Letter From the CEO

With energy and environmental issues getting increased attention from government agencies, corporations and consumers, it is an exciting time to be in the biofuels industry. That is especially true for CleanTech Biofuels, thanks to our proprietary process to convert landfill waste into biomass for biofuel, power and electricity production. Now that we have finalized our intellectual property agreements and market strategy, our team is working on commercialization and revenue generation. We are uniquely positioned in alternative energy space, because our Biomass Recovery Process can solve energy, environment and social issues at the same time--That's a powerful combination, and we are attracting strong customer interest now that the CleanTech biomass recovery process is being offered commercially.

A look across the energy landscape shows why alternative energy that is economically and environmentally sustainable is in higher demand than ever. Depending on which source is cited, oil production will either peak a few years from now or in a couple of decades. Much of the available crude oil, our principal source for fuel, is concentrated in countries where there is significant political strife or petroleum supplies are controlled by countries not allied with the United States. Any disruptions in supply, whether from Gulf Coast hurricanes or political unrest, can cause supplies to plummet and prices to soar. Meanwhile, the world consumes more energy than at any other point in history and the global demand for energy is projected to increase even faster as the economies of China and India expand. In any case, despite short-term fluctuations, oil supplies and prices are going to be an increasing problem.

The U.S. government and industry leaders have seen the trends and reacted with regulations and numerous commercial developments to produce alternative energy. For example, ethanol production is mandated by the Energy Independence and Security Act of 2007, which requires the amount of biofuels added to U.S. gasoline to increase from 4.7 billion gallons in 2007 to 36 billion gallons by 2022. More than 190 plants are in operation or under construction to help meet that demand. However, producing ethanol from corn or other food sources is seen by some people to cause negative environmental consequences, and the practice has raised many questions about using land for energy production instead of growing food. Meanwhile, solar and wind power are promising, but will not come close to displacing fossil fuel in meeting our future energy needs. So that leaves the alternative energy market seeking new solutions for energy production, and CleanTech Biofuels has an exciting answer: Capture the tremendous energy in municipal solid waste by converting garbage into high-quality cellulose for biofuel, power and electricity production.

Our proprietary process converts garbage into biomass, captures the recyclables, and reduces landfill need by up to 90 percent. Each ton of biomass we produce can be converted into more than 80 gallons of ethanol. By making garbage into energy, our technology will revolutionize the waste industry while creating new jobs and helping cities and landfill operators overcome some of their greatest challenges. Ethanol produced from cellulose is cleaner than any other alternative energy in reducing greenhouse gasses. Additionally, we help communities achieve virtually 100 percent recycling without residents having to sort their trash.

While garbage cannot replace all of the energy we currently consume, maximizing the energy recovered from our waste will be an important and dynamic part of the solution to the energy and waste disposal problems we face today and in the future. By having proprietary technology to convert landfill waste into biomass and recyclables, CleanTech Biofuels is uniquely positioned to play an important role in the future of alternative energy. Our team is excited to be offering our technology commercially for the first time, and we're also excited about putting our biomass recovery process to work solving energy, environmental and social problems for cities and landfill operators.

Thanks to all of the CleanTech Biofuels investors who are helping make these exciting developments possible.

Edward P. Hennessey, Jr.
Chief Executive Officer