respectively, in 2005, 2006 and 2007 and the three months ended March 31, 2008. Sales of our renewable diesel will be the principal source of revenues for the foreseeable future. In the second quarter of 2008, we also started generating revenues from the sale of one of our fertilizers.

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 feedstock or we receive payments from feedstock suppliers for receiving and handling feedstock. We anticipate that the volume cost of acquiring feedstock will decrease over time. The other major components of cost of goods sold, which principally relate to our Carthage facility, include:

We believe, based on our understanding of staffing, utility, chemical and other cost components gained from operating experience at our Carthage facility, that our cash production cost per gallon of renewable diesel will be in the range of $1.25 to $1.50 per gallon depending on the size of the production facility. Giving effect to the $1.00 per gallon renewable diesel mixture tax credit that we receive from the U.S. government for each gallon of renewable diesel produced at our facilities that we sell in the United States, we expect that our net cash costs will be in the range of $0.25 to $0.50 per gallon once we open and operate larger-scale facilities. The renewable diesel mixture tax credit is scheduled to expire at the end of 2008. Net cash costs per gallon outside of the United States may be materially different due to variances in feedstock costs, energy costs and the availability and level of tax credits and cash incentives.

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 March 31, 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. Because we have no 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 or which are of lower quality, 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 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. In June 2008, we identified certain impairments to property, plant and equipment which are no longer being utilized due to process improvements implemented during 2008. We will record a related charge in our consolidated financial statements of approximately $1.2 million during the second quarter of 2008.

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 does 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 years 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 years ended:

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.

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 decreased 58.0% to $93,000 for the three months ended March 31, 2008 from $221,000 for the three months ended March 31, 2007. The decrease was attributable to the loss of sales to a customer that demanded unacceptable pricing terms. In the three months ended March 31, 2008, we sold approximately 93,000 gallons for an average price per gallon

Cost of Goods Sold.  Cost of goods sold decreased 5.5% to $4.2 million for the three months ended March 31, 2008 from $4.4 million for the three months ended March 31, 2007. The decrease was attributable to lower maintenance and repair costs resulting from the on-going replacement of the original pumps, piping and other process equipment with equipment that was more suitable for the process conditions at our Carthage facility which were unknown at the time of construction in the period ended March 31, 2008 as compared to the comparable period in 2007. We produced approximately 391,000 gallons for the three months ended March 31, 2008 from approximately 251,000 gallons for the three months ended March 31, 2007. For the three months ended March 31, 2008, feedstock, disposal and transportation cost totaled $1.1 million and facility operating expenses totaled $3.1 million. For the three months ended March 31, 2007, feedstock, disposal and transportation cost totaled $1.1 million and plant operating expenses totaled $3.3 million.

Selling, General and Administrative Expenses.  Selling, general, and administrative expenses decreased 41.7% to $917,000 for the three months ended March 31, 2008 from $1.6 million for the three months ended March 31, 2007. The decrease was principally due to a $200,000 reduction in salary costs as a result of management personnel departures in 2007 and a $300,000 reduction in professional fees incurred in connection with a proposed financing transaction in 2007 that was not completed.

Research and Development Expenses.  Research and development expenses remained relatively consistent and was $297,000 for the three months ended March 31, 2008 and $300,000 for the three months ended March 31, 2007.

Other Income.  Other income decreased 70.6% to $276,000 for the three months ended March 31, 2008 from $938,000 for the three months ended March 31, 2007. The decrease was primarily due to lower renewable diesel mixture tax credit as a result of the decrease in gallons sold. The renewable diesel mixture tax credit decreased to $94,000 for the three months ended March 31, 2008 from $400,000 for the three months ended March 31, 2007. Other income in the three months ended March 31, 2007 also included grants of approximately $400,000, which we did not receive for the three months ended March 31, 2008. The grant was for the optimization of our Carthage facility and was provided by the Society for Energy and Environmental Research, or SEER, a not-for-profit corporation funded by the Department of Energy. One of our directors is on the board of directors of SEER. The decrease was offset by an increase of $59,000 in interest income, which amounted to $127,000 for the three months ended March 31, 2008 compared to $68,000 for the three months ended March 31, 2007, as a result of higher invested cash balances.

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 $0.65. 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. In 2007, cost of goods sold included retrofitting the boiler for a new customer. We produced approximately 1.1 million gallons in 2007 from 1.6 million gallons in 2006. In 2007, feedstock, disposal and transportation cost totaled $4.0 million and facility operating expenses totaled $12.0 million. In 2006, feedstock, disposal and transportation cost totaled $4.4 million and facility operating expenses totaled $12.0 million.

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 primarily due to lower renewable diesel mixture tax credit payments as a result of the decrease in gallons of renewable diesel sold in 2007. Renewable diesel mixture tax credit decreased to $911,000 in 2007 from $1.8 million in 2006. This decrease was offset in part by the increase in interest income, which was $564,000 in 2007 compared to $192,000 in 2006, and an increase of $400,000 in 2007 from the SEER grant.

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. For the year ended December 31, 2005, feedstock, disposal and transportation cost totaled $2.7 million and facility operating expenses totaled $3.3 million. 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 cost totaled $4.4 million and facility operating expenses totaled $12.0 million.

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

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 March 31, 2008 (unaudited) and December 31, 2007, we had an accumulated deficit of $104.0 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 March 31, 2008, we raised an aggregate of $68.2 million in private placements of equity securities. In August 2008, we received $7.5 million in net proceeds from the sale of our common stock in a rights offering to existing investors. 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 implement our expansion strategy in the future.

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 March 31, 2008.

Net cash used in operating activities was $4.8 million, $5.3 million, $17.9 million, $17.9 million and $10.1 million for the three months ended March 31, 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 used to support the operating activities was recorded as an investment in RES. Accordingly, cash used in operating activities for 2005 only includes cash used by the RES facility from August through December 2005. Cash used in operating activities from August 2005 through March 2008 was primarily used to support the continued operations of our Carthage facility, for research and development activities at our Philadelphia facility, and for selling, general, and administrative expenses.

Net cash used in investing activities was $0.4 million, $0.4 million, $2.3 million, $3.1 million and $8.2 million for the three months ended March 31, 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 three months ended March 31, 2008 and 2007 and for the years 2007, 2006 and 2005, cash used to purchase property, plant and equipment amounted to $0.4 million, $0.4 million, $2.3 million, $3.1 million and $2.0 million, respectively.

Net cash provided by financing activities was $0, $3.9 million, $28.3 million, $17.1 million and $25.0 million for the three months ended March 31, 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 a third party until the last to expire of certain patents licensed to us by AB-CWT. AB-CWT has acknowledged that it is the primary obligor under that settlement, has made

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 August 1, 2005 to August 1, 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 $15.38 per MMBtu in December 2007. Natural gas costs comprised about 8% of our total cost of sales for the year ended December 31, 2007.

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 August 1, 2005 to August 1, 2008, based on the New York Mercantile Exchange daily futures data, has ranged from a low of $1.47 per gallon in January 2007 to a high of $4.11 per gallon in July 2008. The price fluctuation of natural gas over the last three years from August 1, 2005 to August 1, 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 $15.38 per MMBtu in December 2007.

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. In the past, circumstances have occurred, such as shifts in market demand that have resulted in variances between our actual inventory level and our desired target inventory level. We maintain some inventories of our renewable diesel, the values of which are subject to wide fluctuations.

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

In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157, “Fair Value Measurements,” or SFAS 157, which defines fair value, establishes guidelines for measuring fair value pursuant to generally accepted accounting principles, and expands disclosures regarding fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements. SFAS 157 will be effective for periods beginning after November 15, 2007, with earlier adoption permitted. In February 2008, the FASB issued FASB Staff Position (FSP) 157-2 which delays the effective date of Statement 157 for one year for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Statement 157 and FSP 157-2 are effective for financial statements issued for fiscal years beginning after November 15, 2007. Effective January 1, 2008, we adopted SFAS No. 157 for assets and liabilities measured at fair value on a recurring basis. The adoption of SFAS 157 did not have an impact on our financial position or operating results, but did expand certain disclosures.

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 February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of SFAS 115,” or SFAS 159, which permits but does not require us to measure financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. We have elected not to adopt SFAS 159.

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

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 three months ended March 31, 2008, we produced approximately 391,000 gallons of renewable diesel and sold approximately 93,000 gallons of renewable diesel. We commenced the sale of one of our fertilizers in the second quarter of 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 $3.44 per gallon as of August 1, 2008, and the average price of No. 2 Heating Oil over the last three years from August 1, 2005 to August 1, 2008 was $2.19 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. Once we open and operate larger-scale production facilities, we believe that our cash production cost of renewable diesel will be in the range of $1.25 to $1.50 per gallon depending on the size of the production facility. Giving effect to the $1.00 per gallon renewable diesel mixture tax credit that we receive from the U.S. government for each gallon of renewable diesel produced at our facilities that we sell in the United States, we expect our net cash production costs will be in the range of $0.25 to

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 4.5 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 trap and low-value 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 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 sustained period of elevated crude oil and natural gas prices which we believe is driven in part by increasing 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, surging global demand for industrial fuels from rapidly developing nations, such as China and India, have further driven up 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

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.

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 of in landfills or incinerated, creating other environmental issues. This issue is compounded by both the distance to legal disposal sites and the rising cost of fuel. We believe that municipalities are seeking technologies that can mitigate these concerns.

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 13 million to 54 million gallons of renewable diesel per year. We also intend to establish trap and low-value grease facilities that can convert from 150 to 600 tons of feedstock per day and produce 5 million to 19 million gallons of renewable diesel per year. Due to more stringent regulations in Canada and Europe regarding animal and food processing waste

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 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 believe that certain aspects of our business model, including its sustainable and renewable aspect, will enable us to secure favorable financing, particularly in relation to other fuel refinement and power generation projects. As a result, we expect that our construction costs will be significantly lower than other fuel and power generators. We plan to finance portions of 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 parties and encourage them to assist us in the financing of new facilities.

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 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 trap and low-value 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.

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.

We believe producing renewable diesel from waste has many benefits, including:

Our renewable diesel is marketed and sold directly to commercial and industrial end-users. We currently sell our renewable diesel for use in commercial and industrial boilers. 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. Steam boilers firing fuel oil or natural gas are the most commonly and widely used equipment to produce process steam and other heat energy for a broad range of large and small-scale commercial and industrial manufacturing facilities. Boilers already configured to burn fuel oils can burn our renewable diesel with simple replacement of select components of the fuel delivery system (e.g., pumps, meters and nozzles). Natural gas fired boilers require more extensive modifications and additions, such as the installation of fuel storage tanks and liquid fuel delivery systems. The one-time cost for converting an industrial boiler burning fuel oil or a similar boiler burning natural gas to burn renewable diesel is approximately $50,000 and $100,000, respectively. We estimate that complete conversion can be accomplished in less than 30 days for fuel oil boilers and

In addition to our renewable diesel, TCP yields two types of organic fertilizer: a liquid nitrogen concentrate fertilizer, or LNC, and a solid mineral phosphate/calcium fertilizer, or SMP. Our fertilizers are naturally derived, and their content and values are based upon their nutrient, or N-P-K, value, a measurement of the nitrogen, phosphates and potassium contained in the fertilizer on a weight percentage basis. Our LNC is marketed with a guaranteed plant nutrient content of 6-0-0 and is registered and sold in Missouri. Our SMP is marketed with a guaranteed plant nutrient content of 0-14-0 and is currently registered in Kansas, Missouri and Oklahoma as a commercial fertilizer.

Both fertilizers can be land-applied using commonly available spreading equipment and transported with conventional over-the-road truck equipment. For our new facilities, it is anticipated that all of the fertilizer produced can be sold to local farms within a 100-mile radius. We will seek business arrangements with existing fertilizer distributors in order to capitalize on their infrastructure, equipment and customer lists. In the future, we may also pursue partnerships with other fertilizer producers to blend our fertilizers with their products.

TCP is a non-combustion process for the conversion of organic waste into renewable diesel and fertilizers. 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. TCP

TCP utilizes four distinct steps to convert waste:

1.  Preparation.  Trucks deliver waste into a tank at our facility. The waste is prepared into a slurry by utilizing standard industrial conveyors, screening and grinding equipment. Once the slurry is prepared, it can either be transferred through a piping system into on-site storage tanks for later processing or immediately introduced into the process. This ability to prepare and store incoming waste prior to processing provides flexibility to accommodate high degrees of variability in the delivery times and composition of wastes.

2.  Separation of Organic and Inorganic Waste.  The slurry is heated to a temperature of approximately 300°F and pressurized to 80 pounds per square inch, or PSIG, in the first thermal reactor. This step breaks down organic matter and separates organic and inorganic materials (minerals) contained in the slurry. The large mineral particles are removed at this stage and transferred to finished product separation where they are re-combined with the smaller particles.

3.  Conversion of Organic Waste to Renewable Diesel.  The organic liquid materials and small mineral particles are then piped to another thermal reactor and subjected to higher temperature and pressure (e.g., 480°F and 600 PSIG). In this step, large complex organic molecules are broken down into smaller simpler molecules and hydrolyzed, creating a mixture of renewable diesel, nitrogen-rich water and small mineral particles. The combination of heat, pressure and time employed in this step assures that any pathogens contained in the waste are destroyed. Much of the heat energy applied in this step is recovered as waste heat from the subsequent conversion step, which is a key factor in the high energy efficiency of the process.

4.  Finished Product Separation.  The mixture of renewable diesel, nitrogen-rich water and small mineral particles from the conversion step are separated using conventional separation equipment. First, the small mineral particles that were not removed during the earlier separation step are removed from the liquids by decanting. This phosphate and calcium rich solid mineral is recombined with the larger particles from the earlier separation step and stored for sale as our fertilizer. Next, the renewable diesel and nitrogen-rich water are separated using a centrifuge. The renewable diesel is piped into storage tanks and held for sale. The nitrogen rich water is further concentrated into our liquid fertilizer, which is piped into storage tanks.

As demonstrated by the figure below, TCP is approximately 85% energy efficient.

Our exclusively licensed patents and patent applications are directed to key elements of TCP, which, we believe, differentiate our position in the industry. For example, our patents and pending patent applications describe the handling of mixed feedstocks in multiple process reaction steps, where each of those steps is at different conditions, such as pressure and temperature, with phase separation in between the process steps. Effective management of these complex interactions is a critical element in the efficient conversion of waste into renewable diesel. Additionally, our patents and pending patent applications describe the use of water in the conversion process. A water-intensive conversion environment facilitates the breakdown of chemical bonds while simultaneously suppressing unwanted, inefficient chemical reactions. We believe that water usage is a key component in optimizing the process for converting waste into fuel.

We believe TCP has the following competitive advantages:

Proprietary.  We exclusively license six issued U.S. patents, six pending U.S. patent applications and 51 issued foreign patents and pending foreign applications, a subset of which are directed to TCP technology as currently implemented, from AB-CWT, a related company. The patents cover the Process for Conversion of Organic, Waste or Low-Value Material into Useful Products, the Thermal Depolymerization Process and Chemical Reforming Apparatus, the Bench Model Reforming System (both as to the method and the product) and the Laboratory Prototype Reforming Flow-Through System (both as to the method and the product).

We also rely upon trade secrets related to facility operating conditions, process chemistry, facility design and research and development experience that we have gained in the ten years we have worked with TCP.

Easily Deployed.  We believe new TCP facilities can be easily deployed due to several attributes of TCP.

Ability to Convert Wide Variety of Feedstock.  We believe that TCP’s ability to convert a wide variety of feedstock into renewable diesel provides us with a competitive advantage in acquiring the feedstock for our process. For example, we sometimes compete with traditional animal and food processors for feedstock. Renderers convert animal remains and by-products into a protein feed

Energy Efficient Process.  TCP achieves high product yield and recovery of the energy contained in the feedstock, while consuming little energy in the process. Energy requirements are minimal due to the moderate processing temperatures and pressures used, the short amount of time required for the process and the recovery and reuse of waste heat. Our renewable diesel’s net energy balance is over 7.0. This is significantly higher than that of soy-based biodiesel at about 3.67 or corn-based ethanol at about 1.25.

Environmentally Friendly Product.  We believe that TCP and our renewable diesel represent a more environmentally friendly fuel option than a variety of other fuel alternatives. While ethanol and other biofuel production processes typically require large amounts of clean process water, catalysts, chemicals and arable land, which place demands on natural resources, diesel production using TCP requires significantly fewer natural resources. In contrast, the majority of the feedstock used in TCP is considered waste and is traditionally considered to have little or no economic value. Moving away from using food crops for energy by developing and deploying energy solutions that produce renewable diesel and fertilizers from waste streams provide us with marketable advantages over processes that use food crops for energy. In addition, our products are renewable and are considered “carbon-neutral” as they are created from animal and food processing waste and do not result in the release of additional fossil carbon into the environment. Further, wastes that we use are not disposed of in landfills where pathogens and harmful chemicals can leach into the ground water. The temperature and pressure at which TCP operates effectively break down and destroy pathogens in the waste. TCP is certified by the New York State Department of Health, and its operating conditions have been proven to eliminate pathogens such as BSE. As a result, the renewable diesel and fertilizers that are generated by TCP can be used safely in a variety of industrial and agricultural applications.

Low Cost of Customer Conversion.  Based on our experience with our customers, conversion of existing heating oil or natural gas infrastructure to handle our renewable diesel can be done with relatively simple modifications. Boilers already configured to burn fuel oils can burn renewable diesel with simple replacement of select components of the fuel delivery system (e.g., pumps, meters and nozzles). Natural gas fired boilers require more extensive modifications and additions, such as the installation of fuel storage tanks and liquid fuel delivery systems. The one-time cost for converting an industrial boiler burning fuel oil or a similar boiler burning natural gas to burn renewable diesel is approximately $50,000 and $100,000, respectively. We estimate that complete conversion can be accomplished in less than 30 days for fuel oil boilers and 60 days for natural gas boilers, with the boiler down-time limited to less than three days.

Our first production facility, located in Carthage, Missouri, was commissioned in February 2005. The Carthage facility was constructed and initially owned and operated by RES, a joint venture between us and ConAgra. The facility is adjacent to a ButterBall turkey processing plant. ConAgra subsequently exchanged its 50% interest in RES for shares of our common stock and warrants and sold its ButterBall turkey business to Carolina Turkey, a joint venture of Smithfield Foods Inc. and Maxwell Farms, Inc. The feedstock agreement with ButterBall, which expires in May 2010, requires ButterBall to deliver 100% of the feedstock produced by its facility in Carthage, Missouri, less 40 tons per week. The nameplate capacity of the facility is 250 tons per day, or 78,000 tons per year. The Carthage facility converts approximately 44,000 tons of animal and food processing waste from the

The development, construction and operation of the Carthage facility:

We have undergone various validation processes, including clean results from multiple internal boiler inspections by third-party inspectors conducted after considerable boiler run-time. Additionally, AP 42 EPA testing was performed to the satisfaction of the state permitting agency. As a result of these activities, we have secured customers for our renewable diesel. Schreiber has committed to two long-term contracts at two sites in Missouri for two large industrial boilers. Schreiber’s boilers are expected to consume approximately 1.4 million gallons annually of renewable diesel. In addition, another customer has entered into a two-year agreement with us to purchase approximately two million gallons of renewable diesel. In the second quarter of 2008, we began selling one of our fertilizers to a number of farms in the Carthage area. Our other fertilizer is currently registered in Kansas, Missouri and Oklahoma as a commercial fertilizer.

During our initial operations at our Carthage facility, we dealt with a number of start-up problems relating to original process design shortcomings, inadequate metallurgical selection and suboptimal equipment design. Further, we incurred costs in connection with diversion and disposal of unprocessed feedstock and waste water. As a result of the process modifications, equipment replacements, operating experience and other changes since commissioning, facility reliability and product quality control have steadily improved. Our new facilities will be redesigned based on the operating experience and knowledge we developed at our Carthage facility. In 2008, the Carthage facility achieved 77% average mechanical availability, which is the percentage of planned operating hours that the facility actually operated. We believe significant improvements in this metric can be realized in the future as a result of improvements to process piping metallurgy.

We believe we compete primarily in two areas. The first involves securing access to an ongoing supply of feedstock for our TCP facilities. In this regard, we compete with large integrated animal and food processors and independent renderers, such as Baker Commodities, Darling International and Griffin Industries, each of which process inedible wastes from meat and poultry processors into animal feed, consumer food and fats for industrial applications. Some of these companies also process fats and greases from restaurants for recycling.

We believe that the value of our end products, when contrasted against those of traditional renderers, provide us with an inherent advantage when competing for the feedstock used in our process. Renderers’ end products are relatively low-margin commodity products with limited applications. In contrast, we believe that the renewable diesel and fertilizers created via TCP can be sold to a broader array of customers at a higher margin.

We also compete to secure customers for our end products. In selling our renewable diesel, we compete against purveyors of traditional fossil fuels, as well as other alternative energy providers. We believe that there are several aspects of our business that provide us with a competitive advantage over providers of conventional fossil fuels. First, we believe that the sustainable, “green” aspect of our business, when contrasted against traditional fossil fuels and their associated environmental impacts, is appealing to certain customers. Additionally, we believe that we can compete well on cost. For example, we believe that prices for our renewable diesel are not prone to the same risks as traditional fossil fuels. This is a result of our ability to create renewable diesel from more widely available sources. In addition, we plan to sell our renewable diesel to customers within a 100-mile radius of our facilities, thereby incurring relatively lower shipping costs. We also compete with other alternative energy providers, predominantly producers of ethanol and biodiesel. We believe that we compare favorably to both of these products given our significantly higher net energy balance, and we can compete well on cost. We also believe the quality of our fuel is superior to these alternative products. Recently, there have been complaints regarding the alcohol content of ethanol and biodiesel, as alcohol is known to undermine the efficacy of these fuels. Our renewable diesel does not contain any alcohol. Lastly, unlike ethanol and some forms of biodiesel, production of our renewable diesel does not require the use of food crops as feedstock. Therefore, we avoid many of the unintended consequences associated with the production of both ethanol and biodiesel, most notably contributing to rising food prices.

In selling our fertilizers, we compete against purveyors of traditional fertilizers. Many conventional fertilizers are produced by large entities with greater financial and other resources than we do, which can give them a competitive advantage. Similar to our renewable diesel, we plan to sell our fertilizers to customers within a 100-mile radius of our facilities, thereby incurring relatively lower shipping costs.

Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of both our owned and licensed technologies as well as successfully defending these patents against third-party challenges, which may require the cooperation of our licensor. Our patent policy is to retain and secure patents for inventions and improvements related to our technologies where commercially warranted. Currently, all patents and patent applications are owned by AB-CWT, a related company. We exclusively license six issued U.S. patents, six pending U.S. patent applications and 51 issued foreign patents and pending foreign applications, a subset of which are directed to TCP technology as currently implemented, from AB-CWT, a related company, the terms of which patents will expire between November 1, 2011 and September 21, 2024.

We have an exclusive license to the patents owned by AB-CWT through RRC, our wholly-owned subsidiary. AB-CWT has the right to terminate this exclusive license for our nonpayment of royalties or our breach of agreement, if either of which default remains uncured, or in the event we transfer or assign any of our exclusively licensed rights without the prior written consent from AB-CWT. Additionally, upon a change of control of our company, AB-CWT has the right to terminate our exclusive license, which could 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 the company and might ultimately affect the market price of our common stock.

We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.

We also seek to protect our proprietary information by requiring our employees, consultants, contractors, outside partners and other advisers to execute, as appropriate, nondisclosure and assignment of invention agreements upon commencement of their employment or engagement. We also require confidentiality agreements from third parties that receive our confidential data or materials.

As of March 31, 2008, we had 70 full-time employees, including 9 engaged in research and development at our Philadelphia facility and 48 at our Carthage facility. None of our employees are represented by any labor union nor are any organized under a collective bargaining agreement. We have never experienced a work stoppage, and believe that our relations with our employees are good.

We own our Carthage facility located at 530 N. Main St, Carthage, Missouri, where we lease 2.8 acres of land pursuant to a lease that is set to expire in April 2027. We also lease 79,000 square feet in Philadelphia, Pennsylvania for our research and development facility under a lease that is set to expire in August 2010. Our principal executive offices are located at 460 Hempstead Avenue, West Hempstead, New York 11552, where we lease 5,395 square feet on a month-to-month basis.

On January 11, 2006, the Attorney General of the State of Missouri filed an action against us in the Circuit Court of Jasper County, Missouri seeking preliminary and permanent injunctions and civil penalties for alleged violations of Missouri’s odor standard at our Carthage facility and for alleged violations of our state air permit. We settled this case pursuant to a consent judgment on June 27, 2006. In conjunction with these claims, we resolved an administrative action brought by the Missouri Department of Natural Resources, or MDNR, relating to a cease and desist order associated with the alleged violations of Missouri’s odor standard we received from the MDNR on December 29, 2005, by agreeing to pay a $175,000 fine. We paid $100,000 of the fine and the remaining $75,000 was suspended for two years unless we received additional notices of violation under the Missouri odor standards. The settlement also requires us to pay a $25,000 fine per subsequently charged violation. On November 15, 2006 we received a notice of excess emission that was subsequently upgraded to a notice of violation. On December 11, 2006, we agreed to pay $25,000 for this violation. Since November 15, 2006, we have not received any notices of violation of the Missouri odor standards, and the two-year suspended penalty period under the settlement agreement has now ended.

On June 5, 2007, a resident of Carthage, Missouri filed a class action petition against us and Donald Sanders, the manager of our Carthage facility, in the Circuit Court of Jasper County, Missouri on behalf of herself and others similarly situated. Plaintiff alleges that the odor associated with our Carthage facility creates a nuisance, and that we are negligent. Plaintiff’s original petition included a claim of negligence per se that was dismissed by the court. Plaintiff seeks compensatory damages, punitive damages, injunctive relief and attorneys’ fees and costs. On April 24, 2008, an amended petition was filed redefining the scope of the class area to three kilometers from our Carthage facility and adding an additional class representative. On July 24, 2008, we filed a motion for change of venue and a motion to stay expert discovery and class certification proceedings pending a ruling on the venue motion and also pending an investigation into potential sources of odor in Carthage by the MDNR. On August 8, 2008, the court denied our motions. Discovery on both class and merit issues is ongoing and class certification briefing is currently scheduled to be completed by November 21, 2008.

On January 14, 2008, we received a letter from the MDNR regarding alleged violations of our air permit and a state emission limitation. Our consultants submitted a response to the state on February 27, 2008, and we soon will conduct an MDNR-approved stack testing to seek to demonstrate compliance with our permit and the emission limitation.

On February 7, 2008, Select Insurance Company filed a petition in the U.S. District Court for the Western District of Missouri to seek a declaratory judgment as to whether Select Insurance Company is required to defend and indemnify us and Donald Sanders, the manager of our Carthage facility, in the class action litigation discussed above. We filed a motion to stay the coverage case pending resolution of the underlying class action. The motion has been fully briefed, but the court has not yet issued a ruling.

The MDNR has been investigating and continues to investigate the source of odor in the Carthage Bottoms area. On February 27, 2008, we received a letter from the MDNR asserting that evidence from the first phase of the investigation indicated that our Carthage facility could be a source of odor, and requesting a meeting with us. We met with the MDNR in May. In June of 2008, the MDNR issued a letter to several businesses in the Carthage Bottoms area seeking to convene a meeting of all industrial facilities in the area and stating that the first phase of the investigation did not identify specific sources for the odor or chemical compounds of interest. The group meeting with the MDNR is scheduled for August 25, 2008. We will continue to cooperate with the MDNR in this effort.

In addition to the matters discussed above, from time to time, we are party to litigation and administrative proceedings that arise in the ordinary course of our business. We do not have any other pending litigation that, separately or in the aggregate, would in the opinion of management have a material adverse effect on our results of operations or financial condition.

The following table sets forth the name and age as of August 12, 2008 and position of each person that serves as an executive officer and director of our company.