Ridgewood UK, LLC

                        Consolidated Financial Statements

                        December 31, 2004, 2003 and 2002

<PAGE>

             Report of Independent Registered Public Accounting Firm

Members
Ridgewood UK, LLC

We have audited the  accompanying  consolidated  balance sheets of Ridgewood UK,
LLC  ("Company")  as of December 31, 2004 and 2003 and the related  consolidated
statements of operations,  changes in members'  equity,  comprehensive  loss 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 the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
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 2004 and 2003 consolidated  financial statements referred to
above present  fairly,  in all material  respects,  the  consolidated  financial
position  of  Ridgewood  UK,  LLC as of  December  31,  2004 and  2003,  and the
consolidated  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.

/s/ Perelson Weiner LLP

New York, New York
October 31, 2005

<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Members of
Ridgewood UK, LLC

In  our  opinion,  the  accompanying   consolidated  statements  of  operations,
comprehensive  loss,  changes in members'  equity and of cash flows for the year
ended December 31, 2002 present fairly, in all material respects, the results of
operations  and cash flows of  Ridgewood  UK, LLC (the  "Company")  for the year
ended  December 31, 2002, in conformity  with  accounting  principles  generally
accepted in the United States of America.  These  financial  statements  are the
responsibility of the Company's management;  our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these  statements  in  accordance  with the  standards of the Public  Company
Accounting Oversight Board (United States). 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 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, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.


/s/ PricewaterhouseCoopers LLP
Florham Park, NJ
May 29, 2003

<PAGE>

Ridgewood UK, LLC
Consolidated Balance Sheets
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                               ---------------------------------
                                                                                    2004                 2003
                                                                               -------------       -------------
<S>                                                                            <C>                 <C>
Assets:
Cash and cash equivalents                                                      $  23,453,588       $  33,283,249
Trade receivables                                                                  4,974,322           3,419,671
Other current assets                                                               2,363,066           2,426,665
                                                                               -------------       -------------
  Total current assets                                                            30,790,976          39,129,585
                                                                               -------------       -------------

Plant and equipment                                                               53,792,387          36,011,951
Construction in progress                                                          10,101,164           6,576,893
                                                                               -------------       -------------
                                                                                  63,893,551          42,588,844
Accumulated depreciation                                                         (11,555,595)         (7,248,466)
                                                                               -------------       -------------
                                                                                  52,337,956          35,340,378
                                                                               -------------       -------------

Electric power sales contracts and other intangibles                              26,077,459          24,165,360
Accumulated amortization                                                          (8,604,643)         (6,366,794)
                                                                               -------------       -------------
                                                                                  17,472,816          17,798,566
                                                                               -------------       -------------

Other non-current assets                                                             674,715             760,058
                                                                               -------------       -------------

  Total assets                                                                 $ 101,276,463       $  93,028,587
                                                                               =============       =============


Liabilities and Members' Equity:
Liabilities:
Accounts payable                                                               $   1,997,220       $   3,676,900
Accrued expenses                                                                   3,898,427           4,029,517
Current portion of long-term debt                                                  1,892,775           1,562,972
Current portion of capital lease obligations (principally affiliates)              1,829,552             772,554
Current portion of construction advances - affiliates                                341,933             338,004
Due to affiliates                                                                    661,392           1,912,998
Other current liabilities                                                             48,676              14,287
                                                                               -------------       -------------
  Total current liabilities                                                       10,669,975          12,307,232

Long-term debt, less current portion                                              21,065,111          21,193,090
Capital lease obligations, less current portion (principally affiliates)          23,653,518          10,198,319
Construction advances, less current portion - affiliates                          35,685,487          34,178,955
Deferred income taxes                                                                994,072             753,979
Minority interest                                                                  1,423,814           2,030,568

Commitments and contingencies

Members' equity                                                                    7,784,486          12,366,444
                                                                               -------------       -------------

  Total liabilities and members' equity                                        $ 101,276,463       $  93,028,587
                                                                               -------------       -------------
</TABLE>

        See accompanying notes to the consolidated financial statements.

<PAGE>

Ridgewood UK, LLC
Consolidated Statements of Operations
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       For the Year Ended December 31,
                                                              --------------------------------------------------
                                                                  2004               2003               2002
                                                              ------------       ------------       ------------
<S>                                                           <C>                <C>                <C>
Power generation revenue                                      $ 22,776,328       $ 13,713,905       $  9,120,088

Cost of revenue, including depreciation and amortization
  of $5,161,765, $3,547,985 and $2,978,809 in 2004,
  2003 and 2002, respectively                                   20,484,901         13,633,056          9,991,516
                                                              ------------       ------------       ------------

Gross profit (loss)                                              2,291,427             80,849           (871,428)
                                                              ------------       ------------       ------------

Other operating expenses:
    General and administrative expenses                            528,422            545,567            451,224
    Write down of investments in power generation
         projects                                                       --                 --            854,367
                                                              ------------       ------------       ------------
              Total other operating expenses                       528,422            545,567          1,305,591
                                                              ------------       ------------       ------------

 Income (loss) from operations                                   1,763,004           (464,718)        (2,177,019)
                                                              ------------       ------------       ------------

Other (expense) income:
     Interest income                                               348,787            184,878             82,280
     Interest expense                                           (4,007,812)        (2,493,943)        (1,765,644)
     Equity income in Spanish landfill projects                         --                 --             94,781
                                                              ------------       ------------       ------------
            Total other expense, net                            (3,659,025)        (2,309,065)        (1,588,583)
                                                              ------------       ------------       ------------

Loss before income taxes and minority interest                  (1,896,020)        (2,773,783)        (3,765,602)

Income tax expense (benefit)                                       168,670           (347,639)          (168,847)
                                                              ------------       ------------       ------------

Net loss before minority interest                               (2,064,690)        (2,426,144)        (3,596,755)

Minority interest in loss of CLP Holdings, Ltd                     222,034            335,996            779,603
                                                              ------------       ------------       ------------

Net loss                                                      $ (1,842,656)      $ (2,090,148)      $ (2,817,152)
                                                              ------------       ------------       ------------
</TABLE>

        See accompanying notes to the consolidated financial statements.

<PAGE>


Ridgewood UK, LLC
Consolidated Statements of Changes in Members' Equity
--------------------------------------------------------------------------------

Members' equity, December 31, 2001                                 $ 18,345,822
                                                                   ------------

Net loss                                                             (2,817,152)

Contributions                                                             4,491

Foreign currency translation adjustment                               1,749,377
                                                                   ------------

Members' equity, December 31, 2002                                   17,282,538

Net loss                                                             (2,090,148)

Distributions                                                        (4,269,459)

Foreign currency translation adjustment                               1,443,513
                                                                   ------------

Members' equity, December 31, 2003                                   12,366,444

Net loss                                                             (1,842,656)

Distributions                                                        (3,507,583)

Foreign currency translation adjustment                                 768,281
                                                                   ------------

Members' equity, December 31, 2004                                 $  7,784,486
                                                                   ============

Ridgewood UK, LLC
Consolidated Statements of Comprehensive Loss
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                  For the Year Ended December 31,
                                           -------------------------------------------
                                               2004           2003             2002
                                           -----------     -----------     -----------
<S>                                        <C>             <C>             <C>
Net loss                                   $(1,842,656)    $(2,090,148)    $(2,817,152)

Foreign currency translation adjustment        768,281       1,443,513       1,749,377
                                           -----------     -----------     -----------

Comprehensive loss                         $(1,074,375)    $  (646,635)    $(1,067,775)
                                           ===========     ===========     ===========
</TABLE>

        See accompanying notes to the consolidated financial statements.

<PAGE>

Ridgewood UK, LLC
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            For the Year Ended December 31,
                                                                    ----------------------------------------------
                                                                         2004            2003              2002
                                                                    ------------     ------------     ------------
<S>                                                                 <C>              <C>              <C>
Cash flows from operating activities:
   Net loss                                                         $ (1,842,656)    $ (2,090,148)    $ (2,817,152)

Adjustments to reconcile net loss to cash flows provided
  by (used in) operating activities, net of businesses acquired:
  Depreciation and amortization                                        5,161,765        3,547,985        2,978,809
  Stock compensation expense                                                  --               --          309,217
  Minority interest in CLPE Holdings, Ltd                               (222,034)        (335,996)        (779,603)
  Write-down of investments in power generation
        projects                                                              --               --          854,367
  Equity in earnings in Spanish landfill projects                             --               --          (94,781)
  Changes in assets and liabilities, net
    of businesses acquired
     (Increase) decrease in trade receivables                         (1,208,039)         541,293         (835,800)
     Decrease (increase) in other current assets                         252,735       (1,873,881)        (108,086)
     Decrease (increase) in other non-current assets                     141,396               --               --
     (Decrease) increase in accounts payable                          (1,889,150)       2,404,942         (220,624)
     (Decrease) increase in accrued expenses                            (443,911)       2,109,604           53,071
     Increase in other current liabilities                                32,667           13,138               --
     Increase (decrease) in deferred income taxes                        168,672         (242,699)        (259,482)
     (Decrease) increase in other non-current liabilities                     --          (79,208)          72,826
                                                                    ------------     ------------     ------------
          Total adjustments                                            1,994,101        6,085,179        1,969,914
                                                                    ------------     ------------     ------------
          Net cash provided by (used in) operating activities            151,445        3,995,031         (847,238)
                                                                    ------------     ------------     ------------

Cash flows from investing activities:
  Capital expenditures                                               (16,149,728)     (13,112,768)      (3,358,550)
  Investment in Spanish landfill projects                                     --               --         (395,887)
                                                                    ------------     ------------     ------------
          Net cash used in investing activities                      (16,149,728)     (13,112,768)      (3,754,437)
                                                                    ------------     ------------     ------------

Cash flows from financing activities:
  Construction advances - affiliates                                  12,100,122       41,473,868               --
  Capital lease obligations (principally affiliates)                  (1,188,817)        (201,809)              --
  Borrowings from bank                                                        --               --        5,504,004
  Repayments of bank debt                                             (1,610,669)      (1,140,205)        (866,895)
  Short term advances from affiliates                                     41,861          155,387          192,103
  Distributions to minority interest                                    (633,811)        (505,390)
  Distributions to members                                            (4,650,102)      (3,126,940)              --
                                                                    ------------     ------------     ------------
          Net cash provided by financing activities                    4,058,582       36,654,911        4,829,212
                                                                    ------------     ------------     ------------

Effect of exchange rate on cash and cash equivalents                   2,110,040        2,820,777          270,873
Net (decrease) increase in cash and cash equivalents                  (9,829,660)      30,357,951          498,410
Cash and cash equivalents at beginning of the period                  33,283,249        2,925,298        2,426,888
                                                                    ------------     ------------     ------------
Cash and cash equivalents at end of period                          $ 23,453,588     $ 33,283,249     $  2,925,298
                                                                    ------------     ------------     ------------
</TABLE>

        See accompanying notes to the consolidated financial statements.

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 1
--------------------------------------------------------------------------------

1. Organization and Business Activity

On May 26, 1999,  Ridgewood UK, LLC was formed as a Delaware  limited  liability
company (the  "Company").  On June 30, 1999,  Ridgewood  Electric  Power Trust V
("Trust V") contributed  $16,667,567 to the Company;  in turn the Company's then
wholly owned subsidiary,  Ridgewood UK Ltd. ("UK Ltd."),  purchased six landfill
gas power plants located in the United Kingdom. During 2001, The Ridgewood Power
Growth Fund (the "Growth Fund") contributed  $5,817,006 to the Company in return
for  an  approximate  equity  share  of  30%.  Approximately  $3,400,000  of the
contributed funds, along with bank financing,  was used to acquire four landfill
gas  power  plants in the  United  Kingdom  with a  capacity  of 10.6  megawatts
("MWs").  Approximately  $2,100,000 of the total  purchase price of the acquired
plants was assigned to the electric power sales contracts  acquired and is being
amortized over the life of the contracts (15 years).

On October 16, 2001, UK Ltd.,  through the issuance of approximately  24% of its
shares  and  $2,000,000  cash  under  the terms of a merger  agreement  (the "UK
Merger"),  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 new landfill  projects.  The
Management and Development  Companies  previously developed the various landfill
gas projects that were sold to UK Ltd. pursuant to the UK Merger. As a result of
the acquisition, which totaled seven plants, UK Ltd. provides its own operation,
management  and  development  services.  UK Ltd. was renamed CLPE  Holdings Ltd.
("CLP") in 2001.  In return for the stock  issuance  and  $2,000,000  cash,  CLP
received plant and equipment  valued at approximately  $4,201,000,  a 50% equity
interest in landfill projects valued at approximately $744,000, cash of $454,000
and other  assets with an  approximate  value of  $1,000,000.  CLP also  assumed
liabilities of approximately  $3,058,000.  CLP assigned the electric power sales
contracts and other intangibles  acquired a value of $6,781,000,  which is being
amortized over the 15 year life of the underlying power sales contracts.

Since  2001,  the  members  of the  Company  are  Trust  V and the  Growth  Fund
(collectively, the "Trusts"), both Delaware business trusts. Trust V, which owns
70% of the Company,  is managed by  Ridgewood  Renewable  Power LLC  ("Ridgewood
Power"),  its  managing  shareholder.  The  Growth  Fund,  which owns 30% of the
Company,  is managed by Ridgewood Power and Ridgewood Power VI LLC, its managing
shareholders.

As of December 31,  2004,  CLP owned twenty  eight  landfill  methane  gas-fired
electric generating projects in the United Kingdom with an installed capacity of
approximately  42.2 MWs.  Seventeen of the projects  representing  approximately
26.5 MWs sells electricity under a 15 year contract to the Non Fossil Purchasing
Agency ("NFPA"), a non-profit  organization that purchases electricity generated
by renewable  sources on behalf of all British  utilities.  The remaining eleven
projects  representing  approximately  15.7 MWs are subject to PowerBank  leases
(see note 4) and sell this output  under one year  contracts.  As of October 31,
2005,  CLP owned  thirty one  landfill  methane  gas-fired  electric  generating
projects in the United Kingdom with an installed  capacity of approximately 48.7
MWs.

Certain  minority  shareholders  of CLP  attempted  to  renovate  certain  older
projects in the United Kingdom.  Under the terms of the UK Merger agreement,  if
they were  successful in renovating  these projects and the projects met certain
performance  tests, CLP would be obligated to acquire the renovated  projects in
exchange for the issuance of  additional  shares in CLP. The number of shares to
be issued was dependent on the projected financial  performance of the renovated
projects.  If CLP issued the maximum  number of shares to acquire the  renovated
projects, the Company's ownership of CLP would have fallen from 76.3% to 63.5%.

In the fourth  quarter of 2002,  CLP decided not to continue the  development of
two  projects it received as part of the 2001 UK Merger and recorded a writedown
of $854,367 to adjust the carrying  value of the projects to zero. The writedown
has been presented as a separate line item under other operating expenses in the
Consolidated Statements of Operations.

As part of the UK Merger,  the  Company  also  acquired a 50%  ownership  in CLP
Organogas SL ("Organogas"),  a 2 MWs plant located in Seville, Spain, as well as
a 50% interest in CLP Envirogas, SL,

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 2
--------------------------------------------------------------------------------

("Envirogas"),  a management  and  development  service  company also located in
Seville, Spain (collectively,  the "Spanish Landfill Projects"). Under the terms
of an agreement with one of its minority shareholders, effective January 1, 2003
the Company  transferred  its 50% interest in the Spanish  Landfill  Projects in
return for a portion of the minority  shareholder's interest in CLP. As a result
of the transaction, the Company increased its ownership in CLP from 76% to 88%.

Beginning in 2002,  the Company  began to identify and develop sites in order to
take advantage of the United Kingdom's  Renewable  Obligation  incentive program
("RO"). The RO program requires electricity  suppliers serving electric users in
the U.K. to obtain renewable obligation certificates ("ROC") to demonstrate that
a portion of their  electricity  supply  portfolio  was  produced  by  qualified
producers.  Registered  producers generate  electricity from qualified renewable
sources.  Accordingly,  the  Company  agreed  to  borrow  funds  from  Ridgewood
Renewable  PowerBank  LLC,  an  affiliated  entity,  to  finance  the  Company's
expansion in 2002. In 2003 and 2004,  the Company  borrowed funds from Ridgewood
Renewable  PowerBank II LLC, Ridgewood Renewable PowerBank III LLC and Ridgewood
Renewable PowerBank IV LLC, all affiliates of the Company (as they have a common
managing  shareholder),  to further finance expansion.  As of December 31, 2004,
the Company  received  advances  totaling  $53,770,169  from the four respective
PowerBank  Funds with the  expectation  to develop  twenty nine projects with an
operating  capacity  of 37.6 MWs.  As of  October  31,  2005,  the  Company  had
commissioned sixteen projects with a capacity of 21.3 MWs.

2. Summary of Significant Accounting Policies

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.

The  Company  used the  equity  method  of  accounting  for its  investments  in
Organogas and  Envirogas as the Company had the ability to exercise  significant
influence  over their  operating and financial  policies.  The Company's  equity
share of the operating  results of Organogas and Envirogas  were included in the
consolidated statements of operations until they were disposed in 2003.

Use of Estimates

The  preparation  of  consolidated   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 on-going basis, the Company evaluates
its estimates, including provision for bad debts, carrying value of investments,
amortization  and  depreciation  of plant and equipment and electric power sales
contracts,   and  recordable  liabilities  for  litigation,   contingencies  and
deferrals. 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.

New Accounting Standards and Disclosures

SFAS 143

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 143,
Accounting for Asset Retirement  Obligations,  on the accounting for obligations
associated  with the  retirement  of  long-lived  assets.  SFAS 143  requires  a
liability  to  be  recognized  in  the  financial   statements   for  retirement
obligations meeting specific criteria.  Measurement of the initial obligation is
to approximate fair value,  with an equivalent amount recorded as an increase in
the value of the capitalized  asset. The asset will be depreciated in accordance
with normal  depreciation policy and the liability will be adjusted for the time
value of money, with a charge to the income  statement,  until the obligation is
settled.  SFAS 143 is effective for fiscal years  beginning after June 15, 2002.
The Company adopted SFAS 143 effective  January 1, 2003, with no material impact
on the financial statements.

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 3
--------------------------------------------------------------------------------

SFAS 145

In April 2002, the FASB issued SFAS No. 145,  Rescission of FASB  Statements No.
4, 44, and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections.
SFAS No. 145 eliminates extraordinary accounting treatment for reporting gain or
loss  on  debt   extinguishment,   and  amends  other   existing   authoritative
pronouncements  to make various  technical  corrections,  clarify  meanings,  or
describe their applicability under changed conditions.  The Company adopted SFAS
145  effective  January  1,  2003,  with no  material  impact  on the  financial
statements.

SFAS 146

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal  Activities.  SFAS No. 146 requires  recording costs associated
with exit or disposal  activities at their fair values when a liability has been
incurred.  The  Company  adopted  SFAS 146  effective  January 1, 2003,  with no
material impact on the financial statements.

FIN 45

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

FIN 46R

In January 2003, the FASB issued FASB  Interpretation  No. 46,  Consolidation of
Variable  Interest  Entities  ("FIN 46") which changes the criteria by which one
company includes another entity in its consolidated financial statements. FIN 46
requires  a variable  interest  entity to be  consolidated  by a company if that
company is subject to a majority of the risk of loss from the variable  interest
entity's  activities or entitled to receive a majority of the entity's  residual
returns or both. The  consolidation  requirements of FIN 46 apply immediately to
variable  interest  entities  created after  December 31, 2003, and apply in the
first fiscal period ending after March 15, 2004, for variable  interest entities
created prior to January 1, 2004. The Company adopted the disclosure  provisions
of  FIN  46  effective  December  31,  2003,  with  no  material  impact  to the
consolidated financial statements.  In December 2003, the FASB issued a revision
to FIN 46 ("FIN 46R") to clarify some of the  provisions  and to exempt  certain
entities from its requirements.  The Company  implemented the full provisions of
FIN 46R effective  January 1, 2004, with no material impact on the  consolidated
financial statements.

SFAS 149

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
the  accounting  for  derivative   instruments,   including  certain  derivative
instruments  embedded in other contracts,  and for hedging activities under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities.  SFAS No.
149 is generally effective for contracts entered into or modified after June 30,
2003 and for hedging  relationships  designated after June 30, 2003. The Company
adopted  SFAS  149  effective  July 1,  2003,  with no  material  impact  on the
financial statements.

SFAS 150

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity.  SFAS No. 150
establishes   standards  for   classifying  and  measuring   certain   financial
instruments with  characteristics  of both  liabilities and equity.  The Company
adopted  SFAS  150  effective  July 1,  2003,  with no  material  impact  on the
financial statements.

SFAS 153

In  December  2004,  the FASB  issued SFAS No.  153,  Exchanges  of  Nonmonetary
Assets--an  amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29,
Accounting  for  Nonmonetary

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 4
--------------------------------------------------------------------------------

Transactions,  is based on the principle that  exchanges of  nonmonetary  assets
should be measured based on the fair value of the assets exchanged. The guidance
in that Opinion,  however,  included certain exceptions to that principle.  This
Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges
of  similar  productive  assets and  replaces  it with a general  exception  for
exchanges  of  nonmonetary  assets  that do not  have  commercial  substance.  A
nonmonetary  exchange has  commercial  substance if the future cash flows of the
entity are expected to change  significantly  as a result of the  exchange.  The
Company adopted SFAS 153 effective June 15, 2005, with no material impact on the
financial statements.

Significant Accounting Policies

Cash and cash equivalents

The  Company  considers  all highly  liquid  investments  with  maturities  when
purchased of three months or less, as cash and cash  equivalents.  Cash balances
with  banks  as of  December  31,  2004  and  2003  exceeds  insured  limits  by
approximately $23,406,000 and $33,239,000, respectively.

Trade receivables

Trade  receivables  are recorded at invoice price 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.

Revenue recognition

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

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,
included in shareholders' equity at December 31, 2004 and 2003 amounts to a gain
of $2,224,109 and $1,455,828, respectively.

Impairment of Long-Lived Assets and Intangibles

The Company evaluates  long-lived assets, such as property,  plant and equipment
and   specifically   identifiable   intangibles,   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
annually by comparing  the carrying  value of an asset to the  estimated  future
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.

Plant and equipment

Plant and equipment, consisting of land, power generation facilities,  equipment
and construction  in-progress are stated at cost.  Renewals and betterments that
increase the useful lives of the assets are capitalized.  Repair and maintenance
expenditures are expensed as incurred.

Depreciation is recorded using the straight-line method over the estimated
useful life of the assets, which ranges from 3 to 20 years with a weighted
average of 15 and 16 years at December 31, 2004 and 2003, respectively. During
the years ended December 31, 2004, 2003 and 2002, the Company recorded
depreciation expense of $3,525,107, $2,082,884 and $1,555,489, respectively.

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 5
--------------------------------------------------------------------------------

Electric power sales contracts and other intangibles

A portion of the purchase price of the landfill gas power plants was assigned to
the electric power sales  contracts and is being amortized over the 15 year life
of the contracts on a straight-line  basis.  During the years ended December 31,
2004, 2003, and 2002, the Company recorded  amortization  expense of $1,636,658,
$1,465,101  and  $1,423,320,   respectively.   The  Company  expects  to  record
amortization expense during the next five years as follows:

                   Year Ended
                  December 31,                      Amortization
                  ------------                      ------------

                  2005                                $1,636,658
                  2006                                 1,636,658
                  2007                                 1,636,658
                  2008                                 1,636,658
                  2009                                 1,636,658

Supplemental cash flow information

Total interest paid during the years ended December 31, 2004,  2003 and 2002 was
$4,007,812, $2,493,943 and $1,765,644, respectively.

During the years  ended  December  31, 2004 and 2003,  construction  advances of
$14,083,446 and $10,582,075, respectively, were converted to capital leases.

Equipment  acquired under  non-affiliated  capital leases during the years ended
December 31, 2004 and 2003 amounted to $727,610 and $559,355, respectively.

Effective  January 1, 2003,  the  Company  transferred  its 50%  interest in the
Spanish  Landfill  Projects,  carried  at  $1,370,564  immediately  prior to the
transaction,  in return for a portion of the minority  shareholder's interest in
CLP.

For the year ended December 31, 2003, the Company declared  distributions to its
members of $4,269,459,  of which  $3,126,940 was paid; the remaining  $1,142,519
was paid in January 2004.

Stock-Based Compensation

The Company applied SFAS No. 123,  Accounting for Stock-Based  Compensation,  in
accounting for its stock option  grants.  Accordingly,  compensation  expense is
recognized for fixed stock options as if the fair values of all stock options as
of the  grant  date  were  recognized  as  expense  over the  vesting  period in
accordance  with SFAS No. 123. The  outstanding  stock option grants vest over a
three year period and have an exercise life of ten years from the date of grant.
For the year ended December 31, 2002, the Company had approximately 1,450,000 of
vested outstanding stock options and recorded  compensation expense of $309,217.
In 2003, the Company  cancelled the plan.  Accordingly,  no outstanding  options
exist at December 31, 2004 and 2003.

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.  No  provision is made for United
States income taxes in the accompanying consolidated financial statements as the
United  States  income or loss of the Company is passed  through and included in
the tax returns of the members.

Reclassification

Certain items in previously  issued financial  statements have been reclassified
for comparative purposes. This had no effect on income or loss.

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 6
--------------------------------------------------------------------------------

3. Long-Term Debt

Following is a summary of long-term debt at December 31, 2004 and 2003:

                               2004              2003
                           ------------     ------------
Total long-term debt       $ 22,957,886     $ 22,756,062
Less - Current portion       (1,892,775)      (1,562,972)
                           ------------     ------------
Total long-term portion    $ 21,065,111     $ 21,193,090
                           ============     ============

In 2001, the Company  renegotiated the terms of its long-term debt with its bank
("bank  loan").  The  renegotiated  bank  loans  are  repayable  in semi  annual
installments  each March 31st and September 30th through 2014. The  installments
vary in amount and include interest.  At December 31, 2004, the outstanding debt
bears interest at the following rates:  $9,419,280 at 7.08%, $9,264,397 at 7.73%
and $4,274,210 at LIBOR plus 1.31% (5.93% at December 31, 2004). At December 31,
2003, the outstanding debt bears interest at the following rates:  $9,698,121 at
7.08%, $9,182,979 at 7.73%, and $3,874,962 at LIBOR plus 1.4% (5.48% at December
31, 2003). The notes to the bank loan are collateralized by substantially all of
the assets of the projects and the underlying credit agreement  requires certain
of the Company's  subsidiaries to maintain a debt service coverage ratio of 1.35
to 1 (as defined) as well as certain other ratios.  At October 31, 2005,  the UK
Projects outstanding debt was current and in good standing with its bank.

Scheduled principal repayments of long-term debt are as follows:

                      Year Ended
                     December 31,            Payment
                     ------------            -------

                     2005                  $ 1,892,775
                     2006                    2,103,156
                     2007                    2,261,900
                     2008                    2,294,536
                     2009                    2,480,536
                      Thereafter            11,924,984
                                           ------------
                      Total                $ 22,957,887
                                           ============

The Company has substantially  reduced its interest rate variability to the bank
loan by entering into near term forward  notional swap agreements with its bank.
Each year the Company can reset and fix the  interest  rate it is charged on the
long  term  portion  of its bank loan or be  charged  the  Company's  prevailing
available interest rate,  approximately  LIBOR plus 1.4%. On March 31, 2005, the
Company reset the interest rate to 5.88% on the long term portion with the fixed
rate expiring on March 31, 2006.

At December  31, 2004 and 2003,  cash and cash  equivalents  include  restricted
balances of $3,228,453 and $2,649,442,  respectively, which is equivalent to six
months of principal and interest payments on the bank loan.

4. Capital Lease Obligations and Construction Advances

Commencing  in 2002,  the Company  began to develop and  construct  expansion of
certain existing  facilities in order to take advantage of the RO programs (Note
1). As the Company required financing to maintain its expansion,  it was decided
to raise the necessary financing from affiliates.  Accordingly,  Ridgewood Power
formed Ridgewood  Renewable  PowerBank LLC ("PB I") and began offering shares in
the fourth quarter of 2002.  During the second quarter of 2003,  Ridgewood Power
formed Ridgewood  Renewable  PowerBank II LLC ("PB II"); in the third quarter of
2003, Ridgewood Power formed Ridgewood Renewable PowerBank III LLC ("PBIII") and
during the third quarter of 2004,  Ridgewood  Power formed  Ridgewood  Renewable
PowerBank IV LLC ("PB IV").  Shortly after the formation of PBI, PBII, PBIII and
PBIV (collectively,  the "PowerBank Funds"),  all affiliates of the Company, the
offering period began for each respective PowerBank Fund. The proceeds raised by
PowerBank Funds,

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 7
--------------------------------------------------------------------------------

less the offering costs incurred by the PowerBank Funds, were initially provided
to the Company in the form of construction advances at the rate of approximately
(pound)850,000 per MWs.

As  of  December  31,  2004,  the  Company  received  construction  advances  of
$53,770,169 from the PowerBank Funds with the expectation to develop twenty nine
projects with an operating  capacity of 37.6 MWs. The following  table  reflects
the construction  advances and anticipated  development per PowerBank Fund as of
October 31, 2005.

             Offering            Net Funds          Anticipated      Anticipated
              Period           Available For      No. of Projects     Capacity
  Fund    Ended (Closed)       Construction *     to be Developed       (MW)
--------------------------------------------------------------------------------

   PBI       Apr 2003         $  9,478,645               5                7
  PBII       Jun 2003           16,227,833              10               11.6
  PBIII      Mar 2004           18,880,696              11                13
  PBIV       Nov 2004            9,182,995               3                 6

--------------------------------------------------------------------------------
  Total                       $ 53,770,169              29               37.6
--------------------------------------------------------------------------------

* In original $US, not impacted by currency translation

During the construction phase, the Company will pay construction period interest
at a rate of 10% on the construction  period advances to the PowerBank Funds for
each respective  project.  Upon completion of construction  and  commencement of
operations of a project ("commissioning"),  construction period interest charges
will  cease,  each  respective  facility  site  will be  sold to the  respective
PowerBank  Fund at a  predetermined  price  ((pound)850,000  per MWs),  and said
project will be leased back to the Company  subject to a 10 year  minimum  lease
pursuant  to  sale-lease   back   agreements.   Accordingly,   the   outstanding
construction advances will convert to capital leases, determined on a project by
project basis. The minimum term of the respective capital leases will run for 10
years  and are  payable  in  quarterly  installments  at a rate  of 12%  with no
guaranteed residuals.  For the years ended December 31, 2004, 2003 and 2002, the
PowerBank Funds charged the Company  construction period interest of $3,459,012,
$1,236,900 and $0, respectively. The Company capitalized all of the construction
period interest charges incurred during construction less interest income earned
of $455,167,  $379,306 and $0 for 2004,  2003 and 2002,  respectively,  and have
included  the  net in the  basis  of the  assets  constructed.  Interest  on the
PowerBank  capital leases charged to the Company,  and reflected within interest
expense  on  the  accompanying   consolidated  statements  of  operations,   was
$2,058,306, $581,220 and $0 in 2004, 2003 and 2002, respectively.

As of December 31, 2004 and 2003, the Company's  capital lease  obligations  and
construction  advances  outstanding  with the respective  PowerBank Funds are as
follows:

<TABLE>
<CAPTION>
                                   2004                                                       2003
          ----------------------------------------------------        ------------------------------------------------------
          No. of Projects     Capital Lease       Construction        No. of Projects     Capital Lease        Construction
Fund        Commissioned        Obligation          Advances           Commissioned         Obligation           Advances
----------------------------------------------------------------------------------------------------------------------------
<S>             <C>            <C>               <C>                        <C>            <C>                  <C>
 PBI             5             $ 10,500,476      $         --               5              $ 10,305,811         $         --
PBII             6               13,717,295         4,912,830               --                       --           17,536,010
PBIII           --                       --        21,288,930               --                       --           16,980,949
PBIV            --                       --         9,825,660               --                       --                   --
--------------------------------------------------------------        ------------------------------------------------------
Total           11             $ 24,217,771      $ 36,027,420               5              $ 10,305,811         $ 34,516,959
--------------------------------------------------------------        ------------------------------------------------------
</TABLE>

Through  October 31, 2005, the Company  commissioned an additional five projects
and  converted   $8,540,766   from   construction   advances  to  capital  lease
obligations.

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 8
--------------------------------------------------------------------------------

In addition to the PowerBank capital lease  arrangements  previously  disclosed,
the Company also leases  vehicles and equipment  under various lease  agreements
which vary in terms and rates  ranging  from 7.4% to 8.9%.  At December 31, 2004
and 2003,  the capital  lease  obligation  for these assets was  $1,265,299  and
$665,062, respectively.

Following is a summary of all capital lease obligations at December 31, 2004 and
2003:

                                                       2004            2003
                                                   -----------     -----------
Gross payments                                     $41,646,201     $18,221,900
Less - imputed interest                             16,163,131       7,251,027
                                                   -----------     -----------
Total capital lease obligation                      25,483,060      10,970,873
Less - current maturity                              1,829,552         772,554
                                                   -----------     -----------
Capital lease obligation- long-term portion        $23,653,518     $10,198,319
                                                   -----------     -----------

At December 31, 2004, remaining scheduled repayments of capital lease obligation
principal are as follows:

Year Ended
December 31,               Repayment
------------               ---------
   2005                   $ 1,829,552
   2006                     1,976,045
   2007                     2,175,496
   2008                     2,429,685
   2009                     2,740,147
Thereafter                 14,332,141
                          -----------
   Total                  $25,483,070
                          -----------

Included in plant and equipment are assets under capital lease obligation with a
cost of $23,244,429 and $8,428,312 at December 31, 2004 and 2003,  respectively.
At  December  31,  2004 and 2003,  accumulated  depreciation  on  capital  lease
obligation amounted to $2,071,095and $391,270, respectively.

5. Purchase Commitments

At December 31, 2004,  the Company had  committed to purchase  fifteen  engines,
with an approximate cost of $5,100,000,  and had contracted various  development
costs, with an approximate cost of $1,400,000.  The Company anticipates that its
purchase  commitments will be fulfilled over the next two years. The engines and
development costs acquired are to be used in the Company's  continued  expansion
under  the RO  program.  Upon  completion  of the  respective  facilities,  such
facilities  will be sold and leased  back to the  Company  pursuant to the terms
described in Note 4.

6. Electric Power Sales Contract

The  Company  is  committed  to sell all of the  output  from  seventeen  of its
projects,  representing  26.5 MWs, to the NFPA, a non-profit  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. The electricity prices are adjusted annually by
a factor equal to the  percentage  increase in the United  Kingdom  Retail Price
Index. The output of the Company's remaining eleven projects,  representing 15.7
MWs and subject to PowerBank  financing,  is sold under one year contracts.  The
pricing and terms of these  contracts  are subject to change and reflect  market
conditions at the time they are entered into.

7. Investments

The Company  owned 50%  interests in the Spanish  Landfill  Projects  located in
Seville,  Spain,  which  was  obtained  as part of the UK  Merger.  The  Company
accounted for its ownership in the Spanish  Landfill  Projects  under the equity
method of accounting.  Effective  January 1, 2003,  the Company  entered into an

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                                Page 9
--------------------------------------------------------------------------------

agreement  with  one  of its  minority  shareholders.  Under  the  terms  of the
agreement,  the Company  transferred  its 50%  interest in the Spanish  Landfill
Projects in return for a portion of the minority  shareholder's  interest in the
Company.  This  exchange  resulted  in a  reduction  to  the  minority  interest
liability that was approximately $1.2 million greater than the recorded value of
the investments. Since the investments were only held for slightly more than one
year, the company recognized proportional  corresponding reductions to the plant
and equipment and electric power sales contract  acquired in the UK Merger. As a
result of the transaction,  the Company  increased its ownership in UK Ltd. from
76% to 88%.

8. Fair Value of Financial Instruments

At December 31, 2004 and 2003, the carrying value of the Company's cash and cash
equivalents,   accounts  receivable,  accounts  payable  and  accrued  expenses,
construction advances, long-term debt and capital lease obligations 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.

9. Transactions with Affiliates

From time to time, 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, 2004
and 2003, the Company had outstanding payables with the following affiliates:

                           2004          2003
                        ----------    ----------
Trust V                 $  399,042    $1,166,214
Growth Fund                262,350       595,837
Other                           --       150,947
                        ----------    ----------
Total                   $  661,392    $1,912,998
                        ==========    ==========

10. Income Taxes

For the year  ended  December  31,  2004,  the  Company  recorded  an income tax
provision for UK income taxes of $168,670 on U.K. losses before income taxes and
minority  interest of $1,761,311.  The Company recorded an income tax benefit of
$347,639  and  $168,847  for  the  years  ended  December  31,  2003  and  2002,
respectively,  on U.K.  losses  before  income  taxes and  minority  interest of
$2,773,783  and  $3,765,602,  respectively.  The  income  tax  benefit/provision
recorded is 30%, the  statutory  corporate  tax rate of the U.K. At December 31,
2004 and 2003,  the Company had a deferred  net tax  liability  of $994,072  and
$753,979,  respectively.  The  significant  component of the Company's  deferred
income tax  liability  is  principally  attributable  to the  taxable  temporary
difference  arising from accelerated  depreciation for tax purposes and straight
line depreciation for book purposes on its plant and equipment.

At December 31, 2004,  the Company had  approximately  $980,000 in net operating
losses  available  for an unlimited  carry-forward  period,  which  results in a
deferred tax asset in the amount of $295,000. The Company's net operating losses
may be somewhat  limited in their  utilization  due to the tax  structure in the
United Kingdom.  Accordingly,  the Company has determined, based upon the weight
of available evidence,  that it is more likely than not that all of the deferred
tax assets resulting from the foreign  operating losses will not be realized and
recorded a valuation allowance for $295,000. In 2004 and 2003, the net operating
losses utilized were approximately $232,000 and $0, respectively.

The following is a reconciliation of the income tax expense  (benefit)  computed
using the  statutory  foreign  income tax rate to the actual  income tax expense
(benefit) and its effective income tax rate.

<PAGE>

Ridgewood UK, LLC
Notes to Consolidated Financial Statements                               Page 10
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        Year ended December 31,
                            -----------------------------------------------------------------------------------
                                       2004                       2003                        2002
                            --------------------------    ------------------------   --------------------------
                                            Percent of                 Percent of                   Percent of
                                              pretax                     pretax                       pretax
                                Amount        income        Amount       income         Amount         income
                            --------------------------    ------------------------   --------------------------
<S>                           <C>             <C>         <C>             <C>        <C>               <C>
Income tax benefit at
  foreign statutory rate      (528,393)       -30.0%       (809,750)      -30.0%     (1,129,681)       -30.0%
Amortization of
  foreign intangibles          482,018         27.4%       408,885         15.1%        524,529         13.9%
Other                          215,045         12.2%        53,226          2.0%        436,305         11.6%
                            --------------------------    ------------------------   --------------------------
Income tax expense
  (benefit)                    168,670          9.6%      (347,639)       -12.9%       (168,847)        -4.5%
                            --------------------------    ------------------------   --------------------------
</TABLE>

Components of the Company's Income tax expense (benefit) are as follows:

                                        -------------------------------------
                                           2004          2003          2002
                                        -------------------------------------
  Income tax expense (benefit):
    Current tax                         $      --     $(106,637)    $      --
    Deferred tax                          168,670      (241,002)     (168,847)
                                        -------------------------------------
                                        $ 168,670     $(347,639)    $(168,847)
                                        =====================================