STILLWATER HYDRO PARTNERS L.P.

                              FINANCIAL STATEMENTS

                     Years Ended December 31, 2003 and 2002














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TABLE OF CONTENTS



                                                            Page No.

INDEPENDENT AUDITORS' REPORT                                   1

FINANCIAL STATEMENTS

       Balance Sheets                                          2

       Statements of Income and Partners' Capital              3

       Statements of Cash Flows                                4

       Notes to Financial Statements                         5 - 8












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                          INDEPENDENT AUDITORS' REPORT



To the Partners of
Stillwater Hydro Partners L.P.


We have audited the  accompanying  balance  sheets of Stillwater  Hydro Partners
L.P. as of December 31, 2003 and 2002 and the related  statements  of income and
partners'  capital,  and cash flows for the years then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

Except as  discussed in the  following  paragraph,  we  conducted  our audits in
accordance with auditing  standards  generally  accepted in the United States of
America.  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.  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.

Because of the inadequacy of accounting records for periods prior to March 1991,
we were  unable  to form an  opinion  regarding  the  amounts  at which  certain
pre-development  costs are recorded in the accompanying  balance sheets totaling
$567,185 and $593,659 at December 31, 2003 and 2002, respectively.

In our  opinion,  except for the effects of such  adjustments,  if any, as might
have been  determined to be necessary had the  accounting  records been adequate
for us to satisfy  ourselves  about the  pre-development  costs  recorded in the
balance  sheets,  the financial  statements  referred to in the first  paragraph
present fairly, in all material  respects,  the financial position of Stillwater
Hydro  Partners  L.P.  as of  December  31, 2003 and 2002 and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.


/s/ Fagliarone Group CPAs, PC

Syracuse, NY
January 23, 2004


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STILLWATER HYDRO PARTNERS L.P.
BALANCE SHEETS
December 31, 2003 and 2002


                                                          2003            2002
                                                       -----------     ---------

ASSETS

   Cash ..........................................     $   51,260     $    5,286

   Account receivable from Niagara Mohawk ........        101,785        126,172

   Prepaid expenses ..............................        116,969         93,922
   Deferred financing costs, net of
     accumulated amortization of $802,070
     in 2003 and $726,016 in 2002 ................        314,081        390,135
   Hydro facility, net of accumulated
     depreciation of $3,051,315 in 2003
     and $2,765,276 in 2002 ......................      7,873,309      8,159,348
                                                       ----------     ----------

       TOTAL ASSETS ..............................     $8,457,404     $8,774,863
                                                       ==========     ==========



LIABILITIES AND PARTNERS' CAPITAL

   Accounts payable and accrued expenses .........     $  187,793     $  167,111
   Accrued interest ..............................      1,397,953      1,239,245
   Bonds payable .................................      4,554,898      5,021,698
   Due to partners ...............................        353,047        376,047
   Due to withdrawing partner ....................      1,000,000      1,000,000
                                                       ----------     ----------

       TOTAL LIABILITIES .........................      7,493,691      7,804,101

                                                       ----------     ----------
COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL ................................        963,713        970,762
                                                       ----------     ----------

       TOTAL LIABILITIES AND PARTNERS'
         CAPITAL .................................     $8,457,404     $8,774,863
                                                       ==========     ==========


See accompanying notes to financial statements.

                                       -2-
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STILLWATER HYDRO PARTNERS L.P.
STATEMENTS OF INCOME AND PARTNERS' CAPITAL
December 31, 2003 and 2002


                                                      2003              2002
                                                   -----------      -----------

POWER SALE REVENUE ...........................     $ 1,310,630      $ 1,384,041
                                                   -----------      -----------

OPERATING EXPENSES
   Depreciation and amortization .............         362,093          362,093
   Administration and operations .............          87,367           81,409
   Insurance .................................          73,436           60,385
   Repairs and maintenance ...................          15,130           48,585
   PILOT and real estate taxes ...............          86,415           81,647
   Professional fees .........................          19,767           19,230
   Easement and land payments ................          29,733           31,087
   Miscellaneous fees ........................          19,591           21,789
   Utilities .................................           3,200            3,719
                                                   -----------      -----------

       TOTAL OPERATING EXPENSES ..............         696,732          709,944
                                                   -----------      -----------

       OPERATING INCOME ......................         613,898          674,097
                                                   -----------      -----------

OTHER INCOME (EXPENSE)
   Interest income ...........................              83              502
   Interest expense ..........................        (621,030)        (682,145)
                                                   -----------      -----------

       TOTAL OTHER INCOME (EXPENSE) ..........        (620,947)        (681,643)
                                                   -----------      -----------

       NET LOSS ..............................          (7,049)          (7,546)

PARTNERS' CAPITAL, BEGINNING OF YEAR .........         970,762          978,308
                                                   -----------      -----------

       PARTNERS' CAPITAL, END OF YEAR ........     $   963,713      $   970,762
                                                   ===========      ===========


See accompanying notes to financial statements.

                                      -3-
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STILLWATER HYDRO PARTNERS L.P.
STATEMENTS OF CASH FLOWS
December 31, 2003 and 2002


                                                           2003          2002
                                                        ----------    ---------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss ........................................    $  (7,049)    $  (7,546)
   Adjustments to reconcile net loss to net
     cash provided by operating activities:
     Depreciation and amortization .................      362,093       362,093
     Changes in operating assets and
       liabilities
        (Increase) decrease in:
         Account receivable                                24,387        (5,349)
         Prepaid expenses ..........................      (23,047)      (14,945)
         Increase (decrease) in:
         Accounts payable and accrued expenses             20,682       (26,591)
         Accrued interest ..........................      158,708       163,444
                                                        ---------     ---------

       NET CASH PROVIDED BY OPERATING
          ACTIVITIES ...............................      535,774       471,106

CASH FLOWS FROM FINANCING ACTIVITIES
   Payments of bonds payable .......................     (466,800)     (477,080)
   (Decrease) increase in due to partners ..........      (23,000)        9,000
                                                        ---------     ---------

       NET CASH USED BY FINANCING ACTIVITIES .......     (489,800)     (468,080)
                                                        ---------     ---------

       NET INCREASE IN CASH                                45,974         3,026

CASH AT BEGINNING OF YEAR                                   5,286         2,260
                                                        ---------     ---------

       CASH AT END OF YEAR .........................    $  51,260     $   5,286
                                                        =========     =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
   INFORMATION

     Cash paid during the year for interest ........    $ 462,322     $ 518,701
                                                        =========     =========



See accompanying notes to financial statements.

                                      -4-
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STILLWATER HYDRO PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002


NOTE A - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Stillwater Hydro Partners,  L.P. (the Partnership) was formed for the purpose of
acquiring, developing,  constructing, owning, financing, managing, operating and
maintaining a  hydroelectric  project (the Project)  located in Stillwater,  New
York.  The  Partnership  was  formed  on March 2,  1989  and the  project  began
commercial  operations on April 26, 1993. The  Partnership has an agreement (The
Power  Sale  Agreement)  to sell the power  produced  by the  Project to Niagara
Mohawk Power Corporation ("Niagara") for a fixed rate for a term of 38 years.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Deferred Financing Costs

Deferred  financing costs consist of legal and other costs incurred in obtaining
construction and term financing for the Partnership and are being amortized over
the term of the bonds payable using the straight-line method.

Hydro Facility

The hydro facility is stated at cost and consists primarily of site acquisition,
construction,  engineering,  and equipment costs associated with the development
and  construction  of the  Project.  The  cost of the  hydro  facility  is being
depreciated  over the term of the power sale agreement  using the  straight-line
method.

Income Taxes

The Partnership is not subject to income taxes since the  Partnership's  profits
and losses are reported on the individual partners' tax returns.


NOTE B - CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Partnership to concentrations
of credit  risk  consist  principally  of cash and cash  equivalent  accounts in
financial  institutions,  which from time to time exceed the federal  depository
insurance coverage limit, and accounts receivable from Niagara.



                                      -5-
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NOTE C - RESTRICTED CASH

All  Partnership  cash  is  restricted  in  accordance  with  the  Partnership's
financing agreements. (See Note D)


NOTE D - FINANCING AGREEMENTS

The Partnership has agreements for Project financing through CIT Group/Equipment
Financing, Inc. (CIT), consisting of County of Saratoga Industrial Development
Agency Industrial Revenue Bonds.

Bonds payable under the agreements are as follows at December 31, 2003 and 2002:

                                                          2003          2002
                                                       ----------   -----------

Fixed rate term bond with variable
quarterly principal payments plus
interest at 10.42% .................................   $3,648,000   $4,200,000

Floating rate term bond with variable quarterly
principal payments plus interest at prime plus 1.25%
or LIBOR plus 3.5% at the option of the Partnership
The interest rate in effect at December 31, 2003 was
LIBOR (1.12%) plus 3.5% ............................      906,898      821,698
                                                       ----------   ----------

                                                       $4,554,898   $5,021,698
                                                       ==========   ==========

Security for the bonds consists of the Partnership's assets including contracts.

In accordance  with the terms of the bonds,  the  Partnership  must meet certain
requirements,  including a requirement to notify CIT of an adverse change in the
operations, prospects or condition of the Partnership.

During 2003 and 2002,  the  Partnership  has operated under an oral agreement by
which CIT permitted the Partnership to defer principal  payments of $37,500 each
quarter. The Partnership is credited with the full quarterly payment due for the
fixed rate term bond,  although it pays $37,500 per quarter  less than  required
under the contractual  terms of the fixed rate term bond. The floating rate term
bond is  increased  by $37,500  per  quarter to offset the credit  given for the
fixed rate term bond.

During 2001,  with the permission of CIT, the Partnership did not make scheduled
principal  payments  of  $129,000 on the fixed rate term bond and $15,143 on the
floating  rate term bond.  During  2002,  the $129,000 was credited to the fixed
rate term bond and added to the floating rate term bond as described above.

The scheduled repayment of bonds payable is as follows at December 31, 2003:

                      2004           $ 683,844
                      2005             746,864
                      2006             816,144
                      2007             891,680
                      2008           1,416,366
                                    ----------
                                    $4,554,898


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NOTE E - COMMITMENTS AND CONTINGENCIES

In the event of early  termination of the Power Sale Agreement,  the Partnership
is required to pay Niagara an amount equal to the difference between total power
previously sold at the fixed rate, as compared to total power previously sold at
90% of the long run avoided cost plus 10% annual interest.  Amounts contingently
due under this  agreement  are  secured by a  subordinate  interest in the hydro
facility and totaled  $6,358,190  and  $5,815,067 at December 31, 2003 and 2002,
respectively.

Under the terms of a Purchase Agreement, the Partnership is obligated to pay the
seller  additional  consideration  equal to 1 1/4% of the Project's gross annual
revenues as defined in the Power Sale Agreement with a minimum annual payment of
$10,000.  Additional  consideration  under this  agreement  totaled  $16,383 and
$17,301 in 2003 and 2002, respectively.

Under  the terms of a  Hydroelectric  Easement  Agreement,  the  Partnership  is
obligated  to  pay  the  grantor  additional  consideration  equal  to 1% of the
Project's  gross  annual  revenues  as  defined  in the  Power  Sale  Agreement.
Additional  consideration  under this agreement  totaled  $13,350 and $13,787 in
2003 and 2002, respectively.

The Partnership's  financing  agreements (See Note D) contain provisions for the
payment of contingent  fees to CIT of 18.5% of project  available  cash flows as
defined in the agreements. There were no fees incurred in 2003 or 2002.

The realization of the cost of the hydro facility and other assets is contingent
upon the generation of adequate revenue by the Project.  The revenue  generation
is  affected by  waterflow  in the river in which the Project is located and the
continuation of the Power Sale Agreement.

NOTE F - RELATED PARTY TRANSACTIONS

In 1994,  Ridgewood Energy Electric Power, L.P.  (Ridgewood) elected to withdraw
from the Partnership and, in accordance with the Partnership  agreement,  was to
receive  $1,000,000  plus  interest  at  12% to be  paid  in  annual  amortizing
installments of $201,303  commencing May 16, 1995 and continuing through May 16,
2002. The payments to Ridgewood are  subordinate to certain other  distributions
that  may be made as  outlined  in the  partnership  agreement  and the  general
obligations of the Partnership.  Due to cash flow restrictions,  the Partnership
was unable to make the  scheduled  principal  and interest  payments in 2003 and
2002.  Any  future   payments  under  this  agreement  are  dependent  upon  the
Partnership's ability to generate sufficient cash flows.

Interest to Ridgewood in connection with its withdrawal totaled $120,000 in 2003
and 2002.  Accrued interest payable to Ridgewood is $1,155,615 and $1,035,615 at
December 31, 2003 and 2002, respectively.



                                       -7-

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NOTE F - (Continued)

At December  31,  2003 and 2002  amounts  due to  partners  represent  operating
advances  made by NewRic -  Stillwater  Hydro  Partners,  L.P.  The advances are
payable on demand,  subject to sufficient  Project cash flows, and bear interest
at the  greater  of 12% or prime plus 3% (12% at  December  31,  2003).  Accrued
interest on these  advances  totaled  $242,338 and $203,630 at December 31, 2003
and 2002, respectively.

The  Partnership  has entered  into  contracts  with an  affiliate of one of the
general  partners  for the  operation  and  maintenance  of the hydro  facility.
Amounts and balances due in connection  with these  agreements  consisted of the
following as of and for the years ended December 31, 2003 and 2002:

                                                      2003             2002
                                                    --------        --------

Purchase of operations and
   maintenance services .....................        $27,400         $26,604

Accounts payable and accrued
   expenses .................................        $57,035         $38,498















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