Exhibit
      99.2








CONSOLIDATED
                FINANCIAL STATEMENTS AND
              REPORT
                OF INDEPENDENT CERTIFIED
              PUBLIC
                ACCOUNTANTS
              
              **RIDGEWOOD
                US HYDRO CORPORATION**
              
              December
                31, 2003

































**CO N T E N T S**








PageReport
              of Independent Certified Public
              Accountants
            
            
            3Consolidated
              Financial StatementsConsolidated
                Balance
                Sheet
            
            
            4Consolidated
                Statement of Operations
            
            
            5Consolidated
                Statement of Changes in Stockholders’
                Equity
            
            
            6Consolidated
                Statement of Cash
                Flows
            
            
            7Notes
                to Consolidated Financial
                Statements
            
            
            8
                -
                19






Table
          of Contents





**REPORT
      OF INDEPENDENT CERTIFIED PUBLIC
      ACCOUNTANTS**











To
      the
      Stockholders


**Ridgewood
      US Hydro Corporation**








We
      have
      audited the accompanying consolidated balance sheet of Ridgewood US Hydro
      Corporation (a Maryland corporation) as of December 31, 2003, and the related
      consolidated statements of operations, changes in stockholders’ equity and cash
      flows for the year then ended. These consolidated financial statements are
      the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audit.





We
      conducted our audit in accordance with auditing standards generally accepted
      in
      the United States of America as established by the American Institute of
      Certified Public Accountants.**Those standards require that we plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement.**An audit includes
      consideration of internal control over financial reporting as a basis for
      designing audit procedures that are appropriate in the circumstances, but not
      for the purpose of expressing an opinion on the effectiveness of the Company’s
      internal control over financial reporting.**Accordingly, we express
      no such opinion.**An audit also includes examining, on a test
      basis, evidence supporting the amounts and disclosures in the financial
      statements, assessing the accounting principles used and significant estimates
      made by management, as well as evaluating the overall financial statement
      presentation.**We believe that our audit provides a reasonable
      basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Ridgewood US Hydro
      Corporation as of December 31, 2003, and the results of its operations and
      its
      cash flows for the year then ended in conformity with accounting principles
      generally accepted in the United States of America.











/s/
      GRANT
      THORNTON LLP


Edison,
      New Jersey


July
      12,
      2007





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Ridgewood
      US Hydro Corporation





**CONSOLIDATED
      BALANCE SHEET**





December
      31, 2003













ASSETSCurrent
                assetsCash
                and cash equivalents
            
            $
            52,508Accounts
                receivable
            
            
            577,834Notes
                receivable
            
            
            3,800,000Due
                from affiliates
            
            
            3,601,394Deferred
                income taxes - current portion
            
            
            1,380,031Prepaid
                and other current assets
            
            
            138,435Total
                current assets
            
            
            9,550,202Property,
                plant and equipment, net
            
            
            1,378,010Intangible
                assets, net
            
            
            10,442,176Goodwill
            
            
            227,365Total
                assets
            
            $
            21,597,753LIABILITIES
                AND STOCKHOLDERS’ EQUITY


Current
                liabilitiesAccounts
                payable and accrued expenses
            
            $
            84,432Long-term
                debt - current portion
            
            
            4,312,723Due
                to affiliates
            
            
            335,529Total
                current liabilities
            
            
            4,732,684Long-term
                debt - noncurrent portion
            
            
            1,337,277Deferred
                rent
            
            
            134,720Deferred
                income tax liability, net
            
            
            3,582,739Total
                liabilities
            
            
            9,787,420Commitments
                and contingenciesStockholders’
                equityCommon
                stock, no par value; 1,000 shares authorized and100
                shares issued and outstanding
            
            
            20,257,307Accumulated
                deficit
            
            
            (8,446,974
            )Total
                stockholders’ equity
            
            
            11,810,333Total
                liabilities and stockholders’ equity
            
            $
            21,597,753







*The
      accompanying notes are an integral part of this statement.*


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Ridgewood
      US Hydro Corporation





**CONSOLIDATED
      STATEMENT OF OPERATIONS**





Year
      ended December 31, 2003











Power
                generation revenue
            
            $
            5,844,921Cost
                of revenues
            
            
            3,402,589Gross
                profit
            
            
            2,442,332Operating
                expensesGeneral
                and administrative expenses
            
            
            1,140,792Write-down
                of notes receivable
            
            
            3,410,922Write-down
                of equipment
            
            
            29,616Impairment
                of goodwill
            
            
            6,432,924Impairment
                of property, plant and equipment
            
            
            188,653Impairment
                of intangible assets
            
            
            1,917,560Total
                operating expenses
            
            
            13,120,467Loss
                from operations
            
            
            (10,678,135
            )Other
                income (expense)Interest
                income
            
            
            53,064Interest
                expense
            
            
            (204,173
            )Other
                expense, net
            
            
            (151,109
            )Net
                loss before income tax benefit
            
            
            (10,829,244
            )Income
                tax benefit
            
            
            (2,509,022
            )Net
                loss
            
            $
            (8,320,222
            )
















*The
      accompanying notes are an integral part of this statement.*


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      US Hydro Corporation





**CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS’
EQUITY**





Year
      ended December 31, 2003










TotalPaid-in
            
            
            Accumulated
            
            
            stockholders’capital
            
            
            deficit
            
            
            equityStockholders’
                equity, January 1, 2003
            
            $
            20,257,307
            
            
            $
            (126,752
            )
            
            $
            20,130,555Net
                loss
            
            
            -
            
            
            
            (8,320,222
            )
            
            
            (8,320,222
            )Stockholders’
                equity, December 31, 2003
            
            $
            20,257,307
            
            
            $
            (8,446,974
            )
            
            $
            11,810,333





















*The
      accompanying notes are an integral part of this statement.*


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      US Hydro Corporation





**CONSOLIDATED
      STATEMENT OF CASH FLOWS**





Year
      ended December 31, 2003





Cash
                flows from operating activitiesNet
                loss
            
            $
            (8,320,222
            )Adjustments
                to reconcile net loss to net cash provided byoperating
                activitiesDepreciation
                and amortization
            
            
            2,049,382Write-down
                of  notes receivable
            
            
            3,410,922Write-down
                of equipment
            
            
            29,616Impairment
                of goodwill
            
            
            6,432,924Impairment
                of property, plant and
                equipment
            
            
            188,653Impairment
                of intangible assets
            
            
            1,917,560Deferred
                income taxes, net
            
            
            (2,772,956
            )Deferred
                rent
            
            
            134,720Changes
                in operating assets and liabilitiesAccounts
                receivable
            
            
            48,598Prepaid
                and other current assets
            
            
            (25,798
            )Accounts
                payable and accrued expenses
            
            
            (540,961
            )Due
                from/to affiliates, net
            
            
            (1,260,720
            )Total
                adjustments
            
            
            9,611,940Net
                cash provided by operating activities
            
            
            1,291,718Cash
                flows from financing activitiesProceeds
                from note receivable
            
            
            200,000Repayments
                of long-term debt
            
            
            (1,450,000
            )Net
                cash used in financing activities
            
            
            (1,250,000
            )Net
                increase in cash and cash equivalents
            
            
            41,718Cash
                and cash equivalents, beginning of year
            
            
            10,790Cash
                and cash equivalents, end of year
            
            $
            52,508Supplemental
                disclosures of cash flow information:Cash
                paid during the year forInterest
            
            $
            202,910Income
                tax
            
            $
            263,834








*The
      accompanying notes are an integral part of this statement.*





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Ridgewood
      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





December
      31, 2003










**NOTE
      A - DESCRIPTION OF BUSINESS**





Ridgewood
      US Hydro Corporation (the “Company”), a Maryland corporation, owns and operates
      eight hydroelectric generating plants located in California, Virginia, Rhode
      Island and New York (the “US Hydro Projects”).  As of December 31,
      2003, all of the US Hydro Projects sold their electric output to local utilities
      pursuant to power contracts.





On
      November 22, 2002, upon completion of the acquisition of the Company (formerly
      Synergics Inc.), Ridgewood Power Growth Fund (“Growth Fund”) and Ridgewood
      Electric Power Trust V (“Trust V”), entities with a common Managing Shareholder,
      Ridgewood Renewable Power LLC (“RRP”), owned 70.8% and 29.2% of the Company,
      respectively.








**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





*1.    Principles
      of Consolidation*





The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries.  All material intercompany accounts and
      transactions have been eliminated in consolidation.





The
      consolidated financial statements include the accounts of Ridgewood Maryland,
      LLC, a related entity, whose only asset is a long-term note receivable from
      the
      Company.  This note is reflected as part of paid-in
      capital.





*2.    Use
      of Estimates*





The
      preparation of financial statements in accordance with accounting principles
      generally accepted in the United States of America requires the Company to
      make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosure of contingent assets and
      liabilities. On an ongoing basis, the Company evaluates its estimates, including
      bad debts, recoverable value of property, plant and equipment and recordable
      liabilities for litigation and other contingencies. The Company bases its
      estimates on historical experience, current and expected conditions and various
      other assumptions that are believed to be reasonable under the circumstances,
      the results of which form the basis for making judgments about the carrying
      values of assets and liabilities that are not readily apparent from other
      sources. Actual results may differ from these estimates under different
      assumptions or conditions.





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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      B (continued)**





*3.    Cash
      and Cash Equivalents*





The
      Company considers all highly liquid investments with maturities when purchased
      of three months or less, as cash and cash equivalents.





*4.    Accounts
      Receivables*





Accounts
      receivables are recorded at invoice price in the period in which the related
      revenues are earned and do not bear interest.  No allowance for bad
      debt expense was provided based upon historical write-off experience, evaluation
      of customer credit condition and the general economic status of the
      customers.





*5.    Revenue
      Recognition*





Power
      generation revenue is recorded in the month of delivery, based on the estimated
      volumes sold to customers at rates stipulated in the power sales contract.
      Adjustments are made to reflect actual volumes delivered when the actual
      volumetric information subsequently becomes available.  Final billings
      did not vary significantly from estimates.





*6.    Impairment
      of Goodwill, Intangibles and Long-Lived Assets*





The
      Company evaluates intangible assets and long-lived assets, such as property,
      plant and equipment, when events or changes in circumstances indicate that
      the
      carrying value of such assets may not be recoverable. The determination of
      whether an impairment has occurred is made by comparing the carrying value
      of an
      asset to the estimated undiscounted cash flows attributable to that asset.
      If an
      impairment has occurred, the impairment loss recognized is the amount by which
      the carrying value exceeds the estimated fair value of the asset, which is
      based
      on the estimated future cash flows discounted at the estimated cost of
      capital.





The
      Company evaluates goodwill, and intangible assets with indefinite useful lives,
      under Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill
      and Other Intangible Assets.”  Under SFAS No. 142, goodwill and
      intangible assets with indefinite lives are subject to annual impairment tests
      through a comparison of fair value to carrying value.  The two-step
      approach to assess a reporting unit’s goodwill impairment requires that the
      Company first compare the estimated fair value of a reporting unit which has
      been assigned to goodwill to the carrying amount of the unit’s assets and
      liabilities, including its goodwill.  If the fair value of the
      reporting unit is below its carrying
      amount, then the second step of the impairment test is performed, in which
      the
      current fair value of the unit’s assets and liabilities is used to determine the
      current implied fair value of the unit’s goodwill.




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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      B (continued)**




*7.    Property,
      Plant and
      Equipment*





Property,
      plant and equipment, consisting of land and hydroelectric generation facilities
      (“HEGFs”), are stated at cost.  Renewals and betterments that increase
      the useful lives of the assets are capitalized.  Repair and
      maintenance expenditures are expensed as incurred.





The
      Company uses the straight-line method to depreciate the HEGFs over 30 years,
      the
      estimated useful life of the assets.





*8.    Significant
      Customers*





During
      2003, the Company’s two largest customers accounted for 50.4% and 30.1% of total
      revenue.





*9.    Income
      Taxes*





The
      Company, for Federal income tax purposes, files on a consolidated basis using
      the accrual method of accounting on a calendar year basis. For state income
      tax
      purposes, the Company generally files on an individual entity
      basis.  The Company uses the liability method in accounting for income
      taxes.  Deferred income taxes reflect, where required, the net tax
      effect of temporary differences arising between the carrying amounts of assets
      and liabilities for financial reporting purposes and amounts used for tax
      purposes.





*10.     New
      Accounting Standards and Disclosures*





*FIN
      45*





In
      November 2002, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees and Indebtedness
      of
      Others.”  FIN 45 elaborates on the disclosures to be made by the
      guarantor in its interim and annual financial statements about its obligations
      under certain guarantees that it has issued.  It also requires that a
      guarantor recognize, at the inception of a guarantee, a liability for the fair
      value of the obligation undertaken in issuing the guarantee.  The
      initial recognition and measurement provisions of this interpretation are
      applicable on a prospective basis to guarantees issued or modified after
      December 31, 2002, while the provisions of the disclosure requirements are
      effective for financial statements of interim or annual reports ending after
      December 15, 2002.  The Company adopted FIN 45 during the fourth
      quarter of 2002 with no material impact to the consolidated financial
      statements.


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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      B (continued)**




*SFAS
      No. 154*





In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error
      Corrections.”  SFAS No. 154 replaces Accounting Principles Board
      (“APB”) Opinion No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting
      Accounting Changes in Interim Financial Statements.”  This statement
      changes the requirements for the accounting for, and reporting of, a change
      in
      accounting principle and applies to all voluntary changes in accounting
      principle, as well as changes pursuant to accounting pronouncements that do
      not
      include transition rules.   Under SFAS No. 154, changes in
      accounting principle must be applied retrospectively to prior periods’ financial
      statements, or the earliest practicable date, as the required method for
      reporting a change in accounting principle.  The Company adopted SFAS
      No. 154 effective December 15, 2005, with no material impact on the consolidated
      financial statements.








**NOTE
      C - NOTES RECEIVABLE**





On
      October 19, 1988, the Company entered into an agreement for services with the
      Truckee-Carson Irrigation District (the “TCID”).  Under the terms of the
      agreement with the TCID, the Company provided funding and development services
      to the TCID for the purpose of developing electricity- generating capacity
      at
      the Lahontan Dam in exchange for a series of payment obligations of the TCID
      in
      the form of notes receivable (the “Notes Receivable”).  At the time of the
      acquisition of the Company by the Growth Fund and Trust V (see Note A), the
      Company valued the obligations under the Notes Receivable at $7,410,922. 
During 2003, the Company received principal payments on the Notes Receivable
      of
      $200,000.





During
      the three-month period ended March 31, 2003, the Company undertook to
      renegotiate the TCID payment obligations.  The result of the renegotiation
      was a settlement between the parties under which the TCID would make a
      $4,000,000 cash payment to the Company in satisfaction of its obligations to
      the
      Company under the Notes Receivable and the Company released the TCID from any
      other obligations.  The Company and TCID entered into a Termination and
      Release Agreement on March 31, 2004, at which time the TCID termination payment
      was made.





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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      C (continued)**





Based
      on
      the $4,000,000 expected amount of the settlement, the Company recorded a
      write-down of $3,410,992 in 2003 and recorded the expected amount of the
      settlement as a short-term Note Receivable.








**NOTE
      D - IMPAIRMENT OF GOODWILL, INTANGIBLES AND**


**LONG-LIVED
      ASSETS**





As
      part
      of the US Hydro purchase agreement, the Growth Fund and Trust V had the option
      of treating the acquisition of the Synergics stock as an acquisition of assets
      in accordance with Internal Revenue Code (“IRC”) Section 338
      (h)(10).  During the third quarter of 2003, the Growth Fund and Trust
      V chose not to exercise the IRC Section 338 (h)(10) election it had originally
      intended to make at the time of the acquisition of the US Hydro
      Projects.  As a result of not exercising the IRC Section 338 (h)(10)
      election, the Company reversed the $1.1 million contingent tax obligation (along
      with other purchase price adjustments) it had recorded in anticipation of making
      such an election.  Also as a result of not making the election, the
      Growth Fund and Trust V recorded a net deferred tax liability of approximately
      $5.0 million with a corresponding increase to goodwill to reflect the temporary
      differences between the financial reporting basis and the income tax basis
      of
      the assets acquired.





The
      Company then performed an interim impairment test in the third quarter of 2003
      and, based on the results of this test, the Company recorded a goodwill
      impairment expense of $6,432,924 during the quarter ended September 30,
      2003.





The
      Company also performed an annual impairment test for property, plant and
      equipment and amortized intangibles and noted a decrease in the estimated future
      undiscounted cash flow of certain US Hydro projects.  Based on the
      results of the test, the Company recorded an impairment expense of $188,653
      and
      $1,917,560 for property, plant and equipment and amortized intangibles,
      respectively, for the year ended December 31, 2003.








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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      E - PROPERTY, PLANT AND EQUIPMENT**





For
      the
      year ended December 31, 2003, property, plant and equipment at cost and
      accumulated depreciation were:





Land
            
            $
            193,379HEGF
            
            
            1,226,5461,419,925Less:
                Accumulated depreciation
            
            
            (41,915
            )$
            1,378,010





For
      the
      year ended December 31, 2003, the Company recorded depreciation expense of
      $38,691, which is included in cost of revenues.








**NOTE
      F - INTANGIBLE ASSETS**





For
      the
      year ended December 31, 2003, the gross and net amounts of intangible assets
      were:





Amortized
                intangiblesElectric
                power sales contracts - gross
            
            $
            12,254,775Water
                rights – gross
            
            
            365,64912,620,424Less
                accumulated amortization
            
            
            (2,178,248
            )Electric
                power sales contracts - net
            
            $
            10,442,176Unamortized
                intangiblesGoodwill
            
            $
            227,365





Each
      electric power sales contract is amortized over the duration of the contract
      (from 4 to 22 years) and water rights are amortized over a period of 35 years
      on
      a straight-line basis.  During the year ended December 31, 2003,
      amortization expense totaled $2,010,691, which is included in cost of
      revenues.  The Company expects to record amortization expense during
      the next five years as follows:





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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      F (continued)**





Year
                endedDecember
                31,2004
            
            $
            1,674,1672005
            
            
            1,564,0022006
            
            
            1,273,0542007
            
            
            1,176,3062008
            
            
            1,123,409








**NOTE
      G - LONG-TERM DEBT**





Of
      the
      Company’s original eight HEGFs, six were financed by a single term loan. The
      borrower under the term loan is an intermediate, wholly-owned subsidiary of
      the
      Company whose only assets are the HEGFs that were financed.  The
      Company has a choice of variable or fixed interest rates on the term loan.
      Variable rate is LIBOR (1.16% at December 31, 2003) plus 1.75% or the Lenders
      Corporate Base Rate (as defined).  At the Company’s option, a fixed
      interest rate can be selected, payable on any portion of the debt in excess
      of
      $1,000,000, for any period of time from two to seven years.  Such
      fixed rate shall be based on the U.S. Treasury note rate at the date of election
      plus 2.75%. The variable rate of 2.91% was the effective interest rate at
      December 31, 2003. This credit facility is collateralized by the assets of
      the
      HEGFs financed including, where appropriate, the interest in HEGFs held in
      the
      form of notes receivable (See Note C). The Company was in compliance with all
      material provisions of the term loan.





As
      additional compensation to the lender, the Company is required to pay an
      additional amount equal to 10% of the cash flow, as defined, of the financed
      projects plus 10% of any net proceeds, as defined, from the sale or refinancing
      of any of the financed projects.  The Company is also required to make
      an additional annual payment of 50% of excess cash flow, as
      defined.  No additional payments were required for the year ended
      December 31, 2003.





The
      following is a summary of term loan payable as of December 31,
      2003:





Term
                loan payable
            
            $
            5,650,000Less
                current portion
            
            
            (4,312,723
            )Total
                long-term portion
            
            $
            1,337,277





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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      G (continued)**





Remaining
      scheduled repayments of term loan payable as of December 31, 2003 are as
      follows:





Year
                ended December 31,2004
            
            $
            4,312,7232005
            
            
            472,4512006
            
            
            432,4132007
            
            
            432,413$
            5,650,000





The
      current portion of the payment obligations listed above includes the prepayment
      obligation arising from the settlement of the Company’s interest in the Lahontan
      project.








**NOTE
      H - LEASE COMMITMENTS**





The
      HEGF
      at Union Falls has leased the site at its facility under a noncancellable
      long-term lease which terminates in 2024. Rent expense at this site for the
      year
      ended December 31, 2003 was $160,000.  The HEGF of the Company at the
      Box Canyon dam in Siskiyou County, California is owned subject to a ground
      lease
      which the Company treats for financial reporting purposes as an operating
      lease.  The lease terminates on December 31, 2010, at which time the
      Company is obligated to transfer the HEGF at the site to the Siskiyou County
      Flood Control and Water Conservation District.  The lease payment for
      Box Canyon for the year ended December 31, 2003 was $500,000.





Future
      minimum lease payments are as follows:





Year
                ended December 31,2004
            
            $
            670,0002005
            
            
            685,0002006
            
            
            695,0002007
            
            
            700,0002008
            
            
            710,000Thereafter
            
            
            6,216,477$
            9,676,477





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      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      H (continued)**





The
      Company has certain other leases that require payments based upon a percentage
      of the annual gross revenue of the respective hydroelectric plants less any
      taxes or other fees paid to the lessors.  There are no minimum rents
      required and these commitments are not included in the amounts presented
      above.  Rent expense for these hydroelectric plants for the year ended
      December 31, 2003 was
      $6,982.








**NOTE
      I - RELATED PARTY TRANSACTIONS**





Under
      an
      Operating Agreement with Growth Fund and Trust V (collectively, the “Trusts”),
      Ridgewood Power Management LLC (“Ridgewood Management”), an entity related to
      the managing shareholder of the Trusts through common ownership, provides
      management, purchasing, engineering, planning and administrative services to
      the
      Company.  Ridgewood Management charges the Company at its cost for
      these services and for the allocable amount of certain overhead
      items.  Allocations of costs are on the basis of identifiable direct
      costs, time records or in proportion to amounts invested in projects managed
      by
      Ridgewood Management.  During the year ended December 31, 2003,
      Ridgewood Management charged the Company $432,070 for overhead items allocated
      in proportion to the amount invested in projects managed.  Ridgewood
      Management also charged the Company for all of the remaining direct operating
      and nonoperating expenses incurred during the periods. Additionally, the Company
      records noninterest-bearing advances from and due to other affiliates in the
      ordinary course of business.  At December 31, 2003, the Company had
      the following outstanding payables and receivables, with the following
      affiliates:





Due
                from
            
            
            Due
                toRPM
            
            $
            251,351
            
            
            $
            -Growth
                Fund
            
            
            2,149,993
            
            
            
            -Trust
                V
            
            
            1,200,050
            
            
            
            -Ridgewood
                Electric Power Trust IV
            
            
            -
            
            
            
            71,000Other
                Affiliates
            
            
            -
            
            
            
            264,529$
            3,601,394
            
            
            $
            335,529





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Ridgewood
      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      J - FAIR VALUE OF FINANCIAL INSTRUMENTS**





At
      December 31, 2003, the carrying value of the Company’s cash and cash
      equivalents, trade and notes receivable, accounts payable and accrued expenses,
      loans payable and due to/from affiliates approximates their fair
      value.  The fair value of the long-term debt, calculated using current
      rates for loans with similar maturities, does not differ materially from its
      carrying value.








**NOTE
      K - INCOME TAXES**





The
      provision for income taxes at December 31, 2003 consists of:





CurrentState
            
            $
            263,834DeferredState
            
            
            (191,533
            )Federal
            
            
            (2,581,323
            )Income
                tax benefit
            
            $
            (2,509,022
            )





Components
      of the Company’s deferred income tax assets and liabilities as of December 31,
      2003 are as follows:





Deferred
                tax assetNOL
                carryforward - noncurrent
            
            $
            24,458Notes
                receivable - current
            
            
            1,380,0311,404,489Deferred
                tax liabilitiesDepreciation
                - noncurrent
            
            
            (3,607,197
            )Net
                deferred tax liabilities
            
            $
            (2,202,708
            )





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Ridgewood
      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      K (continued)**





The
      Company’s effective tax rate differs from the statutory Federal income tax rate
      for the year ended December 31, 2003 as follows:





2003U.S.
                Federal income taxes at the statutory rate
            
            
            34
            %Impairment
                of goodwill
            
            
            (20
            )MD
                interest income, tax effect at partner level
            
            
            9Company’s
                effective tax rate
            
            
            23
            %





At
      December 31, 2003, the Company had a Federal net operating loss carryforward
      (tax effected) for Federal purposes of $24,458 expiring in 2023.  The
      realization of this Federal net operating loss is expected to be utilized;
      accordingly, no valuation allowance has been recorded.








**NOTE
      L - CONTINGENCIES**





The
      Company is subject to legal proceedings involving ordinary and routine claims
      related to its business.  The ultimate legal and financial ability
      with respect to such matters cannot be estimated with certainty and requires
      the
      use of estimates in recording liabilities for potential litigation
      settlements.  Estimates for losses from litigation are disclosed if
      considered reasonably possible and accrued if considered probable after
      consultation with outside counsel.  If estimates of potential losses
      increase or the related facts and circumstances change in the future, the
      Company may be required to record additional litigation expense.








**NOTE
      M - SUBSEQUENT EVENTS**





In
      the
      fourth quarter of 2004, the Company’s Blackstone Project (“Blackstone”) and New
      England Power (“NEP”) agreed to terminate their 1989 power purchase agreement.
      As per the terms of the Termination and Release Agreement, Blackstone now has
      the right to sell its production of electricity to any party it
      chooses.  In addition, beginning January 2005, NEP began paying
      Blackstone $16,000 per month and will do so through February 2010.  In
      addition, NEP has agreed to make a lump-sum payment of $1,000,000 to Blackstone
      on February 15, 2010.  These payments are being made to compensate
      Blackstone for the cancellation of the fifteen years remaining on the original
      agreement.  As a result of the new agreement, the Company recorded a
      net gain of $380,325 in the consolidated statement of operations in 2004,
      reflecting an impairment to electric power sales contracts of $1,261,684 to
      write down the carrying value of the preexisting power purchase agreement to
      zero and to recognize a long-term receivable of $1,642,009, representing the
      present value of payments to be received.





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Ridgewood
      US Hydro Corporation





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**





December
      31, 2003











**NOTE
      M (continued)**




As
      discussed in Note C, during the first quarter of 2004, TCID purchased the
      interests of the Company in the Lahontan project for
      $4,000,000.  Pursuant to the term loan agreement, the Company paid the
      proceeds from the sale to its lender on March 31, 2004.



















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