Planet Resource Recovery · environmental remediation for the Oil and Gas industry. Currently, the Oil and Gas industry mainly uses organic compounds which are hydrocarbon derivatives

Beacon Rock Research, LLC 1

July 7, 2010

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this issue for additional disclosures.

Planet Resource Recovery, Inc. (Pinksheets: PRRY)

Mike Niehuser 503-307-3188

[email protected]

Planet Resource Recovery, Inc. (Pinksheets: PRRY) was founded

with the goal of developing eco-friendly technologies for the re-

covery and remediation of the planet’s resources. While early in

development, these unique technologies have potential for rapid

sales growth and broad application. They appeal to several im-

portant industries, with applications including:

Improving production for the Oil and Gas industry.

Inhibiting corrosion to preserve infrastructure.

Recovering metals for the mining industry.

Removing and separating toxic byproducts.

The commercial application of their processes benefit by having

potentially low capital requirements and large gross profit mar-

gins, resulting in a very low break-even point, providing financial

flexibility. The Company has completed several joint ventures to

leverage its technology and control overhead. While the immedi-

ate revenue opportunity is with PetroLuxus™ and other technolo-

gies for the Oil and Gas industry, the potential for generating

revenue in other areas is rapidly expanding.

Price Target $1.50

Rating Buy

Risk High

Disclosures 1, 2, 3, 4

Corporate Officer Kurt E. Neubauer, Jr., President & CEO (281) 996-5315

Contact Person Enrique M. Salinas, III , Chief Communications Officer (281) 996-5315

Corporate Address 10101 Southwest Fwy., Suite 300, Houston, Texas 77074-1109

Website www.planetresource.net

JULY 7 , 2010

INTRODUCTORY REPORT

Price $0.48 (shares as of 12/31/09)

52 Week Range $0.06 - $0.75 Shares O/S (mils) 109.8 M

Fiscal year-end 12/31 Shares Dil. (mils) 120.3 M

Current ratio 0.07:1 Market Cap (mils) $52.7 M

Cash per share $0.00 Ave. Daily Vol. 246,425

Short Position NA

Insider Ownership 53.0 %

Inst'l Ownership 0.0 %

BEACON

ROCK

RESEARCH

Earnings Per Share (US$)

Q1: Mar. Q2:Jun. Q3:Sep. Q4:Dec. Annual*

2011E $ 0.03 $ 0.04 $ 0.04 $ 0.05 $ 0.15

2010E $ (0.00) $ (0.00) $ 0.01 $ 0.03 $ 0.03

2009Ae $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.01)

2008Ae** $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.02)

* numbers may not add up due to rounding

** fiscal 2008 year ended February 29, 2008

e quarterly shares unavailable, earnings/loss not significant

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

7/2/07 10/2/07 1/2/08 4/2/08 7/2/08 10/2/08 1/2/09 4/2/09 7/2/09 10/2/09 1/2/10 4/2/10

Planet Resource Recovery

Russell 2000

Initial Rating -

Buy

Price - $0.48

Target - $1.50

High Risk

7/6/10


July 7, 2010

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Investment Thesis and Company Summary

Figure 1 - Recent Look at Gulf Oil Spill from Space

Source: AP Photo

Planet Resource Recovery, Inc. (Pinksheets: PRRY)(Planet or

Company) is introducing eco-friendly products to the nation’s

three most important industries: energy, infrastructure and the

environment. Much of the recent appreciation in the Company’s

stock price may be attributed to the speculation that

PetroLuxus™, their initial silicon-based product, may be in-

cluded as part of the solution for the recent oil catastrophe in the

Gulf of Mexico. PetroLuxus is a non-toxic, inorganic solution

that rapidly binds with other inorganic material, allowing sepa-

ration from hydrocarbons and accelerating their recovery. Also,

as PetroLuxus binds with other inorganic material it has been

found to inhibit corrosion.

Planet is making meaningful progress transitioning from re-

search and development into operation and sales, generating

cash flow from sales of PetroLuxus to the Oil and Gas industry,

and other high-margin products in potentially high growth mar-

kets. Planet is also moving beyond PetroLuxus into the com-

mercialization of a broad range of eco-friendly technologies for

the recovery and remediation of the planet’s resources. They are

capitalizing on expertise found in an expanded management

team, completing several joint ventures to improve the recovery

of metals and one strategic acquisition to develop products and

services that inhibit corrosion.

Planet has experienced success in applying PetroLuxus in the field. This includes participation in and receiving accolades for

accelerating remediation in the cleanup of a Superfund Site in Pennsylvania. In addition, PetroLuxus has been applied to pro-

ducing oil wells, leading to increasing production by inhibiting corrosion and reducing maintenance and down time for equip-

ment down-hole. There is also encouraging potential that the introduction of PetroLuxus may have improved the productive

characteristics of the oil field.

PetroLuxus is currently undergoing independent testing to determine its “oil displacement” characteristics and potential for in-

creasing the productivity of oil fields. The US Department of Energy’s Office of Fossil Energy estimates that “more than 60%

of all known oil in the United States remains untapped because of difficulties in extraction from the ground.” They estimated

that there are close to 500,000 wells producing 15 barrels a day or less, that “together produce the same amount of oil as Amer-

ica imports from Saudia Arabia.” Successful independent testing of PetroLuxus now underway has the potential to accelerate

adoption, with the potential for measurably improving production and recovery in the Oil and Gas industry.

The success of improving the operating performance of equipment down-hole led Planet to investigate the potential for

PetroLuxus as a “corrosion inhibitor” beyond the Oil and Gas industry. It is understood that PetroLuxus binds with steel, killing

bacteria and providing a barrier for oxygen, necessary for corrosion to take place. This presents a global opportunity for devel-

oping a solution for extending the life of steel used in buildings and infrastructure, including bridges and pipelines.

Planet is making rapid progress to quantify and validate the extent of their product’s efficacy. As the anecdotal evidence is com-

pelling, and the extent of the potential of their products is important and expansive, they continue to attract the interest and part-

nership of credible, well regarded government, academic and commercial institutions.


July 7, 2010

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Expansion of the Management Team Accelerates Development of New Products

Planet has recently made important additions to their management team. These additions have strengthened both their ability to

advance products from the lab to the field and to accelerate market penetration. This has also led to a broadening of products

and market opportunities beyond PetroLuxus. As a result of recent additions, the Company has successfully delivered a solution

for diesel “Transmix” to remove sulfur ahead of heightened government standards that came into effect June 1st of 2010.

The recent addition to Planet’s technical staff has presented the opportunity to move beyond production and recovery of hydro-

carbon materials to recover metals held in solution. This may include removing materials considered hazardous for environ-

mental remediation or other valuable precious metals in projects for sale in the market. This has led the Company to recently

complete joint venture agreements on mining-related opportunities for both primary and secondary levels of recovery.

Planet Resource Recovery May be at the Front of Several Very Large Opportunities

Figure 2 - Bird Covered in Oil Near Source of Spill

Source: AP Photo

The potential for development of products for the energy

producing and environmentally sensitive markets, as well

as metal recovery or inhibiting corrosion, are potentially

very large. Presently, the Company is focused on develop-

ing and validating these products and technologies for

commercialization. They are also working to complete

essential additions to the management team, improve the

corporate structure and financial footing, and position

themselves for successful production and sale of recogniz-

able, accepted products and services. We believe that the

near-term prospects for products, coupled with these larger

opportunities, make a compelling argument for investors.

Legacy PetroLuxus Product

PetroLuxus Chemical Characteristics

PetroLuxus was developed in the 1990s and first introduced in 2007. It is a proprietary, non-toxic and non-corrosive liquid de-

veloped for the recovery of hydrocarbons using an inorganic compound. Proven applications include increasing production and

environmental remediation for the Oil and Gas industry.

Currently, the Oil and Gas industry mainly uses organic compounds which are hydrocarbon derivatives such as mineral spirits,

oil, or alcohol, for example. Planet pursued inorganic compounds which were more environmentally friendly, and discovered

PetroLuxus, which repels oil or hydrocarbons and has an affinity for inorganics. This forces the separation of oil and inorganics.

In water, PetroLuxus attaches to inorganics while the repelled oil beads up, becomes more buoyant than the water solution, and

quickly separates.

The primary component of PetroLuxus is silicon, which is one of the most common elements and is usually found as silica in

sand or quartz. Silicon is further found in compounds known as silicate, which contains an ion of one or more central silicon

atoms that are surrounded by electronegative ligands. Silicon compounds can be organic or inorganic, depending on the type of

elemental bond. Silicon bonded with oxygen or metals will form silicates, which are inorganic compounds.

Silicon will bond with a variety of other elements to form an almost endless variety of compounds with equally wide variation of

properties. Silicate compounds were the first products developed and tested by the company. The goal was to develop safe, eco-

friendly products that could be used in remediation and treatment of hydrocarbons and hydrocarbon laden materials to induce

separation from water and solid particles.


July 7, 2010

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Figure 4 - Tank Car Cleanup, Orem Pennsylvania

Source: EPA

PetroLuxus Hydrocarbon Application and Opportunity

PetroLuxus is a silicate compound that induces separation of oil from other liquids or precipitation of solid materials by releasing

bonds in contact with hydrocarbons. The electronegativity attributes of PetroLuxus allow for the separation of oil from particu-

lates and water. PetroLuxus has an affinity for the inorganics that create surface tension. As molecules are removed, there is

more room to move and separate. PetroLuxus breaks down contaminants into smaller molecular states while remaining sus-

pended, preventing them from plugging the production zone, resulting in lighter crude in a cleaner well. This is a major positive

characteristic in the oil patch.

PetroLuxus’ initial commercial application was to free oil and gas from sand, shale, and rock by eliminating surface tension.

PetroLuxus treats the oil, salt, sediment, bedrock, paraffin and other matter in the well, and alters their chemistry, preventing

olefins, paraffin and asphaltenes from bonding. The breaking of these electromagnetic bonds reduces surface tension and fric-

tion, allowing separation by gravity or agitation. The process is accelerated with increased contact between PetroLuxus and the

hydrocarbon mated materials. A distinguishing characteristic of PetroLuxus is that it is water soluble and will not mix with oil.

Temperature is not believed to be a factor in application, except for the rate in which PetroLuxus may come into contact with the

target material. The rate of separation is generally a factor of the material treated, the amount of PetroLuxus material deployed,

and conditions of contact with hydrocarbonated material.

PetroLuxus has a broad range of useful applications, including the separation of hydrocarbons in crude oil treatment, waste oil

treatment, soil contamination remediation, sludge pond remediation, storage tank bottom remediation, and other situations to

separate oil from other materials. PetroLuxus may be introduced to a wide variety of situations where the oil may be recovered

for sale, reuse or for disposal with other “cleansed” materials.

Figure 3 - Gulf “tar ball” comprised of oil, shells, sand and PetroLuxus.

Left to right photos demonstrating efficacy of PetroLuxus separating hydrocarbons and inorganics.

Middle photo after 10 minutes.

PetroLuxus was included in the remediation of a buried tank car at

the Tank Car Corporation of America EPA Superfund Site in

Orem, Pennsylvania in early 2009. The cleanup targeted a rail

tank car that contained sludge composed of a wide range of haz-

ardous materials, which included heavy tar-like residue from

cleaning tank cars.

Earlier Applications of PetroLuxus for Environmental Remediation


July 7, 2010

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The writer discussed the remediation of the tank car, which included the application of PetroLuxus with other materials to facili-

tate removal of the contents of the tank car, with both the EPA on-site coordinator and the environmental consultant who en-

gaged the Company to participate in the project. It was found, upon initiating remediation, that the tank car contained twice the

amount of material than originally estimated. The process, which was expected to be completed in up to four weeks, was com-

pleted in five days. Interestingly, the final cleanup of the “film” lining the tank was reduced to only a few hours, which is what

could be expected with the characteristics and benefits of PetroLuxus.

Figure 5- Typical Shut-in Well at Time of Purchase

Source: Lucas Energy

Earlier Applications of PetroLuxus for Improving Oil Production

In February of 2008, Planet commenced a pilot test

study of PetroLuxus with Lucas Energy, Inc. (NYSE

AMEX: LEI) to measure its ability to enhance oil re-

covery. This included a small number of producing

wells with production levels ranging from the single

digits to hundreds of barrels per month. Of the fifteen

oil wells surveyed over a four to six month period, pro-

duction immediately doubled the previous levels in

nearly all cases. In addition to improving well produc-

tion through reduction of down time and maintenance

costs, the operators observed a reduction in paraffin and

asphaltene problems, corrosion, and scaling, thereby

improving fluid entry as well as reducing sulfur and

TAN (total acid number).

PetroLuxus applied to oil producing wells has successfully increased production levels by extending well life. One oil producer

reported that production increased by simply lubricating equipment down-hole. Both required maintenance and down time were

reduced, which lead to higher production from more continuous operation. In another instance, PetroLuxus was added to oil

wells with high sulfur content, and appeared to reduce acidity.

Interestingly, the wells offered up for the pilot test study may have been the least productive in the portfolio - those with the least

to sacrifice should the study go awry. The application of PetroLuxus appears to have improved production of oil wells that oth-

erwise would have remained uneconomic and shut down. Clearly the results improving the least productive wells would most

likely have a positive effect on higher performing wells.

The anticipation of using PetroLuxus to improve production was sufficient for Lucas Energy to make an additional investment,

acquiring a number of marginal oil producing properties with the intent of profitably reopening. Presently, this operator has over

a dozen existing oil wells undergoing “Well Clean” and “Drip” applications, while developing a protocol for further applications

of PetroLuxus.

The PetroLuxus Market Opportunity beyond Primary Production

Primary Oil Recovery produces crude oil from a reservoir by the natural drive or energy of the oil field. Primary Oil Recovery

averages about 30% but varies considerably with the reservoir drive, reservoir rock characteristics, and crude oil properties. Be-

yond primary production, oil producers look to a variety of methods to increase oil production. It would appear that PetroLuxus

may have an opportunity to improve both Secondary Recovery and Enhanced Oil Recovery methods.

Secondary Oil Recovery is a term used for any process used to restore oil production from a reservoir in which the primary drive

mechanism and reservoir pressure have been depleted. Gas injection and waterflood are examples of Secondary Oil Recovery

techniques. Enhanced Oil Recovery includes artificial methods used to recover more oil after primary production by the natural

reservoir drive has been exhausted. Common Enhanced Oil Recovery methods include thermal (cyclic steam stimulation, steam-

flooding and in situ combustion), chemical (polymers, micellar-polymer, and alkaline flooding), and gas miscible (cyclic carbon-

dioxide stimulation, carbon dioxide flooding, and nitrogen flooding). In older terminology, waterflooding was considered part of

Enhanced Oil Recovery (Enhanced Oil Recovery is sometimes called tertiary recovery if it occurs after waterflooding).


July 7, 2010

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The application of PetroLuxus appears to take the more eco-friendly and positive characteristics of these recovery methods. Lu-

cas Energy is resuming treatment of over a dozen wells in its portfolio of about 80 oil wells. As the number of “stripper wells”

in the United States alone that produce less than 15 barrels a day is estimated to be over 500,000, the opportunity for increasing

both oil production and sales growth for the Company’s PetroLuxus product appears staggering.

PetroLuxus appears to be a competitive, low cost means for oil producers to effectively boost oil production and improve the

economics of oil wells. The benefit of improving the production of stripper wells may logically be extended to increasing pro-

duction of larger oil fields and potentially improving Secondary Oil Recovery and Enhanced Oil Recovery techniques. Clearly,

should PetroLuxus be determined to improve the characteristics of oil fields, increasing production beyond reducing mainte-

nance costs of equipment, it may have universal appeal to post-primary oil producers. While improving the economics of strip-

per wells has been validated by experience, an even greater opportunity for Planet may exist if it can be proven through inde-

pendent testing that PetroLuxus improves the structure and economics of oil fields.

Corrosion Opportunity Nears Study for Expanding Potential Opportunity

As demonstrated in the application of PetroLuxus in producing oil wells, the product appears to have increased production

through increased lubrication and reduced corrosion of equipment down-hole. Management reports that its product binds and

coats metals, providing a barrier to water, oxygen and sulfur, necessary for the growth of bacteria and the oxidation of metals

(rust).

Figure 6 - Pipe Corrosion

Source: Mechanical Integrity

We visited with a representative of the National Cor-

rosion Center at Rice University in Houston, Texas,

which is moving toward initiating a study determining

the opportunity that Planet’s products may be ad-

vanced as a metal coating both below and above

ground, including structural and non-structural steel.

The center is equipped with the most cutting-edge

technology - a white light inferometer capable of

measuring corrosion on the molecular level. More

importantly, the device is able to measure the rate of

corrosion without disturbing the bacteria. This is

helpful to set a baseline to determine the rate of corro-

sion essential for modeling the life and structural in-

tegrity of steel. The center estimates that the cost of

corrosion of steel infrastructure in the US alone is a

$276 billion annual problem.

The relationship with Rice University’s National Corrosion Center led to the recent acquisition of assets from Inspar Field Ser-

vices, LLC in exchange for 15 million shares of Planet’s restricted common stock. The assets include an intellectual portfolio of

eight US and foreign patents, with multiple new inventions in various stages of the patent process. The technologies acquired

target remediation and rebuilding of structural pipe, reducing the costs of removal and replacement. The patents cover a diverse

range of energy and industrial uses with a significant number of large, well known clients. The assets will be held in a wholly

owned subsidiary, Inspar Robotic Technologies, Inc (Inspar). The inventor, Kent Weisenberg, will head up the subsidiary. The

Company believes the acquisition of technologies is complimentary with their product’s potential and that the acquisition should

accelerate development of products and market penetration.

Update on Opportunities to Commercialize Hydrocarbon Products and Solutions

The immediate opportunity for Planet is to provide PetroLuxus to the oil producers, as discussed above, with a separate opportu-

nity for deploying new technology for removing sulfur from diesel “Transmix.” While it is evident that numerous projects are

being directed to and entertained by the Company, only a few have been disclosed to the public. In addition, while PetroLuxus

was originally focused on increasing production for the Oil and Gas industry, the Company continues to investigate corrosion

inhibiting characteristics of PetroLuxus in conjunction with the National Corrosion Center, and by recently completing the stra-

tegic acquisition of Inspar Field Services, LLC, to accelerate development and market penetration.


July 7, 2010

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Figure 7 - Planet Production Facility

Source: Analyst

Figure 8 - Pilot Desulfurization System

Source: Planet Resource Recovery

Sales to Lucas Energy

Planet’s initial oil producing customer has com-

menced PetroLuxus Well Clean and Drip treatments

of over a dozen wells. This first Well Clean resulted

in an invoice of about $15,000 for a single well, with

additional smaller Drip treatments. The expectation is

that the Well Clean treatment will be repeated once

every three to six months, depending upon production

and maintenance experience within an evolving treat-

ment protocol. The treatment of these few wells un-

der consideration could ramp up to annualized reve-

nue with this single client to a run rate of up to one

million dollars annually. As these few wells are only

one fifth of the total wells within this producer’s port-

folio, and given that there are an estimated 500,000

stripper wells in the U.S. alone, this could represent a

potential billion dollar market.

Planet produces PetroLuxus out of a facility in Houston, where they are headquartered. The current production facility has ca-

pacity to produce 2,400 gallons of PetroLuxus per day. This may provide enough product to service about ten wells per day.

The potential to add additional wells or customers will require expansion. The capital requirement for expansion is not believed

to be onerous or expensive. The installation of new proprietary manufacturing units can be completed on an expeditious basis to

meet demand. The Company has not patented PetroLuxus but has pursued protection of its proprietary intellectual property as a

trade secret. As they are considering the potential for expansion, the Company has engaged at least one distributor for market-

ing its products, as opposed to developing its own sales force.

Diesel “Transmix” Sulfur Reduction to Meet Government Mandate

Planet has developed a proprietary technology to remove sulfur from diesel “Transmix” to produce a saleable product.

“Transmix” or “transmission mixture” is a mix of refined product (gasoline, diesel, aviation fuel, etc.) contaminated during the

transmission process through a common pipeline. For example, when a fuel gatherer purchases aviation fuel and diesel, these

two refined products are transmitted through the same line. If the aviation fuel, which contains sulfur, is put in the pipeline first,

and then pushed through with the load of diesel, the “interface” tailend of the aviation fuel contaminates the front end of the

diesel. This mixture becomes “Transmix.”

Planet ’s proprietary technology may provide an eco-

nomic solution for producing an Ultra Low Sulfur Die-

sel (ULSD) (below 15 ppm), allowing clients to meet

more demanding EPA guidelines that went into effect in

June of 2010. While these standards had been in effect

for years, Transmix was exempted to June 1, 2010, at

which time the exemption expired. The Company’s

solution provides a means for treating diesel Transmix

that otherwise would not have been available.


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The initial beta desulfurization unit has been delivered, assembled on site, and is commencing processing for its first diesel

Transmix customer. This system utilizes proprietary technology that is distinct from PetroLuxus and was developed for this par-

ticular market need. The system includes installation of an array of four - six 12’ towers and a filtration process. The proprietary

system appears relatively straight forward to produce and replicate with additional customers.

The revenue from this initial system will generate $56,000 per month, which should step up to $120,000 per month, of which one

half will accrue after processing expenses to Planet, and the other half going to its partner, Lerro Processing Group, LP. These

revenues are expected to be both monthly and cumulative as additional clients are brought on line. Later systems are also antici-

pated to be larger in scale, with greater operating capacity. In addition, the larger systems will be optimized following imple-

mentation of the initial system and should command premium pricing.

Planet’s goal is to have six to eight of these systems operating by the end of 2010. They believe that by demonstrating the effec-

tiveness of its diesel Transmix solution, they will be in a position to approach larger markets, including the government and the

military. This may have a particularly important application in the case of jet fuel, which is high grade diesel, making it avail-

able for use in trucks.

Metals Separation and Recovery Application and Opportunity

Planet is expanding the reach of its products by developing a matrix for use of their electrolytic solution, with application of volt-

age in certain conditions (acidity, temperature), to precipitate various targeted metals held in solution. In Planet’s processes,

reactions occur where electrons are transferred between molecules, referred to as oxidation/reduction (redox) reactions.

Planet’s process through electrolysis attracts specific metals in solution, separating them from other materials, and concentrates

them for removal. While this process is not new, the addition to Planet’s management team allows for development of a tangen-

tial but parallel process taking place at the molecular level. As the combination of metals is often complex, the value provided

by Planet Resource Recovery would be in developing specific protocols for unique projects and assembling plant components for

separation and concentration.

In November of 2009, Planet announced that it had successfully separated cadmium, mercury, lead and zinc out of solution.

This demonstrated potential application for the removal of hazardous materials from contaminated water ponds, necessary for the

closure of mine operations. In October of 2009, Planet commenced discussions with a junior mining company to provide addi-

tional processing capacity for an antimony mine in Bolivia. Earlier in 2009, Planet was in the process of negotiating processing

slag from a smelter operation to remove valuable base metals. Separation of metals in solution has yet to be demonstrated in the

field for this particular project.

Update on Opportunities to Commercialize Metals Products and Solutions

In addition to the hydrocarbon product billable opportunities, Planet has entered into a joint venture with El Capitan Precious

Minerals, Inc. (ECPN.OB) for a precious metal project in New Mexico, and Franklin Mining Inc. (FMNJ.PK) with an antimony

project in Bolivia. These projects have been made possible by the Company’s recent additions to its management team that have

allowed it to move beyond PetroLuxus and other hydrocarbon products and solutions, to removing metals from solution. The

ability to recover metals from solution is not new. It is technical and project specific, as the metals contained in solution are in

unique combinations, which complicate the path by which they may be economically recovered.

El Capitan

Planet has completed a joint venture agreement with El Capitan for developing a pilot plant to process 200 tons of concentrate

from the El Capitan site in New Mexico. The concentrate is reported to have assays with values assessed at 0.355 oz/ton of gold

equivalent. The top three target metals showed values of 0.088 gold, 0.616 silver and 0.128 platinum. Base metals include iron

(65% to 68%), with copper and zinc. This portion of the 700 acre site has an estimated 141 million tons of mineable metals and

ore.


July 7, 2010

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Figure 9 - El Capitan Project Pit View

Source: El Capitan

Figure 10 - Native Massive Antimony

Source: Franklin Mining

Planet is working with El Capitan to develop a magnetic conveyor system to capture at least 60% of the iron without losing the

precious metals in the remaining concentrate for sale to a smelter. The Company has tested about 10% of the 2,300 samples

from the El Capitan headore samples with its ICP mass spectrometer. The results supported the grades of metals in the headore

samples and were useful for bench testing a pathway for recovery of the metal. The next phase of the joint venture will address

specifics for the size and scope of operations. Additional study should provide information important to estimate economics,

including the potential extent of profitability and the breadth of the opportunity.

Franklin Mining Inc.

Planet entered into a joint venture agreement with Franklin Mining to develop and operate antimony mines in Bolivia. The joint

venture established Raptor Ventures, LLC, which Planet will manage. Raptor Ventures, LLC will manage and operate the San

Antonio de Turiri Antimony mine in Bolivia. Profits from the joint venture will be distributed after all operational expenses

have been paid. The Company is taking steps to set up an operating company in Bolivia and the project is currently at the point

of a mine decision, depending on the ability to coordinate permits, plans, plant and equipment. As the project is relatively small

in scale and the funding source is in place, the project is expected to advance rapidly upon a positive mine decision and securing

government approvals.

The San Antonio de Turiri Antimony Mine is located 70 kilometers from the

city of Potosi, known for its production of silver, which funded the Spanish

Empire in the 17th century. The geology of Bolivia has made it one of the most

prolific mining areas in the world. The project’s concessions include three

antimony veins, which range up to three meters in width, stretching over 1.5

km. Franklin Mining reports that the main body of these veins ranges from

60% to 67% pure antimony. Antimony is used in flame proofing, paints, ce-

ramics, enamels and a variety of alloys, electronics and rubber. Recently, the

price of antimony has ranged from about US$8,600 to US$9,200 per tonne.

The mine was operated beginning in the 1950s and was closed in 1984 due to

falling metal prices. The camp is still 80% complete and it is anticipated that,

due to its modest size, it could be brought back into production with relatively

low capital cost. This is a small-scale operation of 50 tonnes per month, which

may be increased as the mine operation is optimized. This is very modest in

size relative to other mine operations processing several thousands of tonnes

per day and costing millions to construct. The project has operating and envi-

ronmental permits, but these will need to be amended to resume production

with an upgrade of the processing facility and equipment.

While the high-grades and small capital requirements reduce the risk associated with the project, and Bolivia has a long and well

respected mining history, the country is still regarded as high-risk, despite significant successful investment by foreign investors

over the last several years.


July 7, 2010

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Update on Progress to Validate Products to the Market

It is important for Planet to continue to validate its products and technologies for expansion into new markets and to provide

assurance to investors. The successful participation in the cleanup and disposal of the tank car at the EPA Superfund Site pro-

vided important evidence for the credibility of PetroLuxus. This was supported by the results reported by Lucas Energy, by their

further investment in marginal properties in anticipation of applying PetroLuxus to increase production, and resumption of or-

ders. The Company is in the process of validating their products through both additional sales opportunities and review and test-

ing by widely recognized third parties.

Planet has made the timely addition of experienced professionals in the Oil and Gas industry. This is important both to validate

the opportunity for PetroLuxus beyond reducing maintenance costs of production, and to explore the efficacy of their product in

secondary and enhanced production techniques. PetroLuxus is undergoing initial third party testing by Core Laboratories

(NYSE: CLB), the world’s largest and most technically advanced independent provider of reservoir fluid and petrophysical ser-

vices, to do an oil displacement study for waterflood, and to produce a recovery curve from oil reservoir core samples. This is

expected to provide a greater understanding of the level of treatment, and to manage cost by determining the optimal amount of

PetroLuxus to be applied. The Core Laboratories results should be available for review by the Company during the third quarter

of 2010.

The anecdotal evidence for higher production results may have been achieved solely by reducing downtime and maintenance

costs. It may be concluded that PetroLuxus has improved the operation of equipment down-hole. The essence may be the pro-

tection of equipment from corrosion in an environment hostile to steel. This may suggest a greater and more significant opportu-

nity for the product in protecting steel used in buildings and infrastructure.

Figure 11 - White Light Inferometer, Rice University

Source: Analyst

Planet benefits greatly by its growing relationship with

the National Corrosion Center at Rice University in

Houston, Texas. This center is potentially the world’s

foremost leader in the field of nanotechnology, which is

central to validating and proving PetroLuxus as a Corro-

sion Inhibitor. The work with the National Corrosion

Center, combined with the acquired Inspar Robotic

Technologies, should produce additional validation of

the Company’s products to inhibit corrosion.

Financial Discussion

Planet recently published its unaudited financial statements for year-end December 31, 2009. They also announced the retention

of GBH CPAs, PC as their registered independent public accounting firm to complete the financial audit for their last two years

of operation. In addition, the Loev Law Firm, PC is preparing the required SEC legal documentation to initiate the Company’s

filing of an S-1 Registration in anticipation that it may move to a higher exchange.

Planet reported that as of December 31, 2009, assets were $180,458 and liabilities were $1,434,467, resulting in negative equity

of $1,254,009. They also reported cash of $11,030 and current assets of $91,649, which was more than offset by current liabili-

ties of $1,284,220 for a large negative working capital position. The Company reported revenues of $45,258 in 2009, less cost

of sales of $4,638 and operating expenses of $1,523,328, and reported an operating loss of $1,482,707 and net loss of

$1,506,644.


July 7, 2010

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Much of the negative working capital position, including accrued liabilities, contains deferred payroll. These and other obliga-

tions that were deferrable resembled equity in the Company but were correctly classified as current obligations. In addition, the

Company has enjoyed the support of shareholders, which has been essential to meet critical payables when pressed by creditors.

Management anticipates raising additional capital prior to the end of 2010, returning the Company to a positive net worth. The

Company also anticipates profitable monthly operations before year-end.

Management Discussion

Planet is continuing to build its management team as it transitions from research and development to an operating company. The

Company maintains an entrepreneurial management culture which is highly opportunistic. We would expect that the Company

will continue to fill key management positions and support staff for its broad range of products.

Kurt E. Neubauer, Jr. is Planet’s President and CEO, having founded the Company in 2005. Mr. Neubauer has 35 years ex-

perience in private and publicly traded startup companies located in the U.S. and abroad. His experience includes work with Oil

and Gas industries in Europe and Africa. It was these experiences that prepared him for advancing the Company’s opportunities.

Dr. Hal Potts is Planet’s Director of Technology. Dr. Potts received a Doctorate of Applied Physics, with a heavy emphasis in

Chemistry, in 1988 from the University of New York at New Platz, New York. Prior to coming to the Company, Dr. Potts was

the President and General Manager of Instrumentation Repair & Calibration, Inc., and served as Senior Developer for Serveon

Specialty Chemicals, LLC and Chief Chemist for LCS Laboratories.

Kenneth D. Wolcott – VP of Oil and Gas – recently joined Planet to accelerate market validation of PetroLuxus and execute on

potential applications for secondary and enhanced oil recovery. He has over 25 years experience in the oil industry, working for

major oil companies in the U.S. as well as Africa and Russia, as both an engineer and field manager. Mr. Wolcott has a Master

of Science in petroleum engineering from the Colorado School of Mines.

Frank Crane is a Senior Project Manager for Planet. Previously, Mr. Crane was President and General Manager of G & G

Group in Houston, a metal fabricator, and President and General Manager of Pinnacle Industries of Pasadena, Texas. These po-

sitions allow Mr. Crane to contribute to moving Company products from the lab and into the field.

Risks and Mitigations

Planet is transitioning from research and development to becoming an operating company. Research and development compa-

nies are inherently risky, as they characteristically do not produce revenue and are dependent upon seeking capital to remain vi-

able. This also dilutes earlier shareholders positions in the company. Growing companies also experience financial risk while

having to turn receivables to cash, and from growing sales to funding capital investments and meeting growing overhead obliga-

tions. Planet is exposed to both of these risks as it continues to develop products while transitioning to an operating company.

Risk: The Company’s most recently filed financial statement indicates inadequate revenues or cash to meet current

obligations and has a significant negative working capital position.

Mitigation: Management anticipates raising additional capital in the near term and returning to a positive working capital

position. The Company also anticipates profitable monthly operations before year-end. A large amount of the

Company’s current obligations are due to employees that may be either deferred or converted to equity. The

Company has adequate facilities to produce PetroLuxus, sufficient to meet near-term demand. The margins on

the sale of PetroLuxus are believed to be very large, which may significantly increase cash positions in line

with potentially rapid sales growth. The Company is also not required to contribute capital for the joint ven-

ture to process diesel Transmix or the antimony project with Franklin Mining in Bolivia.

Risk: The Company has developed products that have not yet established a record of adoption in the market. There

are no guarantees that their products will be accepted by the market at a price or in time to meet financial obli-

gations or provide a return to shareholders.

Mitigation: The Company has enjoyed the repeat business with Lucas Energy. This single customer has provided a suffi-

cient number of wells for consideration. If all were treated, the cash flow would rapidly improve the Com-

pany’s working capital position. Also, the diesel Transmix system (now in beta field testing) is performing

and the Company is anxious to develop this market. In addition, the Company is optimistic about potential

cash flow from its mining joint ventures.


July 7, 2010

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Risk: The Company is continuing to build a management team, important for focusing on opportunities to reduce

execution risk, which could result in lost business or reputation. It is important for the Company to maintain

its current book of business to reach financial goals or break-even profitability in 2010.

Mitigation: Management has had success in attracting and retaining key management individuals accelerating develop-

ment, validation and market acceptance. Despite the deferred payroll items, morale among employees appears

to be good, indicating insider confidence of company progress. Management also appears increasingly aware

of the need for additional organization and the board oversight requirements of becoming a reporting company.

Risk: The Company has decided to rely on a trade secret strategy to protect intellectual property. Violation of the

Company’s intellectual property or infringement on other patents may jeopardize delivering a product to mar-

ket.

Mitigation: The Company appears to have safeguarded intellectual property with current and past employees and is aggres-

sive in this area when entertaining joint ventures.

Risk: The Company has some exposure to political risk in its joint venture in Bolivia, whether real or perceived,

which may be an ongoing concern for investors. In addition, participation in a mining company may be con-

fusing to some shareholders who may consider the joint venture to be a distraction to management from core

opportunities.

Mitigation: Bolivia has had recent success attracting foreign investors and the country is enjoying one of the highest

growth rates in South America. The Company’s business plan is to leverage its technologies by entering into

joint ventures, which limit the exposure of financial and human capital, building a diverse portfolio of cash-

generating growth opportunities.

There are a number of risks that Planet will be exposed to as it transitions to becoming an operating company. The Company has

the ability to plan for and mitigate many of these risks. As their products are in development or early stages of commercializa-

tion, they may be considered speculative by investors relative to their intended potential for success. As the potential of some of

these applications may be exceptionally large, the price of the Company’s stock may reflect their opportunity ahead of successful

development or commercialization. The Company benefits from having many products with this goal, which provides some

level of diversification.

The market’s level of appreciation of the Company’s progress for development or commercialization may greatly influence the

volatility of the stock price independent of their achievements. These perceptions may be outside the Company’s control or in-

fluence, which may provide significant volatility due to aggressive trading. While volatility may be reduced over time, the Com-

pany should establish a record of financial stability; in the meanwhile, volatility in the Company’s stock price should be ex-

pected to remain above average.

Our Model

Planet is in the process of completing audited financial statements for 2008 and 2009. As the Company has minimal revenues

from earlier sales, its financial statements are not helpful for trending or forecasting based on historic activity. Earlier statements

may provide insight into operating expenses, but this is of minimal value, as the Company has operated on a low level of activity

and may be expected to incur higher levels of expenses as it pursues accelerating development and commercialization. We have

not relied heavily on historic statements for our forecast. We assume that the most reliable source of revenue is from the rela-

tionship with Lucas Energy and installation of diesel Transmix systems.

Planet’s PetroLuxus production facility is near its 2,400 gallon per day capacity. As this is adequate for about a dozen wells, and

Lucas has only a portfolio of about 80 wells, against a backdrop of 500,000 stripper wells in the U.S. alone, we assume this facil-

ity will operate at full capacity until expansion. Based on pricing between $8 and $15 per gallon, this would imply potential

revenues of $1.7 to $3.0 million per quarter. We might speculate cost of goods sold to be about 35% of revenues, although raw

material costs are reported to be quite manageable.


July 7, 2010

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The initial diesel Transmix system should step up to $120,000 per month. After operating expenses, the net distribution of cash

flow is estimated to be about $40,000, or $120,000 per quarter. The Company’s goal is to place six to eight of these systems in

place by year-end 2010. In addition, later systems are anticipated to be on a larger scale, potentially several times over, and at a

premium level of pricing to the initial system.

Planet’s current cash generating opportunities may produce gross profit of $1 to $2 million per quarter. Overhead in fiscal 2009

was about $1.2 million or $300,000 per quarter. We would anticipate that with the increase in staff from the beginning of 2010,

this may be approaching $400,000 to $500,000 per quarter. It would appear that the opportunity for increasing revenues is trail-

ing increasing overhead, but due to the potentially robust margins for revenues of both PetroLuxus and diesel Transmix systems,

there is a very good possibility that revenues may overtake expense growth and the Company may achieve profitability in 2010.

Depending upon success of execution, it would appear that the Company could achieve sales of $10 to $20 million in 2010,

building a financial platform of large revenue and profit growth from 2010 to 2011.

Conclusion and Recommendation

It is apparent that Planet’s challenges as a research and development company are dissipating as it moves into commercialization

of its technologies. Should the Company continue to execute on its current opportunities it could reach break-even in 2010 and

potentially more than double revenues in 2011 and beyond. As they have high margins and likely manageable capital require-

ments for expansion, this provides a strong and positive earnings growth profile for investors. The demand for the Company’s

technologies may be immense as they serve niche markets in important industries. The Company’s current customer base ap-

pears sufficient to cover overhead while opportunities in the Oil and Gas industry plus diesel Transmix markets are expanded.

This is important for more value-driven investors who are looking for investments with unrecognized potential for improving

cash flow within large, established markets.

Planet’s stock should appeal to momentum investors who are looking for “blue sky” opportunities. In addition to the growth

opportunities mentioned above, the company has potential application in large marquee-like opportunities in mining, corrosion

and environmental remediation. Additional specifics from the Company on any one of these three industries could increase

speculation and push the stock price much higher than current fundamentals would support. Clearly, any participation in the

cleanup in the Gulf of Mexico would greatly increase visibility and demand for investors looking to position themselves based

on the event. Inspar Robotic Technologies and related applications may also address a multi-billion dollar price tag for replacing

aging infrastructure. Both of these niche needs may have federal financial support.

The Company’s stock price reflects breaking even in 2010 and stepping up revenues in 2011 with even more rapid growth of

earnings as they enjoy high margins and financial flexibility. We forecast $0.12 to $0.15 in earnings for 2011. With an earnings

multiple of 10x, this would justify a target price of $1.20 to $1.50 in twelve to eighteen months. The Company’s stock has

traded between $0.06 and $0.75 per share over the last 52 weeks and has ranged from $0.40 to $0.60 per share more recently.

Clearly, the stock price also reflects the potential for participation in the cleanup, mining joint ventures, and other large opportu-

nities. Should any of these be realized, the stock price could move up well above the price target based on current customers.

We are initiating coverage of Planet Resource Recovery with a Buy rating and a twelve month target price of $1.50 per share.

We also assign an investment in Planet a High risk assessment for both execution and market volatility.


July 7, 2010

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Planet Resource Recovery, Inc.

Income Statement

For the Year Ended December 31, 2009

(Unaudited)

Revenues $45,258

Cost of sales 4,638

Gross profit $40,620

Operating expenses

Research and development 221,513

General and administrative 1,264,640

Depreciation 37,175

Total operating expenses 1,523,328

Operating loss ($1,482,708)

Other income (expense)

Interest ($23,937)

Total other income (expense) ($23,937)

Loss from continuing operations ($1,506,645)

Net loss ($1,506,645)

Balance Sheet

For the Year Ended December 31, 2009

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $11,030

Accounts receivable 2,165

Inventory 20,528

Other current assets 57,926

Total current assets $91,649

Property and equipment, net 82,697

Other assets 6,112

Total Assets $180,458

Liabilities

Current liablities:

Accounts payable $401,220

Notes payable - current 105,614

Accrued liabilities 740,671

Other current liabilities 19,695

Accrued interest 17,020

Total Current Liabilities $1,284,220

Shareholder notes payable 75,561

Long-term debt 74,686

150,247

Total liabilities $1,434,467

Equity ($1,254,009)

Total Liabilities & Equity $180,458


July 7, 2010

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DISCLOSURES: Beacon Rock Research, LLC provides information and analysis on selected companies, with a focus on small-cap and micro-cap companies.

This report has been written in accordance with current SEC regulations and the Standards of Practice developed by the Chartered Financial Analyst Institute (CFAI). Our research has been conducted by employing analytical practices generally accepted as standard within the analytical industry. In this instance, a

comparison of financial strength, a bottom-up earnings projection based on the U.S. economy, and relative multiples, were employed. The target price was calcu-

lated on comparative EPS, sales and book value multiples, and our knowledge of small-cap markets when enjoying both a sector and a cyclical rebound. Our conclusions are, by the very nature of forecasting, speculative, but are also reasonable, supportable and consistent.

Key to disclosures:

1. The research analyst or a member of the research analyst’s household may take a financial interest in the securities of the Subject

Company in the form of a long position.

2. MRK Financial has paid a fee of $30,000 to Beacon Rock Research, LLC., for corporate advisory services, research coverage, and other services.

3. The research analyst principally responsible for preparing this research report received compensation based upon various factors, in-

cluding Beacon Rock Research, LLC total revenue. 4. This report was prepared exclusively for the benefit of institutional investors and may or may not receive compensation directly or in

soft dollar arrangements.

The analyst, Mike Niehuser, hereby certifies that the research conclusions and recommendation contained herein accurately reflects his personal views about the

industry, company and shares and also hereby certifies that no part of his research compensation was or will be directly or indirectly related to the earnings esti-mates, target price or recommendation about the security.

The research provided herein should not be considered a complete analysis of every material fact regarding the companies, industries or securities named above. The opinions expressed herein reflect the analysis and judgment of the author on the date of publication and are subject to change without notice. Facts have been

obtained from sources considered reliable but should not be construed as complete and are not guaranteed to be accurate. Beacon Rock Research, LLC; its mem-

bers; employees and their families may have positions in the securities covered within the research material above and may make purchases or sales while this report is in circulation. Additional information on the subject companies is available upon request.

EQUITY RECOMMENDATION SYSTEM:

Buy Immediate purchase is recommended. The security expected to outperform the market over the next 12 to 18 months.

Hold Holding the stock is recommended because the share price’s appreciation potential is less than or equal to the market.

Sell The stock has reached the target price objective and/or conditions have changed sufficiently to alter the outlook for the stock.

EQUITY RISK SYSTEM: High The security is more volatile than the market and/or the company is more leveraged than its peer group.

Moderate The security has about the same volatility as the market and/or the company carries a level of leverage in line with its peer group.

Low The security is less volatile than the market and/or the company is less leveraged than its peer group.

DISTRIBUTION OF RECOMMENDATIONS:

At this time, there are an insufficient number of companies under coverage to generate usable distribution information or draw any conclusions regarding bias about the research methodology. Prospective companies are screened and evaluated by sales personal and research analysts with the investment thesis and overall

research recommendation developed before the commission is established.

Documents

Planet Resource Recovery · environmental remediation for the Oil and Gas industry. Currently, the Oil and Gas industry mainly uses organic compounds which are hydrocarbon derivatives