Exhibit
      99.1







CONSOLIDATED
        FINANCIAL STATEMENTS
 AND
        REPORT OF INDEPENDENT CERTIFIED
 PUBLIC
        ACCOUNTANTS
 
 **RIDGEWOOD
        UK, LLC**
 
 December
        31, 2005, 2004 and 2003
 (As
        restated)
  
   **C
                    O N T E N T S**PageReport
                    of Independent Certified Public Accountants
                3Consolidated
                    Financial StatementsConsolidated Balance Sheets
                4Consolidated Statements of Operations and
                    Comprehensive Loss
                5Consolidated Statement of Changes in Members’
                    Equity
                6Consolidated Statements of Cash Flows
                7Notes to Consolidated Financial Statements
                8
                    -
                    30
 
  
  **REPORT
        OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS**
 
 
 
 
 The
        Members
 **Ridgewood
        UK, LLC**
 
 
 We
        have
        audited the accompanying consolidated balance sheets of Ridgewood UK, LLC
        (a
        Delaware limited liability company) as of December 31, 2005, 2004 and 2003,
        and
        the related consolidated statements of operations, changes in members’ equity
        and cash flows for the years 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 audits.
 
 We
        conducted our audits 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 audits provide 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 UK, LLC as
        of
        December 31, 2005, 2004 and 2003, and the results of its operations and its
        cash
        flows for the years then ended in conformity with accounting principles
        generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements as of and for the years ended
        December 31, 2004 and 2003 have been restated as discussed in Note B to the
        consolidated financial statements.
 
 
 
 
 /s/
        GRANT
        THORNTON LLP
 Edison,
        New Jersey
 August
        17, 2007
 
  -
            3 -
  Ridgewood
        UK, LLC
 
 **CONSOLIDATED
        BALANCE SHEETS**
 
 December
        31,
 
 
 ASSETS
              
              **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Current
                  assetsCash
                  and cash equivalents
              
              **$**
              **6,690,531**
              
              
              $
              20,225,132
              
              
              $
              30,633,809Restricted
                  cash
              
              ****
              **3,152,526**
              
              
              
              3,228,453
              
              
              
              2,649,442Trade
                  receivables
              
              ****
              **2,653,881**
              
              
              
              2,412,790
              
              
              
              1,813,385Unbilled
                  receivables
              
              ****
              **4,752,530**
              
              
              
              3,785,614
              
              
              
              2,423,100Due
                  from affiliates
              
              ****
              **363,610**
              
              
              
              -
              
              
              
              -Inventory
              
              ****
              **746,454**
              
              
              
              834,326
              
              
              
              465,037Other
                  current assets
              
              ****
              **272,989**
              
              
              
              527,012
              
              
              
              559,532Total
                  current assets
              
              ****
              **18,632,521**
              
              
              
              31,013,327
              
              
              
              38,544,305Property,
                  plant and equipment, net
              
              ****
              **51,909,397**
              
              
              
              52,047,733
              
              
              
              34,919,329Electricity
                  sales contracts, net
              
              ****
              **13,368,107**
              
              
              
              16,606,790
              
              
              
              18,072,484Deferred
                  financing costs
              
              ****
              **480,840**
              
              
              
              674,728
              
              
              
              760,070Total
                  assets
              
              **$**
              **84,390,865**
              
              
              $
              100,342,578
              
              
              $
              92,296,188LIABILITIES
                  AND MEMBERS' EQUITYCurrent
                  liabilitiesAccounts
                  payable
              
              **$**
              **1,791,970**
              
              
              $
              1,567,704
              
              
              $
              3,296,639Accrued
                  expenses
              
              ****
              **6,704,547**
              
              
              
              4,011,382
              
              
              
              3,405,412Long-term
                  debt - current portion
              
              ****
              **1,878,494**
              
              
              
              1,892,775
              
              
              
              1,562,974Capital
                  lease obligations - current portion
              
              ****
              **4,057,189**
              
              
              
              2,080,668
              
              
              
              1,175,455Construction
                  advances - current portion
              
              ****
              **577,807**
              
              
              
              341,933
              
              
              
              338,004Due
                  to affiliates
              
              ****
              **439,113**
              
              
              
              661,392
              
              
              
              1,912,998Total
                  current liabilities
              
              ****
              **15,449,120**
              
              
              
              10,555,854
              
              
              
              11,691,482Long-term
                  debt - noncurrent portion
              
              ****
              **16,936,447**
              
              
              
              21,065,125
              
              
              
              21,193,099Capital
                  lease obligations - noncurrent portion
              
              ****
              **26,897,522**
              
              
              
              23,602,085
              
              
              
              9,693,293Construction
                  advances - noncurrent portion
              
              ****
              **23,263,877**
              
              
              
              35,685,487
              
              
              
              34,178,955Deferred
                  income taxes
              
              ****
              **1,104,709**
              
              
              
              960,391
              
              
              
              876,571Other
                  noncurrent liabilities
              
              ****
              **1,380**
              
              
              
              59,113
              
              
              
              505,024Minority
                  interest
              
              ****
              **362,279**
              
              
              
              1,344,844
              
              
              
              2,028,102Total
                  liabilities
              
              ****
              **84,015,334**
              
              
              
              93,272,899
              
              
              
              80,166,526Commitments
                  and contingenciesMembers’
                  equity
              
              ****
              **375,531**
              
              
              
              7,069,679
              
              
              
              12,129,662Total
                  liabilities and members’ equity
              
              **$**
              **84,390,865**
              
              
              $
              100,342,578
              
              
              $
              92,296,188
 
 *The
        accompanying notes are an integral part of these financial
        statements.*
  -
            4 -
  Ridgewood
        UK, LLC
 
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**
 
 Years
        ended December 31,
 
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Power
                  generation revenue
              
              **$**
              **32,359,236**
              
              
              $
              22,877,685
              
              
              $
              13,729,298Cost
                  of revenues
              
              ****
              **29,326,410**
              
              
              
              20,295,280
              
              
              
              13,446,592Gross
                  profit
              
              ****
              **3,032,826**
              
              
              
              2,582,405
              
              
              
              282,706Operating
                  expensesGeneral
                  and administrative expenses
              
              ****
              **200,994**
              
              
              
              551,573
              
              
              
              605,021Impairment
                  of property, plant and equipment
              
              ****
              **635,084**
              
              
              
              500,346
              
              
              
              296,033Total
                  operating expenses
              
              ****
              **836,078**
              
              
              
              1,051,919
              
              
              
              901,054Income
                  (loss) from operations
              
              ****
              **2,196,748**
              
              
              
              1,530,486
              
              
              
              (618,348
              )Other
                  (expense) incomeInterest
                  income
              
              ****
              **328,498**
              
              
              
              373,337
              
              
              
              184,558Interest
                  expense
              
              ****
              **(5,188,353**
              **)**
              
              
              (3,603,930
              )
              
              
              (2,131,302
              )Loss
                  on sale-leaseback
              
              ****
              **(202,551**
              **)**
              
              
              (880,387
              )
              
              
              -Total
                  other expense, net
              
              ****
              **(5,062,406**
              **)**
              
              
              (4,110,980
              )
              
              
              (1,946,744
              )Loss
                  before income taxes and minority interest
              
              ****
              **(2,865,658**
              **)**
              
              
              (2,580,494
              )
              
              
              (2,565,092
              )Income
                  tax expense (benefit)
              
              ****
              **261,118**
              
              
              
              10,298
              
              
              
              (234,787
              )Net
                  loss before minority interest
              
              ****
              **(3,126,776**
              **)**
              
              
              (2,590,792
              )
              
              
              (2,330,305
              )Minority
                    interest in the loss of CLP
              
              ****
              **385,352**
              
              
              
              293,018
              
              
              
              322,532Net
                  loss
              
              ****
              **(2,741,424**
              **)**
              
              
              (2,297,774
              )
              
              
              (2,007,773
              )Foreign
                  currency translation adjustment
              
              ****
              **(448,341**
              **)**
              
              
              710,511
              
              
              
              1,442,695Comprehensive
                  loss
              
              **$**
              **(3,189,765**
              **)**
              
              $
              (1,587,263
              )
              
              $
              (565,078
              )
 
 
 *The
        accompanying notes are an integral part of these financial
        statements.*
  -
            5 -
  Ridgewood
        UK, LLC
 
 **CONSOLIDATED
        STATEMENT OF CHANGES IN MEMBERS’ EQUITY**
 
 Years
        ended December 31, 2005, 2004 and 2003
 
 
 
 Accumulated
                  other
              
              
              TotalMembers’
              
              
              Retained
              
              
              comprehensive
              
              
              members’capital
              
              
              deficit
              
              
              income
                  (loss)
              
              
              equityMembers’
                  equity balance as of January 1, 2003,as restated
              
              $
              22,215,959
              
              
              $
              (5,264,075
              )
              
              $
              12,315
              
              
              $
              16,964,199Net
                  loss
              
              
              -
              
              
              
              (2,007,773
              )
              
              
              -
              
              
              
              (2,007,773
              )Foreign
                  currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              1,442,695
              
              
              
              1,442,695Cash
                  distributions
              
              
              -
              
              
              
              (4,269,459
              )
              
              
              -
              
              
              
              (4,269,459
              )Members’
                  equity balance as of December 31, 2003,as restated
              
              
              22,215,959
              
              
              
              (11,541,307
              )
              
              
              1,455,010
              
              
              
              12,129,662Net
                  loss
              
              
              -
              
              
              
              (2,297,774
              )
              
              
              -
              
              
              
              (2,297,774
              )Foreign
                  currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              710,511
              
              
              
              710,511Cash
                  distributions
              
              
              -
              
              
              
              (3,472,720
              )
              
              
              -
              
              
              
              (3,472,720
              )Members’
                  equity balance as of December 31, 2004,as restated
              
              
              22,215,959
              
              
              
              (17,311,801
              )
              
              
              2,165,521
              
              
              
              7,069,679Net
                  loss
              
              
              -
              
              
              
              (2,741,424
              )
              
              
              -
              
              
              
              (2,741,424
              )Foreign
                  currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              (448,341
              )
              
              
              (448,341
              )Cash
                  distributions
              
              
              -
              
              
              
              (3,504,383
              )
              
              
              -
              
              
              
              (3,504,383
              )**Members’
                  equity balance as of December 31, 2005**
              
              **$**
              **22,215,959**
              
              
              **$**
              **(23,557,608**
              **)**
              
              **$**
              **1,717,180**
              
              
              **$**
              **375,531**
   
 *The
        accompanying notes are an integral part of this financial
        statement.*
  -
            6 -
  Ridgewood
        UK, LLC
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 
 Years
        ended December 31,
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Cash
                  flows from operating activitiesNet
                  loss
              
              **$**
              **(2,741,424**
              **)**
              
              $
              (2,297,774
              )
              
              $
              (2,007,773
              )Adjustments
                  to reconcile net loss to net cash provided by
                operating
                  activitiesDepreciation
                  and amortization
              
              ****
              **6,232,599**
              
              
              
              5,291,820
              
              
              
              3,674,843Amortization
                  of deferred financing costs
              
              ****
              **128,885**
              
              
              
              141,396
              
              
              
              131,491Impairment
                  of property, plant and equipment
              
              ****
              **635,084**
              
              
              
              500,346
              
              
              
              296,033Deferred
                  income taxes
              
              ****
              **261,118**
              
              
              
              10,298
              
              
              
              (129,962
              )Loss
                  on sale-leaseback
              
              ****
              **202,551**
              
              
              
              880,387
              
              
              
              -Minority
                  interest in CLP
              
              ****
              **(385,352**
              **)**
              
              
              (293,018
              )
              
              
              (322,532
              )Changes
                  in assets and liabilitiesTrade
                  receivables
              
              ****
              **(527,783**
              **)**
              
              
              (426,561
              )
              
              
              2,018,462Unbilled
                  receivables
              
              ****
              **(1,450,897**
              **)**
              
              
              (1,104,208
              )
              
              
              (2,228,325
              )Inventory
              
              ****
              **(1,324**
              **)**
              
              
              (314,465
              )
              
              
              (69,932
              )Other
                  current assets
              
              ****
              **209,205**
              
              
              
              75,261
              
              
              
              (514,556
              )Accounts
                  payable
              
              ****
              **414,463**
              
              
              
              (1,905,881
              )
              
              
              2,055,247Accrued
                  expenses
              
              ****
              **3,295,713**
              
              
              
              311,941
              
              
              
              1,451,856Due
                  to/from affiliates, net
              
              ****
              **(585,762**
              **)**
              
              
              41,860
              
              
              
              155,387Other
                  noncurrent liabilities
              
              ****
              **(54,402**
              **)**
              
              
              (464,200
              )
              
              
              385,220Total
                  adjustments
              
              ****
              **8,374,098**
              
              
              
              2,744,976
              
              
              
              6,903,232Net
                  cash provided by operating activities
              
              ****
              **5,632,674**
              
              
              
              447,202
              
              
              
              4,895,459Cash
                  flows from investing activitiesRestricted
                  cash
              
              ****
              **75,927**
              
              
              
              (579,011
              )
              
              
              (619,791
              )Capital
                  expenditures
              
              ****
              **(11,179,552**
              **)**
              
              
              (16,698,046
              )
              
              
              (13,762,962
              )Net
                  cash used in investing activities
              
              ****
              **(11,103,625**
              **)**
              
              
              (17,277,057
              )
              
              
              (14,382,753
              )Cash
                  flows from financing activitiesProceeds
                  from construction advances
              
              ****
              **-**
              
              
              
              12,100,122
              
              
              
              41,473,868Repayment
                  of capital lease obligations
              
              ****
              **(340,564**
              **)**
              
              
              (893,618
              )
              
              
              (295,725
              )Repayments
                  of term loan
              
              ****
              **(1,788,724**
              **)**
              
              
              (1,610,669
              )
              
              
              (1,140,205
              )Distributions
                  to minority interest
              
              ****
              **(556,137**
              **)**
              
              
              (641,074
              )
              
              
              (424,298
              )Distributions
                  to members
              
              ****
              **(3,504,383**
              **)**
              
              
              (4,615,239
              )
              
              
              (3,126,938
              )Net
                  cash (used in) provided by financing activities
              
              ****
              **(6,189,808**
              **)**
              
              
              4,339,522
              
              
              
              36,486,702Effect
                  of exchange rate on cash and cash equivalents
              
              ****
              **(1,873,842**
              **)**
              
              
              2,081,656
              
              
              
              2,738,755Net
                  (decrease) increase in cash and cash equivalents
              
              ****
              **(13,534,601**
              **)**
              
              
              (10,408,677
              )
              
              
              29,738,163Cash
                  and cash equivalents, beginning of year
              
              ****
              **20,225,132**
              
              
              
              30,633,809
              
              
              
              895,646Cash
                  and cash equivalents, end of year
              
              **$**
              **6,690,531**
              
              
              $
              20,225,132
              
              
              $
              30,633,809Supplemental
                  disclosure of cash flow information:Cash
                  paid during the year for interest
              
              **$**
              **5,601,353**
              
              
              $
              4,318,923
              
              
              $
              2,494,199Supplemental
                  disclosures of noncash investing and financing activities:Equipment
                  acquired under nonaffiliated capital leases
              
              **$**
              -
              
              
              $
              727,610
              
              
              $
              559,355Construction
                  advances converted to capital leases
              
              
              **8,337,276**
              
              
              
              14,083,446
              
              
              
              10,582,075Noncash
                  sale of 50% interest in the Spanish Business
              
              ****
              **-**
              
              
              
              -
              
              
              
              1,370,564Distribution
                  to members declared in 2003 but paid in 2004
              
              ****
              **-**
              
              
              
              -
              
              
              
              1,142,519Distribution
                  to minority member declared in 2003 but paid in 2004
              
              ****
              **-**
              
              
              
              -
              
              
              
              143,799
 
 *The
        accompanying notes are an integral part of these financial
        statements.*
  -
            7 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        A - DESCRIPTION OF BUSINESS**
 
 On
        May
        26, 1999, Ridgewood UK, LLC (the “Company”) was formed as a New Jersey limited
        liability company and was re-domiciled to Delaware on December 24,
        2002.  The business of the Company is the extraction of
        methane-containing gas from landfill sites in England, Scotland and Wales,
        the
        use of that gas as fuel for generating electricity, and the sale of that
        electricity.  The Company has no predetermined life or end
        date.
 
 On
        June
        30, 1999, Ridgewood Electric Power Trust V (“Trust V”) contributed $16,667,567
        to the Company; and the Company’s wholly-owned subsidiary, Ridgewood UK Ltd.
        (“UK Ltd.”), a limited company registered in England and Wales, purchased from
        CLP Envirogas, Ltd. (formerly Combined Landfill Projects, Ltd.) six landfill
        gas
        power plants with a combined electrical generation capacity of 15.1 megawatts
        (“MW”) located in the United Kingdom.  At the time of the purchase, UK
        Ltd. and CLP Envirogas, Ltd. also agreed to the terms on which UK Ltd. would
        purchase additional projects then under development by CLP Envirogas, Ltd.,
        should such projects be successfully developed.
 
 In
        2001,
        The Ridgewood Power Growth Fund (“Growth Fund”) contributed $5,817,006 to the
        Company in return for an equity share of 30.4% of the
        Company.  Trust V and the Growth Fund (collectively, the “Trusts”) are
        Delaware business trusts managed by Ridgewood Renewable Power LLC (“RRP”) as
        their Managing Shareholder.
 
 During
        the three-month period ended March 31, 2001, UK Ltd. purchased an additional
        four projects with combined generating capacity of 4.6MW.  On October
        16, 2001, UK Ltd., through the issuance of approximately 24% of its shares
        and
        the payment of $2,000,000 cash, acquired certain of the assets and liabilities
        of CLP Services, Ltd., CLP Development, Ltd. and CLP Envirogas, Ltd.
        (collectively, the “Management and Development Companies”) and the equity and
        debt of certain landfill gas projects (the “UK Merger”).  As a result
        of the UK Merger, UK Ltd. acquired the ability to develop and operate landfill
        gas-fueled electricity-generating facilities in the UK, as well as the
        development rights to a number of such projects.  The seller in the UK
        Merger was Arbutus Energy Ltd. (Jersey) (“Arbutus”), which became the minority
        interest holder of UK Ltd. following the UK Merger.  UK Ltd. was
        renamed CLPE Holdings Ltd. (“CLP”) in 2001.
 
 In
        the UK
        Merger, UK Ltd. received plant and equipment valued at approximately $4,201,000,
        a 50% equity interest in a landfill gas electricity generation business based
        in
        Spain valued at approximately $744,000, cash of $454,000 and other assets
        with
        an approximate value of $1,000,000.  UK Ltd. also assumed liabilities
        of approximately $3,058,000.  UK Ltd. assigned a value of $6,781,000
        to the electricity sales contracts and other intangibles acquired, which
        are
        being amortized over the remaining life of the underlying electricity sales
        contracts.
  -
            8 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
  
 **NOTE
        A (continued)**
 
 As
        part
        of the UK Merger, the Company also acquired a 50% ownership in each of CLP
        Organogas SL, which owns a 2MW plant located in Seville, Spain, and CLP
        Envirogas, SL, a management and development services company also located
        in
        Seville, Spain (collectively, the “Spanish Business”).  Effective
        January 1, 2003, the Company transferred its interest in the Spanish Business
        to
        Arbutus in return for a portion of the minority interest in CLP then held
        by
        Arbutus.  As a result of the transaction, the Company increased its
        ownership in CLP from 76% to 88%.
 
 As
        of
        December 31, 2005, CLP owned landfill methane gas-fired electric generating
        projects in the United Kingdom with an installed capacity of approximately
        48.7MW.  Projects representing approximately 26.5MW sell electricity
        under long-term contracts to the Non-Fossil Purchasing Agency (“NFPA”), a
        not-for-profit organization that purchases electricity generated by certain
        renewable power projects on behalf of large English electric
        utilities.  Projects representing approximately 22.2MW qualify for the
        UK government’s Renewable Obligation incentive program (“RO”) and sell their
        output under short-term contracts.
 
 Beginning
        in 2002, the Company began to develop sites capable of qualifying for the
        UK’s
        RO.  The RO program requires electricity suppliers serving end-users
        in the UK to obtain renewable obligation certificates (“ROCs”) to demonstrate
        that a minimum portion of their electricity supply portfolio was generated
        by
        producers meeting the qualifications of the RO.  In order to fund the
        development and construction of these projects, the Company entered into
        a
        series of agreements with affiliated entities that agreed to provide
        financing.  The affiliated entities providing this funding, Ridgewood
        Renewable PowerBank LLC, Ridgewood Renewable PowerBank II LLC, Ridgewood
        Renewable PowerBank III LLC and Ridgewood Renewable PowerBank IV LLC
        (collectively, the “PowerBank Funds”), are managed by RRP.  Terms of
        the agreements between the CLP and each of the PowerBank Funds are substantially
        the same and each provides for the PowerBank Funds to make construction advances
        to CLP in exchange for interest during construction and streams of fixed
        and
        variable lease payments once the financed projects go into operation (the
        “PowerBank Arrangements”) as discussed in Note H.
 
 All
        projects subject to Non-Fossil Fuel Obligation (“NFFO”) are owned by the
        Company.  Each PowerBank Fund holds title to the
        electricity-generating equipment of the projects funded by that PowerBank
        Fund.
 
  -
            9 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 
 
 **NOTE
        B - RESTATEMENT OF FINANCIAL STATEMENTS**
 
 The
        Company has identified a series of adjustments that have resulted in the
        restatement of the previously issued financial statements for the years ended
        December 31, 2004 and 2003.  Certain items in previously issued
        consolidated financial statements have been reclassified for comparative
        purposes and have no effect on net loss.
 
 The
        following table presents the effects of the restatement adjustments upon
        the
        Company’s previously reported balance sheet and statement of operations as of
        December 31, 2004:
  December
                    31, 2004AdjustmentsPreviouslyreported
                
                
                Reclass
                
                
                Other
                    adjustments
                
                RestatedBalance
                    SheetASSETSCurrent
                    assets
                
                $
                30,790,976
                
                
                $
                (8,841
                )
                
                $
                231,192
                
                (D)
                
                $
                31,013,327Noncurrent
                    assets
                
                
                70,485,487
                
                
                
                (45,975
                )
                
                
                (1,110,261
                )
                (A)
                  (B) (C) (E)
                
                
                69,329,251Total
                    assets
                
                $
                101,276,463
                
                
                $
                (54,816
                )
                
                $
                (879,069
                )
                
                
                $
                100,342,578LIABILITIES
                    AND MEMBERS' EQUITYCurrent
                    liabilities
                
                $
                10,669,975
                
                
                $
                (103,759
                )
                
                $
                (10,361
                )
                (F)
                  (G)
                
                $
                10,555,855Noncurrent
                    liabilities
                
                
                81,398,188
                
                
                
                48,943
                
                
                
                (74,929
                )
                (H)
                  (J)
                
                
                81,372,202Minority
                    interest
                
                
                1,423,814
                
                
                
                -
                
                
                
                (78,970
                )
                (I)
                
                
                1,344,844Members’
                    equity
                
                
                7,784,486
                
                
                
                -
                
                
                
                (714,809
                )
                
                
                
                7,069,677Total
                    liabilities and members’ equity
                
                $
                101,276,463
                
                
                $
                (54,816
                )
                
                $
                (879,069
                )
                
                
                $
                100,342,578Statement
                    of OperationsPower
                    generation revenue
                
                $
                22,776,328
                
                
                $
                (3,111
                )
                
                $
                104,468
                
                (D)
                
                $
                22,877,685Cost
                    of revenues
                
                
                20,484,901
                
                
                
                (39,968
                )
                
                
                (149,653
                )
                (A)
                  (C) (G)
                
                
                20,295,280Gross
                    profit
                
                
                2,291,427
                
                
                
                36,857
                
                
                
                254,121
                
                
                
                
                2,582,405Operating
                    expenses
                
                
                528,422
                
                
                
                -
                
                
                
                523,497
                
                (A)
                  (B) (F)
                
                
                1,051,919Income
                    (loss) from operations
                
                
                1,763,005
                
                
                
                36,857
                
                
                
                (269,376
                )
                
                
                
                1,530,486Other
                    expense, net
                
                
                (3,659,025
                )
                
                
                (36,857
                )
                
                
                (415,098
                )
                (C)
                  (E) (J)
                
                
                (4,110,980
                )Loss
                    before income taxes and minority interest
                
                
                (1,896,020
                )
                
                
                -
                
                
                
                (684,474
                )
                
                
                
                (2,580,494
                )Income
                    tax expense (benefit)
                
                
                168,670
                
                
                
                -
                
                
                
                (158,372
                )
                (H)
                
                
                10,298Net
                    loss before minority interest
                
                
                (2,064,690
                )
                
                
                -
                
                
                
                (526,102
                )
                
                
                
                (2,590,792
                )Minority
                    interest in the loss of CLP
                
                
                222,034
                
                
                
                -
                
                
                
                70,984
                
                (I)
                
                
                293,018Net
                    loss
                
                $
                (1,842,656
                )
                
                $
                -
                
                
                $
                (455,118
                )
                
                
                $
                (2,297,774
                )
 -
                10 -
 Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        B (continued)**
 
 (A)
              In
                  periods prior to 2003, the Company did not recognize intangible
                  assets and
                  the related amortization expense properly.  As a result, the
                  Company decreased intangible assets, accumulated amortization,
                  beginning
                  members’ equity, cumulative translation adjustments (“CTA”) and
                  amortization expense by $334,179, $104,526, $194,712, $46,549 and
                  $11,607,
                  respectively, during 2004.  The Company recognized additional
                  impairment losses of $274,916 and $296,033 for the years ended
                  December
                  31, 2004 and 2003, respectively.
 
 (B)
              The
                  Company reviewed the previously reported construction-in-process
                  (“CIP”)
                  on a site-by-site basis, and noted that certain CIP balances were
                  irrecoverable.  As a result of this error, the Company
                  recognized an additional impairment loss of $225,431, which resulted
                  in a
                  decrease in property, plant and equipment of $236,971 and CTA of
                  $11,540.
 
 (C)
              Originally,
                  the Company did not properly recognize a loss on a sales-leaseback
                  transaction.  In 2004, the Company recorded an adjustment by
                  increasing other expenses by $880,388 and decreasing property,
                  plant and
                  equipment, accumulated amortization, cost of revenues, and CTA
                  by
                  $925,437, $14,104, $13,418 and $44,363,
                  respectively.
 
 (D)
              The
                  Company did not properly recognize power generation revenue of
                  $119,146
                  and $112,046 in 2004 and 2003, respectively.  As a result, in
                  2004, the Company increased accounts receivable by $231,192, power
                  generation revenue by $104,468, beginning members’ equity by $103,039 and
                  CTA by $23,685.
 
 (E)
              Originally,
                  the Company netted interest earned on funds borrowed to finance
                  CIP
                  against interest expense and improperly capitalized the net amount
                  as
                  opposed to the gross interest expense.  As a result, the Company
                  recorded adjustments in 2004 by increasing CIP, interest income,
                  beginning
                  members’ equity and CTA by $905,502, $440,638, $376,174 and $88,690,
                  respectively.
 
 (F)
              The
                  Company underaccrued $23,150 and $97,498 of accounting fees for
                  the years
                  ended December 31, 2004 and 2002, respectively.  As a result,
                  the Company recorded an increase in accrued expenses and general
                  and
                  administrative expenses of $120,648 and $23,150, respectively,
                  and a
                  decrease in beginning members’ equity of
                  $97,498.
 
 (G)
              The
                  Company overaccrued cost of revenues by $131,008.  To correct
                  the over-statement, the Company recorded an adjustment to decrease
                  accrued
                  expenses by $131,008, cost of revenues by $124,628, with an offsetting
                  increase of $6,380 to CTA.
  -
            11 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        B (continued)**
 
 (H)
              The
                  Company recorded the deferred income tax impact of the adjustments
                  noted
                  above by decreasing deferred tax liabilities, income tax expense,
                  beginning members’ equity and CTA by $33,544, $158,372, $112,852 and
                  $11,976, respectively.
 
 (I)
              To
                  correct the overstatement of minority interest resulting from the
                  adjustments stated above, the Company recorded a decrease in minority
                  interest, and minority interest in income of CLP and CTA of $78,971
                  and
                  $70,983, respectively, and increased members’ equity and CTA by $4,354 and
                  $3,634, respectively.
 
 (J)
              The
                  Company overstated long-term capital lease obligations.  As a
                  result, the Company recorded a decrease in long-term capital lease
                  obligations of $41,385 and an increase in interest income, beginning
                  members’ equity and CTA of $24,651, $13,135 and $3,599,
                  respectively.
  The
        following table presents the effects of the restatement adjustments upon
        the
        Company’s previously reported balance sheet and statement of operations as of
        December 31, 2003:
  December
                    31, 2003AdjustmentsPreviouslyreported
                
                
                Reclass
                
                
                Other
                    adjustments
                
                RestatedBalance
                    SheetASSETSCurrent
                    assets
                
                $
                39,129,585
                
                
                $
                (697,326
                )
                
                $
                112,046
                
                (B)
                
                $
                38,544,305Noncurrent
                    assets
                
                
                53,899,002
                
                
                
                (1,756
                )
                
                
                (145,363
                )
                (A)
                  (C)
                
                
                53,751,883Total
                    assets
                
                $
                93,028,587
                
                
                $
                (699,082
                )
                
                $
                (33,317
                )
                
                
                $
                92,296,188LIABILITIES
                      AND MEMBERS' EQUITYCurrent
                    liabilities
                
                $
                12,307,232
                
                
                $
                (713,248
                )
                
                $
                97,498
                
                (D)
                
                $
                11,691,482Noncurrent
                    liabilities
                
                
                66,324,343
                
                
                
                14,166
                
                
                
                108,433
                
                (E)
                  (G)
                
                
                66,446,942Minority
                    interest
                
                
                2,030,568
                
                
                
                -
                
                
                
                (2,466
                )
                (F)
                
                
                2,028,102Members’
                    equity
                
                
                12,366,444
                
                
                
                -
                
                
                
                (236,782
                )
                
                
                
                12,129,662Total
                    liabilities and members’ equity
                
                $
                93,028,587
                
                
                $
                (699,082
                )
                
                $
                (33,317
                )
                
                
                $
                92,296,188
  -
              12 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
  **NOTE
        B (continued)**
 
 December
                  31, 2003AdjustmentsPreviouslyreported
              
              
              Reclass
              
              
              Other
                  adjustments
              
              
              
              RestatedStatement
                  of OperationsPower
                  generation revenue
              
              $
              13,713,905
              
              
              $
              (87,646
              )
              
              $
              103,039
              
              (B)
              
              $
              13,729,298Cost
                  of revenues
              
              
              13,633,056
              
              
              
              (173,294
              )
              
              
              (13,170
              )
              (A)
              
              
              13,446,592Gross
                  profit
              
              
              80,849
              
              
              
              85,648
              
              
              
              116,209
              
              
              
              
              282,706Operating
                  expenses
              
              
              545,567
              
              
              
              59,454
              
              
              
              296,033
              
              (A)
              
              
              901,054(Loss)
                  income from operations
              
              
              (464,718
              )
              
              
              26,194
              
              
              
              (179,824
              )
              
              
              
              (618,348
              )Other
                  expense, net
              
              
              (2,309,065
              )
              
              
              (26,194
              )
              
              
              388,515
              
              (C)
                (G)
              
              
              (1,946,744
              )Loss
                  before income taxes and minority interest
              
              
              (2,773,783
              )
              
              
              -
              
              
              
              208,691
              
              
              
              
              (2,565,092
              )Income
                  tax (benefit) expense
              
              
              (347,639
              )
              
              
              -
              
              
              
              112,852
              
              (E)
              
              
              (234,787
              )Net
                  (loss) income before minority interest
              
              
              (2,426,144
              )
              
              
              -
              
              
              
              95,839
              
              
              
              
              (2,330,305
              )Minority
                  interest in the (income) loss of CLP
              
              
              335,996
              
              
              
              -
              
              
              
              (13,464
              )
              (F)
              
              
              322,532Net
                  (loss) income
              
              $
              (2,090,148
              )
              
              $
              -
              
              
              $
              82,375
              
              
              
              $
              (2,007,773
              )
 
 
 (A)
              The
                  Company recognized an additional impairment loss of $296,033 for
                  the year
                  ended December 31, 2003.  As a result, in 2003, the Company
                  decreased electricity sales contracts of $321,908, with an offsetting
                  decrease of $25,875 to CTA.  In addition, in periods prior to
                  2003, the Company did not recognize intangible assets and amortization
                  expense properly.  As a result, the Company reduced intangible
                  assets, accumulated amortization, beginning members’ equity, CTA and
                  amortization expense by $315,390, $78,394, $220,844, $29,322 and
                  $13,170,
                  respectively.
 
 (B)
              The
                  Company did not properly recognize power generation revenue of
                  $112,046
                  correctly in 2003.  As a result, the Company increased accounts
                  receivable, power generation revenue and CTA by $112,046, $103,039
                  and
                  $9,007, respectively.
  -
            13 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        B (continued)**
 
 (C)
              The
                  Company initially netted interest earned on funds borrowed to finance
                  CIP
                  against interest expense and improperly capitalized the net amount
                  as
                  opposed to the gross interest expense.  An adjustment was
                  recorded to increase CIP, interest income and CTA by $413,540,
                  $375,382
                  and $38,158, respectively.  (D)
              The
                  Company underaccrued $97,498 of accounting fees for the year ended
                  December 31, 2002.  To correct the understatement during
                  2003, the Company recorded an increase in accrued expenses and
                  a decrease
                  in beginning members’ equity of $97,498.  (E)
              The
                  Company recorded the deferred income tax impact of the adjustments
                  noted
                  above by increasing income tax expense by $112,852 and deferred
                  tax
                  liabilities by $122,716, with an offsetting decrease of $9,864
                  to
                  CTA.  (F)
              To
                  correct the overstatement of minority interest resulting from the
                  adjustment stated above, the Company recorded a decrease in minority
                  interest, minority interest in the loss of CLP and CTA of $2,465,
                  $13,464, and $1,177, respectively, and increase in members’ equity of
                  $17,106.  (G)
              The
                  Company overstated interest expense by $13,135.  The
                  overstatement was corrected by recording a decrease in interest
                  expense of
                  $13,135 and other current liabilities of $14,283, with an offsetting
                  increase of $1,148 to CTA, during
                  2003.
 
 The
        Company restated 2002 amounts by decreasing members’ equity as of January 1,
        2003 by $318,339.  The following is the summary of adjustments
        recorded that were made to members’ equity as of January 1, 2003: (a)
        overstatement of intangibles of $220,842 and (b) underaccrual of accounting
        fees of $97,498.
 
 
 **NOTE
        C - 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 transactions
        have been eliminated and the minority interest of Arbutus has been provided
        for
        in consolidation.
  -
            14 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        C (continued)**
 
 *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,
        revenue 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, intangible assets 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.
 
 *3.*
              *Cash
                  and Cash Equivalents*
 
 The
        Company considers all highly liquid investments with maturities when purchased
        of three months or less to be cash and cash equivalents.  All cash
        deposits are held in foreign banks and cash balances with banks as of December
        31, 2005, 2004 and 2003 exceed UK insured limits by $8,439,000, $20,560,000
        and
        $33,026,000, respectively.
 
 *4.*
              *Trade
                  Receivables*
 
 Trade
        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.*
              *Inventory*
 
 Inventory
        primarily consists of spare parts and materials used in the Company’s
        operations.  Inventories are stated at the lower of cost and net
        realizable value.  An allowance is established for slow moving items
        on the basis of management’s review and assessment of inventory
        movements.
  -
            15 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 **NOTE
        C (continued)**
 
 
 *6.*
              *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 electricity sales
        contracts.  Any adjustments needed to reflect actual volumes delivered
        are made when the actual volumetric information subsequently becomes
        available.  Final adjustments do not vary significantly from
        estimates.
 
 *7.*
              *Foreign
                  Currency Translation*
 
 The
        British pound sterling is the functional currency of the Company’s operating
        subsidiaries.  The consolidated financial statements of the Company’s
        non-United States subsidiaries are translated into United States dollars
        using
        current rates of exchange, with gains or losses included in the foreign currency
        translation adjustment account in the members’ equity section of the
        consolidated balance sheets.  The cumulative foreign currency
        translation adjustment, which represents total accumulated other comprehensive
        income is included in members’ equity.
 
 *8.*
              *Impairment
                  of Long-Lived Assets and
                  Intangibles*
 
 The
        Company evaluates intangibles 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.
 
 *9.*
              *Deferred
                  Financing Costs*
 
 The
        Company capitalizes financing costs and amortizes them using the straight-line
        method, over the term of the related debt.  Amortization of deferred
        financing costs is included in interest expense.
  *10.*
              *Property,
                    Plant and Equipment*
 Property,
        plant and equipment, consisting of land, plant and machinery, vehicles,
        furniture and fixtures and construction-in-process are stated at cost less
        accumulated depreciation.  Renewals and betterments that increase the
        useful lives of the assets are capitalized.  Repair and maintenance
        expenditures are expensed as incurred.
  -
            16 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 
 
 **NOTE
        C (continued)**
 
 The
        Company uses the straight-line method of depreciation over the estimated
        useful
        life of the assets:
 
 Plant
                  and machinery
              15
                  yearsVehicles
              4
                  yearsFurniture
                  and fixtures
              4
                  years
 
 *11.*
              *Sale
                  and Leaseback
                  Transactions*
 
 The
        Company accounts for the sale and leaseback of property, plant and equipment
        in
        accordance with Statement of Financial Accounting Standards (“SFAS”) No. 98,
“Accounting for Leases.”  Losses on sale-leaseback transactions are
        recognized at the time of sale if the fair value of the property sold is
        less
        than the undepreciated cost of the property.  Gains on sale and
        leaseback transactions are deferred and amortized over the remaining lease
        term.
 
 *12.*
              *Fair
                  Value of Financial Instruments*
 
 For
        the
        years ended December 31, 2005, 2004 and 2003, the carrying value of the
        Company’s cash and cash equivalents, trade receivables, unbilled receivables,
        inventory, accounts payable and accrued expenses 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.
 
 *13.*
              *Significant
                  Customers*
 
 The
        Company sells all of the electricity it produces from the project that it
        owns
        to the Non- Fossil Purchasing Agency (“NFPA”), a nonprofit organization that
        purchases electricity generated by renewable sources (such as landfill gas
        power
        plants) on behalf of all British utilities in order to meet British
        environmental protection goals.  Projects subject to PowerBank lease
        financing arrangements sell their output of electricity and ROCs under
        short-term contracts entered into from time-to-time.
  *14.*
                *Unbilled
                      Receivables*
 Unbilled
            receivables consist of revenue that has been earned but for which no
            invoices
            have been issued by the Company as the meter readings have not been certified
            by
            the customer or appropriate regulatory body.  Power generation revenue is
            recorded in the month of delivery and meter certification can require
            a period
            of two to four months in the case of certifications required for the
            issuance of
            RO certificates.
 -
            17 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        C (continued)**
 
 *15.*
              *Income
                  Taxes*
 
 The
        Company uses the liability method in accounting for income
        taxes.  Deferred income tax reflects, where required, the net tax
        effect of temporary differences between the carrying amounts of assets and
        liabilities for financial reporting purposes and amounts used for tax
        purposes.  The provision in the accompanying consolidated financial
        statements is made for UK income taxes and no provision is made for United
        States income taxes as the income or loss of the Company is passed through
        and
        included in the income tax returns of the members.
 
 *16.*
              *New
                  Accounting Standards and
                  Disclosures*
 
 *SFAS
        No. 154*
 
 In
        May
        2005, the FASB issued SFAS No. 154, “Accounting Changes and Error
        Corrections.”  SFAS No. 154 replaces 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, and accordingly restated the consolidated financial statements, as
        described in Note B.
 
 **NOTE
        D - IMPAIRMENT OF LONG-LIVED ASSETS**
 
 The
        Company performed impairment assessments for each of the years ended December
        31, 2005, 2004 and 2003, using a discounted cash flow valuation methodology,
        and
        noted that the carrying value exceeded the estimated fair value of the
        asset.  As a result, the Company recorded impairments of plant and
        equipment of $635,084, $500,346 and $296,033 for the years ended December
        31,
        2005, 2004 and 2003, respectively.
  -
            18 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        E - PROPERTY, PLANT AND EQUIPMENT**
 
 At
        December 31, 2005, 2004 and 2003, property, plant and equipment at cost and
        accumulated depreciation were:
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Property,
                  plant and equipment
              
              **$**
              **51,876,483**
              
              
              $
              51,410,620
              
              
              $
              34,621,844Construction
                  in process
              
              ****
              **14,264,150**
              
              
              
              11,836,846
              
              
              
              7,232,332****
              **66,140,633**
              
              
              
              63,247,466
              
              
              
              41,854,176Less
                  accumulated depreciation
              
              ****
              **(14,231,236**
              **)**
              
              
              (11,199,733
              )
              
              
              (6,934,847
              )**$**
              **51,909,397**
              
              
              $
              52,047,733
              
              
              $
              34,919,329
 
 For
        the
        years ended December 31, 2005, 2004 and 2003, the Company recorded depreciation
        expense of $4,486,103, $3,502,046 and $2,087,431, respectively, which is
        included in cost of revenues.
 
 
 **NOTE
        F - ELECTRICITY SALES CONTRACTS**
 
 At
        December 31, 2005, 2004 and 2003, the gross and net amounts of electricity
        sales contracts were:
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Electricity
                  sales contracts - gross
              
              **$**
              **22,255,445**
              
              
              $
              24,716,652
              
              
              $
              23,840,783Less
                  accumulated amortization expense
              
              ****
              **(8,887,338**
              **)**
              
              
              (8,109,862
              )
              
              
              (5,768,299
              )Electricity
                  sales contracts - net
              
              **$**
              **13,368,107**
              
              
              $
              16,606,790
              
              
              $
              18,072,484
 
 A
        portion
        of the purchase price of the landfill gas power plants was assigned to
        electricity sales contracts and is being amortized over the duration of the
        contracts on a straight-line basis.  As of December 31, 2005, the
        weighted-average remaining life of the contracts was 9 years, with the
        shortest
  -
            19 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        F (continued)**
 
 remaining
        duration being 1.6 years and the longest remaining duration being 13.6
        years.  Electricity sales contracts are more fully described in Note
        J.  During the years ended December 31, 2005, 2004 and 2003, the
        Company recorded amortization expense of $1,746,496, $1,789,774 and $1,587,412,
        respectively, which is included in cost of revenues.  The Company
        expects to record amortization expense during the next five years as
        follows:
 
  2006
              
              $
              1,746,4962007
              
              
              1,722,7442008
              
              
              1,689,3862009
              
              
              1,681,3522010
              
              
              1,663,538
 
 
 **NOTE
        G - LONG-TERM DEBT**
 
 The
        Company has a term loan facility (the “Term Loan”) for the purpose of financing
        certain of its power generation projects.  Payments under the Term
        Loan are made semiannually on March 31 and September 30 of each
        year.  A portion of the Term Loan bears interest at a fixed rate, with
        the remaining portion bearing interest at rates set from time to time based
        on a
        premium over widely recognized indices.  Payments under the Term Loan
        include amounts of principal and interest such that the Term Loan will be
        fully
        repaid by March 31, 2014, its final maturity.  Following is a summary
        of long-term debt obligations of the Company as of December 31, 2005, 2004
        and
        2003:
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Total
                  debt
              
              **$**
              **18,814,941**
              
              
              $
              22,957,900
              
              
              $
              22,756,073Less
                  current portion
              
              ****
              **(1,878,494**
              **)**
              
              
              (1,892,775
              )
              
              
              (1,562,974
              )Total
                  long-term portion
              
              **$**
              **16,936,447**
              
              
              $
              21,065,125
              
              
              $
              21,193,099
 
 At
        December 31, 2005, the interest rates applicable to portions of the Term
        Loan
        ranged from 5.88% to 7.73%.  At December 31, 2004, the interest rates
        applicable to portions of the Term Loan ranged from 5.93% to
        7.73%.  At December 31, 2003, the interest rates applicable to
        portions of the Term Loan ranged from 5.48% to 7.73%.  Amounts
        outstanding under the Term Loan are collateralized by substantially all of
        the
        assets of the projects owned by the Company and the underlying Term
        Loan
  -
            20 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        G (continued)**
 
 agreement
        requires certain of the Company’s subsidiaries to maintain a debt service
        coverage ratio (as defined in the Term Loan agreement) of 1.35 to 1 as well
        as
        certain other ratios.  At December 31, 2005, the Company's
        outstanding debt was current and in good standing with its bank.
 
 Remaining
        scheduled principal repayments of long-term debt as of December 31, 2005
        are as
        follows:
 
 2006
              
              $
              1,878,4942007
              
              
              2,020,2832008
              
              
              2,049,4332009
              
              
              2,215,5772010
              
              
              2,391,307Thereafter
              
              
              8,259,847$
              18,814,941
 
 The
        terms
        of the Term Loan provide for the Company to maintain certain cash balances
        with
        the lending bank for the purpose of providing for debt service and operations
        and maintenance reserves equal to six months of such expenses, which is included
        as restricted cash in the consolidated balance sheets.
 
 
 **NOTE
        H - CAPITAL LEASE OBLIGATIONS AND CONSTRUCTION ADVANCES**
 
 The
        Company entered into PowerBank Arrangements with Ridgewood Renewable PowerBank
        LLC on September 12, 2003 and with Ridgewood Renewable PowerBank II LLC,
        Ridgewood Renewable PowerBank III LLC and Ridgewood Renewable PowerBank IV
        LLC
        on September 30, 2004.
 
 Under
        the
        terms of the PowerBank Arrangements (see Note A), each PowerBank Fund committed
        to providing £850,000 per MW of capacity, with each PowerBank Fund committing
        for a specified amount of capacity.  The PowerBank Arrangements are
        denominated entirely in British pounds sterling and provide for funds to
        be
        advanced to the Company, initially for development and construction financing
        and, after the project reaches commercial operations, as permanent
        financing.  During the construction period, the Company pays to the
        PowerBank Funds providing financing a prorated amount equal to 10% per annum
        of
        the advances attributable to projects that have not yet reached commercial
        operation.  When a project reaches commercial operation, title to the
        project passes from the Company to the PowerBank Funds that provided the
        financing for that project and the advances convert from construction advances
        to long-term financing.
 
  -
            21 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        H (continued)**
 
 Under
        the
        long-term financing provisions of the PowerBank Arrangements the Company
        is
        obligated to make regular fixed payments and formula-based variable payments,
        the amounts of which are determined by a combination of (i) the output of
        each
        plant and (ii) the price received for such output during the periods for
        which
        the payments are made.  The PowerBank Arrangements provide for a
        minimum period of ten years for the permanent financing and can be extended
        on a
        project-by-project basis indefinitely by the PowerBank Fund providing the
        financing.  There are no purchase options or residual guarantee
        provisions in the PowerBank Arrangements.
 
 The
        Company accounts for its obligations under the PowerBank Arrangements as
        either
        long-term or current (as appropriate) construction advance obligations and,
        in
        the case of the permanent financing, as capital lease obligations with a
        10-year
        minimum term and an initial lease obligation of £850,000 per
        MW.  Should the cost of developing a given project be greater than or
        less than £850,000 per MW, then the Company will experience a gain or loss on
        the sale of the project.  Such gains are deferred and taken into cost
        of revenues over the ten-year minimum lease period, while losses are realized
        and taken into other income at the time when such losses are considered to
        be
        probable.
 
 For
        the
        years ended December 31, 2004 and 2003, the Company had received construction
        advances of $12,100,122 and $41,473,868, respectively, from the PowerBank
        Funds for the purpose of developing projects with an operating capacity of
        37.6MW.  As of December 31, 2005, the Company had commissioned
        projects with total capacity of 21.3MW.  The following table reflects
        the construction advances and anticipated capacity development associated
        with
        each PowerBank Fund as of December 31, 2005:
 
 Net
                  funds
              
              
              Anticipatedavailable
                  for
              
              
              capacityFund
              
              construction*
              
              
              (MW)PBI
              
              $
              9,618,503
              
              
              
              7PBII
              
              
              16,227,833
              
              
              
              11.6PBIII
              
              
              18,880,696
              
              
              
              13PBIV
              
              
              9,182,995
              
              
              
              6$
              53,910,027
              
              
              
              37.6*
                In original $US, not impacted by currency translation.
 
   -
            22 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        H (continued)**
 
 For
        the
        years ended December 31, 2005, 2004 and 2003, the Company paid to the PowerBank
        Funds construction period interest of $2,805,415, $3,448,064 and $1,417,721,
        respectively.  The Company capitalized all of the construction period
        interest charges incurred during construction.  The interest expense
        component of the capital lease payments made by the Company under the PowerBank
        Arrangements and included in interest expense on the accompanying consolidated
        statements of operations, was $3,400,773, $2,026,720 and $564,806 for the
        years
        ended December 31, 2005, 2004 and 2003, respectively.
 
 As
        of
        December 31, 2005, 2004 and 2003, the Company’s capital lease obligations and
        construction advances outstanding with the respective PowerBank Funds are
        as
        follows:
 
 **2005****MW**
              
              
              **Capital
                  lease**
              
              
              **Construction****Commissioned**
              
              
              **obligation**
              
              
              **advances****PBI**
              
              ****
              **7**
              
              
              **$**
              **9,296,887**
              
              
              **$**
              **-****PBII**
              
              ****
              **10.3**
              
              
              ****
              **14,776,809**
              
              
              ****
              **1,901,484****PBIII**
              
              ****
              **4**
              
              
              ****
              **5,981,084**
              
              
              ****
              **13,164,120****PBIV**
              
              ****
              -
              
              
              ****
              **-**
              
              
              ****
              **8,776,080******
              **21.3**
              
              
              **$**
              **30,054,780**
              
              
              **$**
              **23,841,684**2004
                  (Restated)MW
              
              
              Capital
                  lease
              
              
              ConstructionCommissioned
              
              
              obligation
              
              
              advancesPBI
              
              
              7
              
              
              $
              10,665,682
              
              
              $
              -PBII
              
              
              8.6
              
              
              
              13,927,555
              
              
              
              4,912,830PBIII
              
              
              -
              
              
              
              -
              
              
              
              21,288,930PBIV
              
              
              -
              
              
              
              -
              
              
              
              9,825,66015.6
              
              
              $
              24,593,237
              
              
              $
              36,027,420
  -
            23 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 
 **NOTE
        H (continued)**
 
 2003
                  (Restated)MW
              
              
              Capital
                  lease
              
              
              ConstructionCommissioned
              
              
              obligation
              
              
              advancesPBI
              
              
              7
              
              
              $
              10,868,748
              
              
              $
              -PBII
              
              
              -
              
              
              
              -
              
              
              
              17,536,010PBIII
              
              
              -
              
              
              
              -
              
              
              
              16,980,9497
              
              
              $
              10,868,748
              
              
              $
              34,516,959
 In
        addition to the PowerBank capital lease arrangements, the Company leases
        certain
        vehicles and equipment under multiple lease agreements which vary in terms
        and
        rates ranging from 7.4% to 8.9%.  At December 31, 2005 and 2004,
        the capital lease obligation for these assets was $899,931 and $1,089,516,
        respectively.
 
 Following
        is a summary of all capital lease obligations at December 31, 2005, 2004
        and
        2003:
  **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Gross
                  payments
              
              **$**
              **48,173,727**
              
              
              $
              41,839,579
              
              
              $
              17,973,263Less
                  imputed interest
              
              ****
              **(17,219,016**
              **)**
              
              
              (16,156,826
              )
              
              
              (7,104,515
              )Total
                  capital lease obligation
              
              ****
              **30,954,711**
              
              
              
              25,682,753
              
              
              
              10,868,748Less
                  current maturity
              
              ****
              **4,057,189**
              
              
              
              2,080,668
              
              
              
              1,175,455Capital
                  lease obligation - long-term
                portion
              
              **$**
              **26,897,522**
              
              
              $
              23,602,085
              
              
              $
              9,693,293
 
  -
            24 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 
 
 **NOTE
        H (continued)**
 
 At
        December 31, 2005, remaining scheduled repayments of capital lease obligation
        principal are as follows:
 
 2006
              
              $
              4,057,1892007
              
              
              2,502,8892008
              
              
              2,799,1002009
              
              
              3,159,4712010
              
              
              3,527,230Thereafter
              
              
              14,908,832$
              30,954,711
 
 Included
        in property, plant and equipment are assets under capital lease obligation
        with
        a net book value of $23,304,708, $21,173,334 and $8,037,042,
        respectively.
 
 
 **NOTE
        I - PURCHASE COMMITMENTS**
 
 On
        November 10, 2003, the Company entered into an equipment purchase agreement
        with
        its main supplier for the purchase of the electricity generation equipment
        constituting the primary element of the projects making up the Company’s future
        expansion.  The sales price of the equipment was negotiated in euros
        and the contract allowed the Company to fix the euro price for a substantial
        portion of its future construction costs.  Foreign currency
        transaction losses for the years ended December 31, 2005, 2004 and 2003 were
        $208,984, $21,658 and $29,780, respectively.  As of December 31, 2005,
        all of the units provided for in the equipment purchase agreement had either
        been delivered or had been ordered with delivery pending.  A portion
        of the required payments with respect to 15 engine/generator sets remains
        outstanding pending full performance by the equipment supplier.  The
        total of these payment obligations is approximately $4,076,532 at December
        31,
        2005 and payments are subject to and contingent on supplier performance in
        subsequent periods.  The Company anticipates that its purchase
        commitments will be fulfilled over the next two years.  The engines
        acquired are to be used in the Company’s continued expansion under the RO
        program pursuant to the PowerBank Fund Arrangements described in Note
        H.
 
  -
            25 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 
 **NOTE
        J - ELECTRIC POWER SALES CONTRACTS**
 
 The
        Company is committed to sell all of the output from certain of its projects,
        representing 26.5MWs at December 31, 2005, to the NFPA, a not-for-profit
        organization that purchases electricity generated by certain renewable power
        projects on behalf of large British electric utilities.  The
        electricity prices provided for in these contracts were set at an initial
        level
        and are adjusted annually based on general inflation in the UK.  Each
        contract is specific to a certain project site with contract terms being
        typically 15 years from the start of commercial operation of the project
        under contract.  Contracts for certain projects have shorter durations
        to match expected project life.  Contracts with the NFPA cannot be
        transferred from their original site.  The Company’s remaining
        projects, representing 21.3MW at December 31, 2005, are subject to the PowerBank
        Arrangements and the output from these projects is sold under one-year contracts
        renegotiated by the PowerBank Funds from time to time.  The pricing,
        terms and counterparties of these contracts are subject to change and reflect
        market conditions at the time they are entered into.
 
 
 **NOTE
        K - LANDFILL GAS AGREEMENTS**
 
 Projects
        of the Company are located on the sites of landfills owned and operated by
        third
        parties.  In each case the Company has entered into agreements with
        the landfill site operators (each a “Gas Agreement”) that give the Company
        certain rights including the right to occupy the portion of the landfill
        site
        required for its electricity generation project (or projects), to build the
        project to specifications agreed with the landfill site operator, to have
        access
        to the project compound, to install, own, operate and maintain a landfill
        gas
        collection system and to use the methane-containing gas produced by the landfill
        site for the purpose of generating electricity.  In exchange, the
        Company agrees to use its efforts to control the escaping of gas from the
        landfill and to pay a royalty to the landfill operator.  The landfill
        gas royalty is typically a percentage of the revenue of the project and may
        have
        a fixed payment component.  The terms of the Gas Agreements to which
        the Company is a party vary but are long-term agreements approximating the
        expected life of the project to be located on a site.
 
 
  -
            26 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        L - PROJECT DEVELOPMENT AND OPERATION**
 
 The
        Company develops, operates and maintains all of the projects that it owns,
        whether outright or subject to the PowerBank Arrangements.  In order
        to perform these functions the Company employs personnel in a number of
        functions including site operations, electrical operations, gas collection,
        site
        acquisition and administrative functions.  The Company is also
        responsible for the procurement of spare parts and supplies and for both
        routine
        and major maintenance of its facilities.
 
 
 **NOTE
        M - FAIR VALUE OF FINANCIAL INSTRUMENTS**
 
 At
        December 31, 2005, 2004 and 2003, the carrying value of the Company’s cash and
        cash equivalents, trade receivables, accounts payable and accrued expenses,
        royalty accrual, long-term debt, capital lease obligations and construction
        advances approximates their fair value.  The majority of the capital
        lease obligations and all of the construction advances relate to the sales-lease
        back agreements between the Company and its affiliated PowerBank
        Funds.
 
  -
            27 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 **NOTE
        N - TRANSACTIONS WITH AFFILIATES**
 
 The
        Company records short-term payables and receivables from other affiliates
        in the
        ordinary course of business.  The amounts payable and receivable with
        the other affiliates do not bear interest.  At December 31, 2005, 2004
        and 2003, the Company had outstanding receivables and payables with the
        following affiliates:
 
 Due
                  from
              
              
              Due
                  to**2005**
              
              
              2004
              
              
              2003
              
              
              **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)
              
              
              
              
              
              (Restated)
              
              
              (Restated)Trust
                  V
              
              **$**
              **-**
              
              
              $
              -
              
              
              $
              -
              
              
              **$**
              **244,342**
              
              
              $
              399,042
              
              
              $
              1,166,212Growth
                  Fund
              
              ****
              **-**
              
              
              
              -
              
              
              
              -
              
              
              ****
              **194,771**
              
              
              
              262,350
              
              
              
              595,837PowerBank
              
              ****
              **363,610**
              
              
              
              -
              
              
              
              -
              
              
              ****
              **-**
              
              
              
              -
              
              
              
              -Other
              
              ****
              **-**
              
              
              
              -
              
              
              
              -
              
              
              ****
              **-**
              
              
              
              -
              
              
              
              150,949**$**
              **363,610**
              
              
              $
              -
              
              
              $
              -
              
              
              **$**
              **439,113**
              
              
              $
              661,392
              
              
              $
              1,912,998
 
 
 **NOTE
        O - INCOME TAXES**
 
 For
        the
        years ended December 31, 2005, 2004 and 2003, the provision for income taxes
        consists of:
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)CurrentForeign
              
              **$**
              **-**
              
              
              $
              -
              
              
              $
              (104,825
              )DeferredForeign
              
              ****
              **261,118**
              
              
              
              10,298
              
              
              
              (129,962
              )Total
                  Foreign
              
              **$**
              **261,118**
              
              
              $
              10,298
              
              
              $
              (234,787
              )
 
 Components
        of the Company’s deferred income tax assets and liabilities as of December 31,
        2005, 2004 and 2003 are as follows:
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)Deferred
                  tax liabilitiesDepreciation
                  - noncurrent
              
              **$**
              **1,104,709**
              
              
              $
              960,391
              
              
              $
              876,571
 
  -
            28 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
 **NOTE
        O (continued)**
 
 The
        Company and its subsidiaries are not subject to U.S. income tax as they are
        treated as fiscally transparent entities for U.S. income tax
        purposes.  The following is a reconciliation of the income tax expense
        (benefit) computed using the statutory UK income tax rate to the actual income
        tax expense (benefit) for the years ended December 31, 2005, 2004 and
        2003:
 
 **2005**
              
              
              2004
              
              
              2003(Restated)
              
              
              (Restated)U.S.
                  Federal income taxes at the statutory rate Income (loss) subject
                  to tax at
                  the UK level (at statutory rate)
              
              ****
              **-**
              **%**
              
              
              -
              %
              
              
              -
              %Company’s
                  effective tax rate
              
              ****
              **(9**
              **)**
              
              
              -
              
              
              
              9****
              **(9**
              **)%**
              
              
              -
              %
              
              
              9
              %
  **NOTE
        P - 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
        Q - SUBSEQUENT EVENTS**
 
 On
        January 23, 2007, the Company entered into an agreement (the “Sale Agreement”)
        along with Arbutus and the PowerBank Funds (the “Sellers”), and MEIF LG Energy
        Limited (the “Buyer”) as buyer.  At that time, the Company owned 88%
        of the issued and outstanding shares of CLP and the remaining 12% of CLP
        was
        owned by Arbutus.  On February 22, 2007, the Company completed the
        sale (the “Sale”) of all of the issued and outstanding shares of
        CLP.
 
 Under
        the
        Sale Agreement, the Buyer agreed to buy (i) 100% of the issued and outstanding
        shares (the “Shares”) of CLP from Ridgewood UK and Arbutus, and (ii)
        substantially all of the assets (the “Assets”) of the PowerBanks.  The
        Assets and the Shares constitute all the landfill gas business located in
        the
        United Kingdom of the Company and of the PowerBank Funds.
  -
            29 -
  Ridgewood
        UK, LLC
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 December
        31, 2005, 2004 and 2003
 
  **NOTE
        Q (continued)**
 
 In
        accordance with the Sale Agreement, at closing, the Buyer paid an aggregate
        purchase price for the Shares and the Assets of £117.8 million ($229.5 million),
        subject to a working capital adjustment that resulted in an increase to the
        purchase price of approximately £4.2 million ($8.2 million).  After
        adjustment, the purchase price for the Shares was approximately £25.1 million
        ($48.9 million), of which approximately £22.1 million ($43.1 million) was
        attributable to the shares sold by the Company.  Taking into account
        payments made to the Company pursuant to certain sharing arrangements with
        the
        PowerBanks, the total gross sales proceeds to the Company were approximately
        £27.6 million ($53.8 million).
 
 On
        February 23, 2007, the Manager caused a portion of the sales proceeds to
        be
        converted from sterling into U.S. dollars, which was done at the rate of
        1.9483
        U.S.  dollars for each pound sterling.  On March 27, 2007, a
        subsequent conversion took place at an exchange rate of 1.9604 U.S. dollars
        for
        each pound sterling.  While certain transactions remain to be made
        that will require dollar/sterling conversions, management of the Fund does
        not
        expect the exchange rates of these conversions to have a material effect
        on the
        Company.
 
 The
        Sellers gave a number of warrantees and indemnities to the Buyer in connection
        with the Sale that are typical of such transactions.  Should there be
        a breach or breaches of the warrantees or should an indemnifiable event occur,
        the Buyer could make claims against the Sellers including the
        Company.  Management of the Company does not believe there is a
        material likelihood that such a claim will arise or that, should such a claim
        arise, the Company would incur a material liability.  This belief is
        based, in part, on the Sellers having purchased warrantee and indemnity
        insurance to minimize such risk and no reserves or escrow will be provided
        for
        the contingent liability represented by these warrantees and
        indemnities.  The Company has distributed all but a nominal amount of
        the sale proceeds to its members.






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