Business Commentary

During the last quarter, the Company continued in its efforts relating to a number of initiatives in its transformation from a development based company to a sustainable operating company. These initiatives and accomplishments included the following, which will be further described later in this press release:

-- Huckabay Ridge operations are performing at or exceeding targeted

reliability levels and producing RNG(R) in accordance with expectations.

-- We entered into an on-site energy services agreement to allow for

increased RNG(R) sales at Huckabay Ridge of 147,000 MMBtus per year

resulting in improved operating margins.

-- Based on the third generation of our RNG(R) process design which

incorporates the lessons learned from Huckabay Ridge, we have increased

the expected RNG(R) sales volume for each of our development projects.

We are also assessing other alternative means to maximize our RNG sales,

including third party energy services agreements.

-- Marathon Capital, LLC, is actively working to obtain final financing

proposals from prospective investors in support of our announced project

pipeline and for discussions with the California bondholders.

-- In light of the current capital raising activities, we extended from

June 30, 2009 until September 15, 2009 the bondholders option period to

redeem the California tax-exempt bonds in order to facilitate further

discussions with them as to financing options.

-- We are aggressively pursuing the availability of funds under the federal

stimulus package and other federal programs.

-- We continue to gain support for legislation to create tax credits for

the production of renewable natural gas from waste products.

-- We continue to evaluate options to reduce our project capital costs and

operating expenses to improve project returns.

-- We reduced G&A costs by 25%, and expect to maintain these reductions

for 2009.

-- We entered into a new technology agreement with Xergi/DBT, better

reflecting EPC's build/own/operate business model.

-- Xergi acquired $3 million of EPG's 14% convertible notes. Our

financing plans include the possibility of future financings on similar

terms with other parties

We believe the success of these initiatives will ensure that we maintain our leadership position in the RNG(R) market.

Market Update

We continue to experience very positive market conditions for our RNG(R) product as a source of carbon neutral gas for utility and industrial companies and we anticipate that federal renewable energy incentives, a national Renewable Electricity Standard, and a mandatory cap-and-trade program will increase the demand and value of our RNG(R) product and associated greenhouse gas offset credits.

Because our RNG(R) product can be used as a fuel in existing plant assets, it is available 24/7, does not require new electric transmission capacity and does not impact food related crops, demand for our RNG(R) product remains high. While "brown" natural gas prices remain low, we believe that our principal competition is not this form of gas but rather the cost of other renewables such as wind and solar on an equivalent energy basis. As shown by a recent analysis by the California PUC, biogas at our green premium pricing is still more competitive than other forms of renewable energy. It is to this standard that we price our RNG(R) product as reflected in the existing long term RNG Sales agreements with PG&E and Xcel, both of which received their respective PUC approvals. We are also seeing utilities getting more proactive in pursuit of renewable options as they prepare for a new carbon constrained world and the requirement of a national Renewable Electricity Standard ("RES"). We expect demand for our RNG(R) product to remain high and even increase as both utilities and industrial organizations strive to improve environmental stewardship and address the new regulatory regime related to renewables and carbon.

We believe the market for our unique product which addresses the environmental needs of the agricultural and food processing sectors while creating a versatile and renewable energy product with greenhouse gas offset credits will be a key component in addressing the future energy and environmental needs of the US.

Financial Results

The Company had a net loss applicable to common shareholders of $2.6 million, or loss per common share of $0.17, for the quarter ended June 30, 2009, as compared to a net loss applicable to common shareholders of $5.3 million, or loss per common share of $0.34 for the quarter ended June 30, 2008. The reduction in net loss for 2009 of $2.7 million is primarily due to a reduction in general and administrative expenses in 2009 as a result of management's cost reduction program and reduced operating expenses at the Company's Huckabay Ridge facility.

Revenues. Revenues for the three months ended June 30, 2009 were essentially unchanged, increasing to $1.2 million during the second quarter of 2009 as compared to $1.1 million during the second quarter of 2008.

Operations and maintenance expenses. These expenses declined by $1.0 million in the second quarter of 2009 to $0.9 million, as compared to $1.9 million for the second quarter of 2008. The reduction in expenses principally reflects lower operating expenses at Huckabay Ridge. At Huckabay Ridge in the second quarter of 2009 start-up and non-recurring expenses were reduced from 2008 levels. Insurance proceeds received in the second quarter of 2009 and the reversal of certain reserves established in 2008 for the costs of disposal of substrate also resulted in lower operations and maintenance costs in the second quarter of 2009.

General and administrative expenses. General and administrative expenses were $1.5 million for the three months ended June 30, 2009, as compared to $3.6 million for the three months ended June 30, 2008, a reduction of $2.1 million. This reduction reflects lower salary expenses as a result of the Company's cost reduction program, lower non-cash compensation expenses in 2009 and reduced development expenses in 2009 as we slowed development efforts to conserve cash pending our fundraising initiatives. Excluding the decline in non- cash compensation expenses, general and administrative expenses declined to $1.4 million in the second quarter of 2009 as compared to $2.5 million for the second quarter of 2008, a decline of $1.1 million.

Depreciation and amortization expenses. Depreciation and amortization expense was $0.4 million for the second quarters of both 2009 and 2008.

Operating loss. As a result of the factors described above, the operating loss from continuing operations during the second quarter of 2009 was $1.6 million, as compared to an operating loss of $4.8 million for the second quarter of 2008.

Interest income. Interest income declined to $0.01 million in the second quarter of 2009, as compared to $0.1 million in the second quarter of 2008. Interest income declined due both to lower invested cash balances and lower interest rates on such balances.

Interest expense. Interest expense increased by $0.3 million to $0.6 million for the second three months of 2009, as compared to $0.3 million for the second three months of 2008. The increase in interest expense was due principally to the fact we accrued $0.3 million in interest expense on $8.0 million original principal amount of our 14% convertible notes which were issued in March and May 2009. Interest expense in the second quarter of 2009 also increased because we expensed $0.1 million related to our Swift facility in Grand Island, Nebraska in connection with our temporary suspension of construction as of April 1, 2009, whereas we had capitalized these costs in the second quarter of 2008.

A complete presentation of the Company's financial results for the three months ended June 30, 2009, and management's discussion and analysis thereof, is included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, which was filed with the Securities and Exchange Commission on August 10, 2009 and is available on the Company's web site.

Caturano & Company, P.C., our independent registered public accounting firm, reported that the Company's audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008 contain a paragraph that indicates that, while the Company's financial statements have been prepared on a going concern basis, there is substantial doubt about its ability to continue as a going concern, and that no adjustments have been made to the financial statements that might result from the outcome of this uncertainty.

Financing Initiatives

As of June 30, 2009, the Company's unrestricted cash and cash equivalents amounted to $1.8 million.