Exhibit
      99.1






CONSOLIDATED
      FINANCIAL STATEMENTS


AND
      REPORT OF INDEPENDENT CERTIFIED


PUBLIC
      ACCOUNTANTS





**RIDGEWOOD
      UK, LLC**





December
      31, 2006 and 2005












**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 (Deficit)
              6Consolidated
                Statements of Cash Flows
              7Notes
                to Consolidated Financial Statements
              8
                  -
                  25













**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, 2006 and 2005, and the
      related consolidated statements of operations and comprehensive loss, changes
      in
      members’ equity (deficit) and cash flows for each of the three years in the
      period ended December 31, 2006.  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, 2006 and 2005, and the results of its operations and its cash
      flows
      for each of the three years in the period ended December 31, 2006 in conformity
      with accounting principles generally accepted in the United States of
      America.








s/
      GRANT
      THORTON LLP





Edison,
      New Jersey


October
      31, 2007





-
          3 -




Ridgewood
                  UK, LLC**CONSOLIDATED
                  BALANCE SHEETS**December
                  31,**2006**
              
              
              2005ASSETSCurrent
                  assetsCash
                  and cash equivalents
              
              **$**
              **7,199,536**
              
              
              $
              6,690,531Restricted
                  cash
              
              ****
              **2,483,982**
              
              
              
              3,152,526Trade
                  receivables
              
              ****
              **4,438,133**
              
              
              
              2,653,881Unbilled
                  receivables
              
              ****
              **7,641,807**
              
              
              
              4,752,530Due
                  from affiliates
              
              ****
              **2,593,616**
              
              
              
              363,610Inventory
              
              ****
              **994,600**
              
              
              
              746,454Other
                  current assets
              
              ****
              **279,140**
              
              
              
              272,989Total current assets
              
              ****
              **25,630,814**
              
              
              
              18,632,521Plant
                  and equipment, net
              
              ****
              **61,899,406**
              
              
              
              51,909,397Electricity
                  sales contracts, net
              
              ****
              **12,570,841**
              
              
              
              13,368,107Deferred
                  financing cost, net
              
              ****
              **422,590**
              
              
              
              480,840Total
                  assets
              
              **$**
              **100,523,651**
              
              
              $
              84,390,865LIABILITIES
                  AND MEMBERS' EQUITY (DEFICIT)Current
                  liabilitiesAccounts
                  payable
              
              **$**
              **1,619,776**
              
              
              $
              1,791,970Accrued
                  expenses
              
              ****
              **17,980,367**
              
              
              
              7,864,472Long-term
                  debt - current portion
              
              ****
              **2,300,056**
              
              
              
              1,878,494Revolving
                  credit facility
              
              ****
              **2,350,920**
              
              
              
              -Capital
                  lease obligations - current portion
              
              ****
              **5,406,987**
              
              
              
              2,897,264Construction
                  advances - current portion
              
              ****
              **589,493**
              
              
              
              577,807Due
                  to affiliates
              
              ****
              **125,319**
              
              
              
              439,113Total
                  current liabilities
              
              ****
              **30,372,918**
              
              
              
              15,449,120Long-term
                  debt - noncurrent portion
              
              ****
              **16,981,784**
              
              
              
              16,936,447Capital
                  lease obligations - noncurrent portion
              
              ****
              **43,454,636**
              
              
              
              26,897,522Construction
                  advances - noncurrent portion
              
              ****
              **9,235,393**
              
              
              
              23,263,877Deferred
                  income taxes
              
              ****
              **1,548,339**
              
              
              
              1,104,709Other
                  liabilities
              
              ****
              **-**
              
              
              
              1,380Minority
                  interest
              
              ****
              **-**
              
              
              
              362,279Total
                  liabilities
              
              ****
              **101,593,070**
              
              
              
              84,015,334Commitments
                  and contingenciesMembers’
                  equity (deficit)
              
              ****
              **(1,069,419**
              **)**
              
              
              375,531Total
                  liabilities and members’ equity (deficit)
              
              **$**
              **100,523,651**
              
              
              $
              84,390,865*The
                  accompanying notes are an integral part of these consolidated financial
                  statements.*
  -
            4 -
  Ridgewood
                  UK, LLC**CONSOLIDATED
                  STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**Years
                  ended December 31,**2006**
              
              
              2005
              
              
              2004Power
                  generation revenue
              
              **$**
              **44,750,987**
              
              
              $
              32,359,236
              
              
              $
              22,877,685Cost
                  of revenues
              
              ****
              **36,871,677**
              
              
              
              29,326,410
              
              
              
              20,295,280Gross
                  profit
              
              ****
              **7,879,310**
              
              
              
              3,032,826
              
              
              
              2,582,405Operating
                  expensesGeneral
                  and administrative expenses
              
              ****
              **888,700**
              
              
              
              200,994
              
              
              
              551,573Impairment
                  of plant and equipment
              
              ****
              **1,210,265**
              
              
              
              635,084
              
              
              
              500,346Total
                  operating expenses
              
              ****
              **2,098,965**
              
              
              
              836,078
              
              
              
              1,051,919Income
                  from operations
              
              ****
              **5,780,345**
              
              
              
              2,196,748
              
              
              
              1,530,486Other
                  income (expense)Interest
                  income
              
              ****
              **420,140**
              
              
              
              328,498
              
              
              
              373,337Interest
                  expense
              
              ****
              **(6,584,615**
              **)**
              
              
              (5,188,353
              )
              
              
              (3,603,930
              )Loss
                  on sale-leaseback
              
              ****
              **(191,291**
              **)**
              
              
              (202,551
              )
              
              
              (880,387
              )Total
                  other expense, net
              
              ****
              **(6,355,766**
              **)**
              
              
              (5,062,406
              )
              
              
              (4,110,980
              )Loss
                  before income taxes and minority interest
              
              ****
              **(575,421**
              **)**
              
              
              (2,865,658
              )
              
              
              (2,580,494
              )Income
                  tax expense
              
              ****
              **941,496**
              
              
              
              261,118
              
              
              
              10,298Net loss before minority interest
              
              ****
              **(1,516,917**
              **)**
              
              
              (3,126,776
              )
              
              
              (2,590,792
              )Minority
                  interest in loss of CLP
              
              ****
              **234,394**
              
              
              
              385,352
              
              
              
              293,018Net loss
              
              ****
              **(1,282,523**
              **)**
              
              
              (2,741,424
              )
              
              
              (2,297,774
              )Foreign
                  currency translation adjustment
              
              ****
              **(162,427**
              **)**
              
              
              (448,341
              )
              
              
              710,511Comprehensive
                  loss
              
              **$**
              **(1,444,950**
              **)**
              
              $
              (3,189,765
              )
              
              $
              (1,587,263
              )*The
                  accompanying notes are an integral part of these consolidated financial
                  statements.*
 -
              5 -
  Ridgewood
                    UK, LLC**CONSOLIDATED
                    STATEMENT OF CHANGES IN MEMBERS' EQUITY**Years
                    ended December 31, 2006, 2005 and 2004Accumulated
                    other
                
                
                TotalMembers'
                
                
                Retained
                
                
                comprehensive
                
                
                members'capital
                
                
                deficit
                
                
                income
                
                
                equity
                    (deficit)Members'
                    equity balance as of January 1, 2004
                
                $
                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
                
                
                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
                
                
                
                375,531Net
                    loss
                
                
                -
                
                
                
                (1,282,523
                )
                
                
                
                
                
                
                (1,282,523
                )Foreign
                    currency translation adjustment
                
                
                -
                
                
                
                
                
                
                
                (162,427
                )
                
                
                (162,427
                )**Members'
                    deficit balance as of December 31, 2006**
                
                **$**
                **22,215,959**
                
                
                **$**
                **(24,840,131**
                **)**
                
                **$**
                **1,554,753**
                
                
                **$**
                **(1,069,419**
                **)**
 *The
            accompanying notes are an integral part of these consolidated financial
            statements.*


-
          6 -


Ridgewood
                  UK, LLC**CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**Years
                  ended December 31,**2006**
              
              
              2005
              
              
              2004Cash
                  flows from operating activitiesNet
                  loss
              
              **$**
              **(1,282,523**
              **)**
              
              $
              (2,741,424
              )
              
              $
              (2,297,774
              )Adjustments
                  to reconcile net loss to net cash providedby
                  operating activitiesDepreciation
                  and amortization
              
              ****
              **7,853,465**
              
              
              
              6,232,599
              
              
              
              5,291,820Impairment
                  of plant and equipment
              
              ****
              **1,210,265**
              
              
              
              635,084
              
              
              
              500,346Amortization
                  of deferred financing costs
              
              ****
              **117,436**
              
              
              
              128,885
              
              
              
              141,396Loss
                  on sale-leaseback
              
              ****
              **191,291**
              
              
              
              202,551
              
              
              
              880,387Deferred
                  income taxes
              
              ****
              **273,416**
              
              
              
              261,118
              
              
              
              10,298Minority
                  interest in CLP
              
              ****
              **(234,394**
              **)**
              
              
              (385,352
              )
              
              
              (293,018
              )Changes
                  in operating assets and liabilitiesTrade
                  receivables
              
              ****
              **(1,332,742**
              **)**
              
              
              (527,783
              )
              
              
              (426,561
              )Unbilled
                  receivables
              
              ****
              **(2,098,858**
              **)**
              
              
              (1,450,897
              )
              
              
              (1,104,208
              )Inventory
              
              ****
              **(136,192**
              **)**
              
              
              (1,324
              )
              
              
              (314,465
              )Other
                  current assets
              
              ****
              **2,807,168**
              
              
              
              209,205
              
              
              
              75,261Accounts
                  payable
              
              ****
              **(395,433**
              **)**
              
              
              414,463
              
              
              
              (1,905,881
              )Accrued
                  expenses
              
              ****
              **5,713,770**
              
              
              
              4,440,555
              
              
              
              467,786Due
                  to/from affiliates, net
              
              ****
              **(2,501,563**
              **)**
              
              
              (585,762
              )
              
              
              41,860Other
                  liabilities
              
              ****
              **(1,478**
              **)**
              
              
              (54,402
              )
              
              
              (464,200
              )Total
                  adjustments
              
              ****
              **11,466,151**
              
              
              
              9,518,940
              
              
              
              2,900,821Net
                  cash provided by operating activities
              
              ****
              **10,183,628**
              
              
              
              6,777,516
              
              
              
              603,047Cash
                  flows from investing activitiesCapital
                  expenditures
              
              ****
              **(9,492,617**
              **)**
              
              
              (11,179,552
              )
              
              
              (16,698,046
              )Cash
                  flows from financing activitiesRepayments
                  of term loan
              
              ****
              **(2,011,840**
              **)**
              
              
              (1,788,724
              )
              
              
              (1,610,669
              )Proceeds
                  from construction advances
              
              ****
              **-**
              
              
              
              -
              
              
              
              12,100,122Repayments
                  of capital lease obligations
              
              ****
              **(2,236,687**
              **)**
              
              
              (1,498,570
              )
              
              
              (1,125,675
              )Restricted
                  cash
              
              ****
              **1,039,593**
              
              
              
              (284,549
              )
              
              
              (340,931
              )Borrowings
                  from revolving credit facility
              
              ****
              **2,211,540**
              
              
              
              -
              
              
              
              -Cash
                  distributions to minority interest
              
              ****
              **(80,420**
              **)**
              
              
              (556,137
              )
              
              
              (641,074
              )Cash
                  distributions to members
              
              ****
              **-**
              
              
              
              (3,504,383
              )
              
              
              (4,615,239
              )Net
                  cash (used in) provided by financing activities
              
              ****
              **(1,077,814**
              **)**
              
              
              (7,632,363
              )
              
              
              3,766,534Effect
                  of exchange rate on cash and cash equivalents
              
              ****
              **895,808**
              
              
              
              (1,500,202
              )
              
              
              1,919,788Net
                  increase (decrease) in cash and cash equivalents
              
              ****
              **509,005**
              
              
              
              (13,534,601
              )
              
              
              (10,408,677
              )Cash
                  and cash equivalents, beginning of year
              
              ****
              **6,690,531**
              
              
              
              20,225,132
              
              
              
              30,633,809Cash
                  and cash equivalents, end of year
              
              **$**
              **7,199,536**
              
              
              $
              6,690,531
              
              
              $
              20,225,132Supplemental
                  disclosure of cash flow information:Cash
                  paid during the year for interest
              
              **$**
              **5,643,380**
              
              
              $
              5,601,353
              
              
              $
              4,319,839Supplemental
                  disclosures of noncash investing and financing activities:Construction
                  advances converted to capital leases
              
              **$**
              **16,291,678**
              
              
              $
              8,337,276
              
              
              $
              14,083,446Equipment
                  acquired under nonaffiliated capital leases
              
              ****
              **-**
              
              
              
              -
              
              
              
              727,610*The
                  accompanying notes are an integral part of these consolidated financial
                  statements.*
 -
              7 -


Ridgewood
      UK, LLC





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





December
      31, 2006 and 2005





**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 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, 2006 and 2005





**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, 2006, CLP owned landfill methane gas-fired electric generating
      projects in the United Kingdom with an installed capacity of approximately
      59.1MW.  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 32.6MW 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.





See
      Note
      P for discussion of the sale of CLP.


-
          9 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





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





*1.*
            *Principles
                of Consolidation*





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





*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 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, 2006 and 2005 exceed UK-insured limits by approximately $4,735,000 and
      $5,341,000, respectively.  Restricted cash (see Note G) as of December
      31, 2006 and 2005 exceeded insured limits by approximately $2,422,000 and
      $3,098,000, 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.


-
          10 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      B (continued)**





*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.





*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 did not vary significantly from
      estimates.





*7.*
            *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
      ROCs.





*8.*
            *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
      operating 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.  The
      cumulative foreign currency translation adjustment, which represents total
      accumulated other comprehensive income is included in members’
equity.





*9.*
            *Impairment
                of Long-Lived Assets and
                Intangibles*





The
      Company evaluates amortizable intangibles and long-lived assets, such as 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.


-
          11 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      B (continued)**





*10.*
            *Deferred
                Financing Costs*





The
      Company capitalizes financing costs and amortizes them using the effective
      rate
      method over the life of the related loan.  Amortization of deferred
      financing costs is included in interest expense in the consolidated statements
      of operations.  Accumulated amortization at December 31, 2006 and 2005
      was $609,026 and $455,132, respectively.




*11.*
            *Plant
                and Equipment*




Plant
      and
      equipment 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.





The
      Company depreciates its plant and equipment using the straight-line method
      of
      depreciation over the estimated useful lives of the assets, which range from
      4 -
      15 years.




*12.*
            *Sale
                and Leaseback Transactions*





The
      Company accounts for the sale and leaseback of 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 plant and equipment sold is less
      than
      the undepreciated cost of the plant and equipment.  Gains on sale and
      leaseback transactions are deferred and amortized over the remaining lease
      term.




*13.*
            *Fair
                Value of Financial Instruments*




For
      the
      years ended December 31, 2006 and 2005, 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 Company’s long-term debt, calculated
      using current rates for loans with similar maturities, does not differ
      materially from its carrying value.




*14.*
            *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




-
          12 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005







**NOTE
      B (continued)**





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.




*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.*
            *Comprehensive
                Loss*




The
      Company’s comprehensive loss consists of net loss and foreign currency
      translation adjustments.




*17.*
            *Reclassifications*




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




*18.*
            *New
                Accounting Standards*




*FIN
      48*





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued
      FASB   Interpretation No. 48 (“FIN 48”),
“Accounting for Uncertainty in Income Taxes**- an interpretation of
      FASB Statement
      No. 109.”  FIN 48 clarifies the accounting for uncertainty
      in income taxes recognized in an enterprise’s financial statements in accordance
      with SFAS No. 109 and prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a tax return. FIN 48 also
      provides guidance on




-
          13 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005




**NOTE
      B (continued)**





derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. FIN 48 will be effective for the Company
      beginning January 1, 2007. The Company does not believe that the adoption
      of FIN 48 will have a material impact on its consolidated financial
      statements.





*SFAS
        No. 157*





In
        September 2006, the FASB issued SFAS No. 157, “Fair Value
        Measurements,” to define fair value, establish a framework for measuring fair
        value in accordance with accounting principles generally accepted in the
        United
        States of America (“GAAP”) and expand disclosures about fair value
        measurements.  SFAS No. 157 requires quantitative disclosures using a
        tabular format in all periods (interim and annual) and qualitative disclosures
        about the valuation techniques used to measure fair value in all annual periods.
        SFAS No. 157 will be effective for the Company beginning January 1, 2008.
        The Company is currently evaluating the impact of adopting SFAS No. 157 on
        its
        consolidated financial statements.





*SFAS
      No. 159*





In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities.”  SFAS No. 159 expands
        opportunities to use fair value measurements in financial reporting and permits
        entities to choose to measure many financial instruments and certain other
        items
        at fair value. SFAS No. 159 will be effective for the Company on January 1,
        2008. The Company is currently evaluating the impact of adopting SFAS No.
        159 on
        its consolidated financial statements.








**NOTE
      C - IMPAIRMENT OF LONG-LIVED ASSETS**




The
      Company performed impairment assessments for each of the years ended December
      31, 2006, 2005 and 2004 by comparing the cash flows of the related assets to
      their undiscounted cash flows and noted that the carrying value exceeded the
      undiscounted cash flows estimated from such assets as of December 31, 2006,
      2005
      and 2004.  The Company then measured the impairments using a
      discounted cash flow valuation methodology.  As a result, the Company
      recorded impairments of plant and equipment of $1,210,265, $635,084 and $500,346
      for the years ended December 31, 2006, 2005 and 2004,
      respectively.


-
          14 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      D - PLANT AND EQUIPMENT**




At
      December 31, 2006 and 2005, plant and equipment at cost and accumulated
      depreciation were:





**2006**
            
            
            2005Property,
                plant and equipment
            
            **$**
            **74,218,627**
            
            
            $
            51,876,483Construction
                in process
            
            ****
            **10,515,887**
            
            
            
            14,264,150****
            **84,734,514**
            
            
            
            66,140,633Less
                accumulated depreciation
            
            ****
            **(22,835,108**
            **)**
            
            
            (14,231,236
            )**$**
            **61,899,406**
            
            
            $
            51,909,397





For
      the
      years ended December 31, 2006, 2005 and 2004, the Company recorded depreciation
      expense of $6,219,530, $4,486,103 and $3,502,046, respectively, which is
      included in cost of revenues.




**NOTE
      E - ELECTRICITY SALES CONTRACTS**




At
      December 31, 2006 and 2005, the gross and net amounts of electricity sales
      contracts were:





**2006**
            
            
            2005Electricity
                sales contracts - gross
            
            **$**
            **24,400,986**
            
            
            $
            22,255,445Less
                accumulated amortization
            
            ****
            **(11,830,145**
            **)**
            
            
            (8,887,338
            )Electricity
                sales contracts - net
            
            **$**
            **12,570,841**
            
            
            $
            13,368,107





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, 2006, the
      weighted-average remaining life of the contracts was 8 years, with the shortest
      remaining duration being 0.6 years and the longest remaining duration being
      12.6
      years.  Electricity sales contracts are more fully described in Note
      J.  During the years ended December 31, 2006, 2005




-
          15 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      E (continued)**





and
      2004,
      the Company recorded amortization expense of $1,633,935, $1,746,496 and
      $1,789,774, respectively, which is included in cost of revenues.  The
      Company expects to record amortization expense during the next five years as
      follows:





Year
                endedDecember
                31,2007
            
            $
            1,611,6762008
            
            
            1,580,5132009
            
            
            1,573,0152010
            
            
            1,556,3322011
            
            
            1,447,238




**NOTE
      F - ACCRUED EXPENSES**





Accrued
      expenses consist of the following at December 31, 2006 and 2005:





**2006**
            
            
            2005PowerBank
                variable payment
            
            **$**
            **9,527,673**
            
            
            $
            2,803,804Accrued
                royalty expense
            
            ****
            **2,713,354**
            
            
            
            1,725,962General
                accrued expenses
            
            ****
            **2,713,322**
            
            
            
            1,798,723Accrued
                interest
            
            ****
            **1,050,078**
            
            
            
            941,278Payroll
                tax and benefit accrual
            
            ****
            **1,975,940**
            
            
            
            594,705**$**
            **17,980,367**
            
            
            $
            7,864,472





**NOTE
      G - LONG-TERM DEBT**





The
      Company entered into a revolving credit facility of £1,200,000 in 2006 for the
      purpose of providing working capital to the business.  Such facility
      is collateralized by all trade receivables of the Company.  The credit
      facility bears interest at LIBOR (5.23% at December 31, 2006) plus 1.5%, with
      a
      maturity date of March 31, 2007.  At December 31, 2006, the amount
      outstanding under this facility was £1,200,000 ($2,350,920).


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          16 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      G (continued)**





The
      Company also 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,
      2006 and 2005:





**2006**
            
            
            2005Term
                loan
            
            **$**
            **19,281,840**
            
            
            $
            18,814,941Revolving
                credit facility
            
            ****
            **2,350,920**
            
            
            
            -Total
                debt
            
            ****
            **21,632,760**
            
            
            
            18,814,941Less
                current portion
            
            ****
            **(4,650,976**
            **)**
            
            
            (1,878,494
            )Total
                long-term portion
            
            **$**
            **16,981,784**
            
            
            $
            16,936,447





At
      December 31, 2006, the interest rate applicable to portions of the Term Loan
      ranged from 7.08% 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 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.





Remaining
      scheduled principal repayments of long-term debt as of December 31, 2006 are
      as
      follows:





2007
            
            $
            4,650,9762008
            
            
            2,333,2432009
            
            
            2,522,3952010
            
            
            2,722,4602011
            
            
            2,667,669Thereafter
            
            
            6,736,017$
            21,632,760





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          17 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      G (continued)**





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.




**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.





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.


-
          18 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      H (continued)**





As
      of
      December 31, 2006, the Company had commissioned projects with total
      capacity of 32.6MW.  The following table reflects the construction
      advances and anticipated capacity development associated with each PowerBank
      Fund as of December 31, 2006:





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.




For
      the
      years ended December 31, 2006, 2005 and 2004, the Company paid to the PowerBank
      Funds construction period interest of $1,493,162, $2,805,415 and $3,448,064,
      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 was $4,486,034, $3,400,773 and
      $2,026,720 for the years ended December 31, 2006, 2005 and 2004,
      respectively.





As
      of
      December 31, 2006, the Company’s capital lease obligations and construction
      advances outstanding with the respective PowerBank Funds are as
      follows:





2006MW
            
            
            Capital
                lease
            
            
            ConstructionCommissioned
            
            
            obligation
            
            
            advancesPBI
            
            
            7
            
            
            $
            9,418,553
            
            
            $
            -PBII
            
            
            10.3
            
            
            
            15,850,193
            
            
            
            1,498,712PBIII
            
            
            4
            
            
            
            17,793,943
            
            
            
            3,330,482PBIV
            
            
            -
            
            
            
            4,980,769
            
            
            
            4,995,69221.3
            
            
            $
            48,043,458
            
            
            $
            9,824,886




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          19 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      H (continued)**





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, 2006 and 2005,
      the capital lease obligations for these assets were $818,165 and $899,929,
      respectively.





Following
      is a summary of all capital lease obligations at December 31, 2006 and
      2005:





**2006**
            
            
            2005Gross
                payments
            
            **$**
            **75,918,834**
            
            
            $
            48,173,727Less
                imputed interest
            
            ****
            **(27,057,211**
            **)**
            
            
            (18,378,941
            )Total
                capital lease obligation
            
            ****
            **48,861,623**
            
            
            
            29,794,786Less
                current maturity
            
            ****
            **(5,406,987**
            **)**
            
            
            (2,897,264
            )Capital
                lease obligation - long-term
              portion
            
            **$**
            **43,454,636**
            
            
            $
            26,897,522





At
      December 31, 2006, remaining scheduled repayments of capital lease obligation
      principal are as follows:





2007
            
            $
            5,406,9872008
            
            
            4,340,6392009
            
            
            4,904,4472010
            
            
            5,490,5792011
            
            
            6,062,111Thereafter
            
            
            22,656,860$
            48,861,623




Included
      in plant and equipment are assets under capital lease obligation with a cost
      of
      $45,572,584 and $27,587,866 and accumulated depreciation of $9,164,670 and
      $4,283,158 at December 31, 2006 and 2005, respectively.


-
          20 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005




**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, 2006, 2005 and 2004 were
      $8,269, $208,984 and $21,658, respectively, and are included in cost of
      revenues.  As of December 31, 2006, 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 the engine/generator sets remains outstanding pending full
      performance by the equipment supplier.  The total of these payment
      obligations is approximately $48,677 at December 31, 2006 and payments are
      subject to and contingent on supplier performance in subsequent
      periods.  The Company anticipates that its purchase commitments will
      be fulfilled during 2007.  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.





**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, 2006, 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 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


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          21 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      K (continued)**





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.  For the years ended December 31, 2006, 2005 and 2004,
      royalty expense was $5,730,702, $4,278,250 and $2,360,640,
      respectively.  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.





**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 - 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, 2006 and
      2005, the Company had outstanding receivables and payables with the following
      affiliates:





Due
                From
            
            
            Due
                To**2006**
            
            
            2005
            
            
            **2006**
            
            
            2005Trust
                V
            
            **$**
            **934,324**
            
            
            $
            -
            
            
            **$**
            **-**
            
            
            $
            244,342Growth
                Fund
            
            ****
            **316,768**
            
            
            
            -
            
            
            ****
            **-**
            
            
            
            194,771PowerBank
                Funds
            
            ****
            **1,257,038**
            
            
            
            363,610
            
            
            ****
            **-**
            
            
            
            -Ridgewood
                Power Management
            
            ****
            **-**
            
            
            
            -
            
            
            ****
            **125,319**
            
            
            
            -Other
            
            ****
            **85,486**
            
            
            
            -
            
            
            ****
            **-**
            
            
            
            -**$**
            **2,593,616**
            
            
            $
            363,610
            
            
            **$**
            **125,319**
            
            
            $
            439,113




-
          22 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      N - INCOME TAXES**





The
      Company is not subject to U.S. income tax as it is treated as a fiscally
      transparent entity for U.S. income tax purposes. For the years ended December
      31, 2006, 2005 and 2004, the provision for income taxes consists
      of:





**2006**
            
            
            2005
            
            
            2004CurrentForeign
            
            **$**
            **668,080**
            
            
            $
            -
            
            
            $
            -DeferredForeign
            
            ****
            **273,416**
            
            
            
            261,118
            
            
            
            10,298Income
                tax expense
            
            **$**
            **941,496**
            
            
            $
            261,118
            
            
            $
            10,298





Components
      of the Company’s deferred income tax assets and liabilities as of December 31,
      2006 and 2005 are as follows:





**2006**
            
            
            2005Deferred
                tax assetsNet
                operating losses - noncurrent
            
            **$**
            **210,218**
            
            
            $
            287,852Less
                valuation allowance
            
            
            **(210,218**
            )
            
            
            (287,852
            )**$**
            **-**
            
            
            $
            -Deferred
                tax liabilitiesDepreciation
                - noncurrent
            
            **$**
            **1,548,339**
            
            
            $
            1,104,709Net
                deferred tax liability
            
            **$**
            **1,548,339**
            
            
            $
            1,104,709




At
      December 31, 2006 and 2005, CLP group had approximately £358,000 and £558,000,
      respectively, of loss carryforward, all of which may be carried forward
      indefinitely.  However, the Company’s ability to utilize its NOL’s may
      be limited due the tax structure in the United Kingdom.  Accordingly,
      the Company has determined that it is not more likely than not that it will
      realize the benefit of these NOL’s and, as such, has recorded a full valuation
      allowance against the related deferred tax asset.


-
          23 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005


**NOTE
      O - CONTINGENCIES**





The
      Company is subject to legal proceedings involving ordinary and routine claims
      related to its business.  The ultimate legal and financial liability
      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
      P - 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.




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.




-
          24 -


Ridgewood
      UK, LLC





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





December
      31, 2006 and 2005





**NOTE
      P (continued)**





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.  As of October 31, 2007, the Company is not aware of any
      claims.  The Company has distributed all but a nominal amount of the
      sale proceeds to its members.






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      25
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