Natural State Research, Inc.

Natural State Research, Inc. (NSR) is a company located in Stamford, Connecticut.

Executive Summary

NSR has developed an innovative and unique technology for producing alternative hydrocarbon liquid fuel from almost all types of solid waste plastics materials. The technology is environmentally friendly. The fuel produced burns more efficiently and cleaner than commercial gasoline and diesel, and would be produced at a lower overall cost.

NSR has demonstrated the feasibility of producing this fuel in a laboratory scale plant that is able to produce 5 gallons per day, and now proposes to expand this process to the point where it can be adopted by organizations as part of their waste handling systems and fueling systems. This will be done in a two stages:

1. First by putting together a pilot conversion facility with 15 – 25 Kg per day (5 to 8 gallons) capacity. This activity is already underway, and,
2. Followed by a full sustained commercial plant this will be developed within 3 to 5 years with a production capacity of 250,000 to 1000,000 gallons per year (685 to 2740 gallons per day or more) depending on the waste plastic quantity and plant infrastructure.

Based on the available statistics that US alone generates 10.2.million tons of waste plastic, this represents a mere 2% of the plastics that can be reclaimed and converted to fuel. When fully operational, multiple plants running in parallel and 100% of solid waste plastics are recycled using this technology it can produce a staggering 2.5 billion gallons of liquid fuel per year.

NSR will be focused as a business on building these plants for governmental agencies, utility companies, and private enterprises. It plans to commercialize the technology by licensing it these types of organizations to create locally-owned franchises.

It is seeking an investment of $7 million to put together the pilot waste conversion plant and to be ready for full production deployment at customer sites.

Corporate Background and Team

Dr. Karin Kaufman founded NSR in 2003 in Stamford, Connecticut with the business objective of converting solid waste into energy. After completion of its initial phase of research and development, NSR has applied for a US and International (PCT) Patent on this conversion process, entitled “Method for converting waste plastics to lower – molecular weight hydrocarbons, particularly hydrocarbon fuel materials and the hydrocarbon material produced thereby.”

Dr. Moinuddin Sarker is the Vice President of Research and Development at NSR. He has developed the alternative fuel technology at NSR and the technology is described in detail in the NSR patent application.

Business Opportunity

As the world population increases, oil producing nations along with emerging producers are seeing exponential growth in domestic oil consumption, offsetting their oil exports. Meanwhile, oil production in the United States is predicted to shrink, given that the country imports two-thirds of its oil from overseas [1]. Transportation fuels derived from imported fossil fuels are subject to price fluctuations in the global marketplace and constitute a major expense in the operation of vehicles and other uses of energy.

There are few industries whose products do not contain plastic in some form or other. Plastics are all around use (plastic shopping bags, plastic bottles, in microwaves, in cars…) that at the end of their life generate waste plastics. Unfortunately, these are not usually recycled back and there is no other option but to sell this waste as scrap or pay for its disposal at a very low price creating immense environmental issues. The following public statistics are noteworthy:

• Today, Americans generate 10.5 million tons of plastic waste a year but recycle only 2 % of it [2].
• Landfills continue to dwindle in number. In 1979, there were an estimated 18,500 landfills in the nation. In 1988, there were 8000 landfills, in 2005 there were 1654.
• 108,234 tons of waste per day is incinerated – not only producing toxic fumes – but other gases that contribute directly to global warming.
• Packaging adds 29 million tons of non-biodegradable waste to landfills every year.
• 11.8% of all US annual municipal solid waste is plastics.

NSR has developed a technology that addresses this environmental problem directly. NSR’s technology uses waste plastics and converts it into high octane liquid fuel. The technology is environmentally friendly and practically self sufficient. This process can produce approximately 1.3 liters of NSR fuel from one kilogram of plastic waste. The exact yield depends on the type of plastic, and the grade of NSR fuel desired. Typically, the process produces a residue of about 5% of the weight of the waste plastics. This residue is rich in carbon and can be used as a replacement for coal with a high BTU value. The NSR technology is able to cater to a wide range of diverse applications, including but not limited to fuel, gas and electrical generation.

It can be adopted by local governments and/or private organizations as part of their waste handling systems and integrated into fueling systems for their energy needs. This approach will promote local ownership of energy production, will create jobs, and will result in generation of energy from plants that run cleaner and produce fewer harmful emissions. In the initial stages, keeping in mind the practical limits to establishing plants that are economically sustainable, we estimate this to be a $40 Billion market in the US alone.

The anticipated return of investment would be less than 5 years for a full-fledged plant for commercial production of industrial fuel. The potential cost reduction, of course, would be unique for each individual situation including the target fuel category with specific application.

Business Execution Plan

Competitive Advantage of NSR Technology

Preliminary external analysis of NSR fuel indicates that this can be used in place of aviation-type fuel. This offers a high potential of return on investment. Initial tests also show 17% higher vehicle mileage with NSR fuel when compared that with commercial gasoline. This provides competitive economic advantages for NSR fuels over the conventional fossil fuels in addition to the unique advantages in its environmentally friendly source for alternative energy. Jobs will be created to run the fuel production facilities and to collect, sort, and clean waste plastics, and to produce, refine, analyze, and transport NSR fuel. Besides labor, the production costs of the fuel should remain low and will not be vulnerable to the fluctuations seen in the global oil markets.

In recognition of its innovative technology, NSR has been awarded the prestigious Connecticut Technology Council Innovation Pipeline Award 2009 (Companies to Watch).

NSR has also received the AEI Tech Award 2009 by the Society of Automobile Engineering (SAE) at the SAE World Congress and Expo 2009 in Detroit, Michigan held on 20-23 April, 2009.

Leverageable Advantages

The advantages of the fuel are many:

• The cost savings from the fuel will help defray expenditures relating to vehicle retrofits, if any, and for the collection, transportation, and sorting of waste plastic. Waste plastics are collected from private or municipal waste systems where procedures are already in place to separate solid waste into various components.
• NSR fuel has an advantage over typical biomass fuels in that it does not require large amounts of land to create the fuel.
• The use of NSR fuel in vehicles will have energy, environmental, and economic benefits. The energy benefits arise from the high energy content of the fuel relative to the energy required to produce it.
• NSR fuel has a considerably higher energy potential per unit volume as compared with commercially-available gasoline.
• The fuel also burns cleaner than gasoline. It has reduced concentrations of benzene, toluene, styrene, xylene, and naphthalene compounds which are readily present in fossil fuel emissions.
• The NSR fuel contains negligible amount of sulfur and phosphorus.
• Direct environmental benefits are realized by the removal of waste plastics from the environment.
• This will create jobs within the private organizations and/or municipalities.

Business Model

NSR has demonstrated the feasibility of producing electricity from its fuel. The production process is simple and inexpensive, and will provide fuel at a cost that is more attractive than gasoline. Once the fuel production process is automated and efficiencies in the production are realized, the produced fuel should have a retail price that would be lower and more stable than conventional fuels such as commercially available gasoline and diesel.

To leverage these benefits NSR plans to enter into collaborative agreements with municipalities to build fuel processing plants as an integral part of their waste processing and vehicle fueling systems.

NSR plans to commercialize the technology by licensing it to public and private concerns to create locally-owned franchises. Each organization will then be able to build its own fuel production plant to power its transportation vehicles. NSR will provide the necessary supports in process engineering, instrumentation and controls, piping design, plant design modeling, and review services to facilitate franchising. In return these organizations will pay NSR a monthly fee based on production volume and an initial non-recurring setup fee for customized support.

Market Size

The potential market for these franchises would be equivalent to the number of municipalities in the country which are large enough to generate sufficient quantities of waste plastics. The market size is estimated to be over 1,200, based on the number of cities in the United States with population greater than 100,000 for each city. The market potential for franchises in the private sector has a limitless potential [2].

Setting up a waste conversion plant will also create market for ancillary jobs. For example, if there were ten jobs for an one-ton production facility in each of the target 1200 cities with a population of >100,000 per city, the NSR fuel technology would create 12,000 sustainable jobs in the US for an average period of 5 years or longer.

USA and International Market Values of NSR Technology

1. If NSR licenses the technology in each of the 1200 cities at US$ 0.25M to US$ 0.5M per state, the immediate market size is US$ 300 to 600 million. NSR will also charge royalty to these plants.
2. If NSR licenses its technology to each of the 168 countries/territories in the world at US$ 3M per country [3,4], there is again an immediate market of US$ 500 Million. NSR will also charge royalty to these plants.

Cost of Pilot Plant for NSR Fuel Production

1. NSR estimates that the cost of pilot plant or proto-type plant setup and running will be approximately US$ 1 Million, assuming a capacity of 15 to 20 gallon per day, including manpower and infrastructure. NSR will provide comprehensive packages with the acquisition of the license and franchise of the technology.
2. NSR estimates that the cost of commercial plant setup is in the range of US$ 5 to 20 Million depending on waste plastics sources and feeding, assuming a capacity of 250,000 to 1000,000 gallons per year (685 to 2,740 gallons per day or more) depending on the waste plastic quantity and plant infrastructure.

Immediate Plans

NSR is currently working on opening pilot process plants either in NY, CT or CA in order to produce fuel. With this pilot plant, NSR plans to increase production of the fuel and to fine-tune the purification and distillation process of the fuel to produce a variety of high quality fuels. NSR will test the fuel to:

• Test its efficiency for gasoline and diesel engine types.
• Determine whether any engine retrofits will be required (none is expected).
• Demonstrate enhanced engine performance with the objectives of reduced emissions and increased cost savings.

NSR has been on a rapid and steep ascent up the sustainability learning curve just as many of us have over the last few years. Energy costs have been the catalyst that initiated the changes in public attitudes and foci. Terms like carbon credits, carbon trading, zero-waste and corporate social responsibility are the regular parts of NSR’s foci. This rapidly evolving concept of sustainability is undeniably important considering the economic and environmental pressures that the world is facing today.

Investments and Capitalization

Dr. Karin Kaufman is the sole owner of NSR and has invested US$ 7 Million during 2003 to 2008. Currently NSR is looking for US$ 7 Million for its on going R&D and to set up the proto-type plant which will be completed in 2 years with proper funding, from Federal, State, Municipal and City Government, Private Investors, Venture Capitols and Other funding agencies.

NSR will be able to pay back the fund by 2 years after the completion of the proto-type plant, by selling products and licensing the technology in USA and around the world.

NSR just finalized its first franchise deal consisting of a $5,000,000 (5M US$) advance fee for licensing and franchising of this technology with a California based company. The concerned company will construct a pilot and production plants in California by their own cost. The royalty is being calculated based on the total waste plastics consumption of the plant.

We have not accepted any external funding to date.

Conclusion

Investment Sought

NSR is seeking an investment of $7 million.

First Round Objective

This investment will allow NSR to put together the pilot waste conversion plant and to be ready for full production deployment at customer sites, before Second round investment is sought.

Milestones

In the next 12 months, this initial investment will allow NSR to achieve the following milestones:

• Establish a pilot plant to demonstrate the large scale economic viability of NSR’s technology
• Demonstrate the comparative advantages of NSR’s technology over other approaches to produce alternative fuel.
• Plan large scale implementation of its technology by partnering with municipalities around the country and other public/private agencies.
• Secure patents.
• Initiate franchise registration

Winning Formula

Natural State Research Inc. (NSR) is an award winning Technology Company spearheading the innovative approach of recycling waste plastics directly into high octane liquid fuel – fuel that can be used in any combustion engine. NSR addresses two of the most difficult problems of the 21st century: energy dependence on fossil fuels and environmental pollution. NSR’s technology will lead to a sustainable economic development model by creating an entire alternate energy industry – creating jobs and ensuring long term prosperity while keeping the natural balance of our planet earth.