Hey all!!
Figured I would I would accomodate those with slow mail servers and post tonights edition her to SI.
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05 Mar 1997
Howdy Gang!!!
Seeing a little weakness in the stock, but for the long term holders like me that is no problem. Been there, done that before. For the short-term traders out there, keep your eye on the newswire services as you never know when the company will surprise you (and me). There are a lot of potential deals out there that can send this stock right back into the $10 range in a flash.
Traders inevitably wind up missing the train somewhere down the lline, while longer term investors reap the accrued rewards. It is often wise to form a trading position for short-term plays while maintaining a core position long term.
As many of you know, once GRNO brings this processor fully online and closes the deal with the limited partnership that is buying it, it will be rather difficult to convince the various investors in the partnership that the regular production schedule should be interupted to facilitate "special tests". So they have been running them at this time for the purpose of judging which feedstock gives the best results... etc. As they complete the material sample test where they confirm the actual amounts of #2 diesel produced from each gallon, they will move into full-time production. I understand that they've already produced upwards of 193 gph on partial heat to the system. They will gradually ramp up the heat source and increase production to 400 gph +.
Basically the machine is running, and for those of you who are wondering when the revenue is going to roll in, you need to remember that GRNO is selling Unit #1 to the limited partnership for $1,500,000. All of this should hit the bottom line THIS quarter. Divide that by approx 6 million shares outstanding and you have $.25/share. However, obviously there were some costs incurred in installing the unit. This *MAY* reduce the potential by some amount, say $500,000 for a brand new TO, condensor.... etc. With this generous discount, we can project a rough guesstimate of $.16/share ($1 million / 6 million shares) in the first quarter of 1997 ending in March.
And these kinds of earnings are the result of selling only one machine!!! GRNO conservatively expects to build 10-14 of them this year alone!!!. (#400 net 55% of $1.5 million). #600-800s will be substantially higher in profit margin as there is minimal increase incurred in manufacturing them, approx $100,000. They should be priced in the $2 million+ range.
Also, many of you have expressed concern about how difficult it will be to ramp up production given that assembling Unit #1 took this much time. Once a company has money in its pocket, it is able to make things happen a lot quicker. Earnings from the partnership sale will be reinvested into manufacturing additional units. Preliminary work is already beginning on Unit #2. GRNO will be hiring additional personnel, most former shipyard workers with years of experience.
The company is also exploring outsourcing manufacture of the processors built to GRNO's specifications. Also, remember that all GRNO has to do is manufacture the equipment and upon shipment, it collects full payment on the purchase. All site preparation, infrastructure...etc, is a cost incurred by the customer, not GRNO. The installation support by GRNO will be handled under a SEPARATE contract of approx $150,000. Installation is by far the most prone to delays from weather and permitting hassles. That is not GRNO's problem, it is the customers. (but GRNO will be there to hold their hand.... :0)
Furthermore, GRNO is still actively pursuing the acquisition of Approved Oil Services in Denver. AOS is one of the largest oil collectors in the US and will provide GRNO with the ready infrastruture and capacity to facilitate installation and operation of their units under company control. Each unit will likely generate well over $1 million per year in revenue, as well as corresponding marketable TAX CREDITS at $0.13/gal. Combined with continual streams of royalty payments on each gallon of fuel produced by machines sold to its customers, GRNO has a very healthy future ahead of it.
But can management pull it off?? Well, I would have to answer I believe they will. Bill Carraway and his able staff have been carrying this company for over two years waiting for this moment. The difficult part is over, reassembling and proving the technology. Everything else is a matter of duplication and mass assembling operations.
Sure there will be the occasional glitch, but nothing like what was involved in the Charleston project. (Hurricanes, tardy equipment vendors... need I go on??... :0)
But if you don't believe me, take the ultimate step and take a working vacation to Charleston, SC... ( please coordinate it with them first... its only polite) I, and those others who have, understand what they are invested in and its potential.
Remember that all of the above elements could be some aspect of the next news release. If you know what to expect, then you will know why you bought GRNO in the first place as well as pleasantly surprised by the news when it pops up.
Sorry that this edition was long, but I thought before some of us inadvertantly became bearish, we had better remember the "glut" of SUBSTANTIAL news that still lies ahead.
Regards,
Ron
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