Delojozafado

How to Invest in Cellulosic Ethanol

"Oopps", a little typo in my previous post. "subsequent 'debt' issuances", should have read "subsequent share issuances/offerings".

Well then it happened with VRNM. As I had pointed out a reverse split of 1:12 was approved at Monday's annual meeting. In addition the "option swap" of worthless options for the highly compensated top level management in this micro cap company, for new options instruments with equity created out of shareholder equity was also approved. VRNM saw their shares fall off more than 7% in after market trading to 55 cents. That is down from the 65 cents they closed near last Friday.

Amazing that the Obama administration's DOE would grant loans/loan guarantees/&/or grants to this company where in a Merrill Lynch/BOA type of scenario TAXPAYERS MONEY will be diverted as BONUSES into the pockets of high level management that have so miserably failed in the management of the company that they now have had to resort to a reverse stock split! Obviously no one in the Obama Administration is paying any attention to these low level small company chiselers.

You have to wonder how many hundreds of these kinds of scams there are going on out there! The Obama Administration is legitimately trying to get the economy going by helping out these outfits who in the end, each provide employment for hundreds of employees. I guess it is like food stamps . If only 10% of the food stamps are used to buy Lobsters & Steaks for someone at 80 cents on the dollar so that the person in that way 'selling" their food stamps can buy cigarettes and beer with the cash, at least 90% of the needy are actually getting the help they desperately need?

How to Invest in Cellulosic Ethanol

This is a very decent article. One of interest that was not mentioned was Dyadic DYAI.PK. They seem to have of late established some superior relative shere price strength to VRNM. DYAI is a smaller cap ~$13MM vs the capitalization of VRNM near~ $65MM in capitalization. The Verenium management is mostly an arrogant rapacious predatory group. After adjourning yesterday's annual meeting they have yet to release any memos or information on what was discussed or how the vote went on a couple management sponsored resolutions that will potentially create shareholder dilution. There was a vote on a reverse stock split that would go 1:10 or 1:20. This would allow the company to issue further subsequent debt issuances with out breaking the long term $1 share price to remain listed and not be kicked over to the pinks & then the bulletin board. This would have been OK as the company's operating revenue does not meet current operating expenditures. Except for the second proposal that was a more egregious rapacious plundering of the shareholder equity and current cash flow/burn. This was a stock option swap scam. There would be no need for a stock option swap of worthless options for new option instruments that will further dilute shareholders if the directors and management had succeeded in maintaining and enhancing the share price. Mr Rivas the CEO already receives more than $700K in annual compensation. Most senior members of the board are in the +$400K range of compensation. They did not see fit to exempt themselves from eligibility for this theft of shareholder equity. This is the same scam as the Merrill Lynch/BOA bonus fiasco! in this case rather than TARP money, the VRNM board is anticipating the Gov't windfalls of a Gov't guaranteed loan/ loan /or grant under the DOE alternative energy sponsorship program. This again might have been not so bad if VRNM had enough operating income to meet or even nearly meet current expenses. It is one thing to give such incentives to some of the more than 300 rank and file employees but to perpetrate this kind of theft from shareholders to benefit senior management is unconscionable. It is plainly theft of shareholder equity at best. At worst it is likely if it passed and they still more than a day later won't reveal that, likely to trigger a class action shareholder law suit that is going to create even more negative cash flow to the operating cash burn of VRNM.

Be careful of this one. It has legs against the Gov't funding/assistance forthcoming but the traders and insiders are likely to leave you high and dry if you think you can make a total position, an all in all out Long term holding.

A couple larger caps also of note here are the Dutch conglomerate RDSMY.PK and ADM or more specifically the ADM-A mand cnvt of 5/11 with it's 8.25% yield. While ADM has it's 20% of its business model in mostly corn based ethanol, they have put expansion mansion designs into their newer facilities to accommodate a morphing into the accommodating of larger quantities of biomass for a transition over to a cellulosic process, most likely under a license from a VRNM,DYAI,BFRE etc There is a very excellent website "thecesite.com" that has about 80 different companies listed to explore this whole cellulosic ethanol theme.