Nathaniel Energy Corporation (NECX)
SPECULATIVE BUY -GROWTH OPPORTUNITY
Price and Common Stock Data:
Stock Price (1/18/99): $6.25
Shares Outstanding (1/99): 10,007,384
Public Float (1/99): 2,060,384
Market Capitalization: $62,546,150
SPECIALIZED ALTERNATIVE ENERGY
Today, there are more than one billion waste tires stockpiled in the United States, with over 250 million discarded tires added annually. Approximately 900 million tires are located in municipal solid waste landfills. There is one used tire created each year for every person living in the United States.
This has created an enormous environmental problem that constantly grows worse. Up to the present, the majority of tire re-use, recycling and burning-for-fuel projects have either failed, or barely survive due to the complex nature of tearing apart and re-using what the world's tire manufacturers have spent billions on to create a product that will last longer and be more reliable.
THE COMPANY
Nathaniel Energy Corporation (NECX) is a multi-faceted company that is implementing innovative and profitable ways to resolve the complex problem of tire recycling, re-use and the subsequent creation of low cost fossil fuel suitable for creating energy for heating and electricity. NECX presently has two operations located in Kansas City, Missouri and Castle Rock, Colorado. These facilities collect used tires under pre-arranged tipping fee agreements with vendors on a daily basis. Salvageable tires are resold both nationally and internationally (primarily to Mexico). The "junk" tires (representing the clear majority) are shredded and processed using patented methods and sold as a low cost fuel to local municipalities and commercial customers. One example of this type of arrangement is Colorado Gas' subsidiary, Coastal Corporation (NYSE: CGP), which provides low cost tire-produced energy under a special partnership arrangement to a commercial greenhouse operation in Colorado.
NECX is Poised to Profitably Capitalize on the Used Tire Marketplace in the Following Ways:
1. Creating Alternative Energy by providing a clean, environmentally-friendly process to produce tire-derived fossil fuel (TDF) which can be used to create heat, steam and electricity for a variety of economically feasible applications.
2. Re-manufacturing used tires for re-sale as an economical alternative to new tires.
NECX's first major alternative energy project involves locating a new tire re-manufacturing and shredding facility in Calhan, Colorado. This site is next to a facility owned by Ripe Touch Greenhouses, Inc., and will be home to a 20 acre greenhouse slated to produce hydroponically-grown tomatoes. In this joint venture, NECX will provide TDF for fuel that will provide heat and also power a seven megawatt electrical power plant. This facility alone will consume over three million tires each year, thus creating a profitable closed loop solution to the problem of disposing of trash tires.
NECX is in the process of purchasing a tire re-manufacturing facility in Long Island, New York. The equipment will be moved to the Calhan, CO location to be used to create quality, full bead-to-bead recapped used tires. Tire re-manufacturing alone is projected to bring in slightly less than $30 million in gross revenues for each of the next three years. Tires destined for shredding produce three primary raw material products: 1.) 99.9% clean crumb rubber 2.) clean steel and 3.) recyclable fibers like nylon, rayon and dacron. Crumb rubber from "trash" tires are further refined to proper specifications and burned in the exclusive "Thermal Combustors" equipment to provide heat and power for commercial consumers like the Ripe Touch facility. This facility will not only realize profits from providing TDF from trash tires, but also from reselling reusable tires from its recapping operation.
TIRE BURNING: Cleaning Up a Traditionally Dirty Business
Burning tires for fuel is known to be a dirty, environmentally-unfriendly business. To solve this problem, NECX acquired the exclusive rights to a patented tire combustion process called Thermal Combustors. This environmentally-friendly process cleanly burns shredded tire material, providing low cost energy without the usual harmful smoke and residue. It has been approved by the state of Colorado for use in the Ripe Touch project.
MARKETING CLEAN TIRE BURNING TECHNOLOGY INTERNATIONALLY
To further take advantage of this opportunity, NECX also obtained the exclusive marketing rights to the Thermal Combustors in the United States. Three projects representing $3,700,000 in contract sales have been approved and are awaiting funding. The Company also represents Thermal Combustors overseas in Italy and England and have several Thermal Combustors under contract in those countries representing another $1,500,000 in sales.
The Marketplace and Competition
Tires have become one of the biggest solid waste problem in the world. While the technology to produce longer wearing, more dependable tires has improved dramatically, the technology to dispose of, and recycle, tires has not kept up.
Because of the difficulty of separating metal, fabric and rubber from a typical tire, the ability to recycle each of these components has met with limited success. Many companies are involved with the collection, separation and disposal of old tires, but once recappable "shells" have been taken out, there still remains millions of useless tires that must be disposed of... and tons of recyclable or burnable resources lost to industry.
There is no direct competition on a large scale to the alternative fuel/recycling program that NECX has embarked upon. Large waste disposal companies rely on the disposal of trash tires in a limited number of landfills and storage in special, licensed areas that are prone to fire, pest infestation and the general degradation of the surrounding environment.
RECENT DEVELOPMENTS
12/98 Currently negotiating with a Dallas/Fort Worth tire recycler to purchase their operation, currently collecting approximately 7,000,000 tires per year. This operation has collection sites in the Dallas and Houston areas. They are currently paying to dispose of junk tires which comprises about 80% of their daily collections. By shredding and creating TDF from these junk tires, hundreds of thousands of dollars of additional profits can be realized by producing this low cost fuel annually.
12/98 The Company enters into an agreement with Ripe touch Greenhouse. Inc. to provide shredded tire material that will be burned in the Thermal Combustors unit to provide economical heat and energy via a seven megawatt power generating facility.
10/98 NECX acquires exclusive right to use and market the Thermal Combustor, a revolutionary device that burns shredded tire material with almost no harmful emissions or residues that can be detrimental to the environment.
A STRONG MANAGEMENT TEAM
Stan Abrams - CEO and Chairman of the Board.
Mr. Abrams has been a successful real estate developer in Colorado. Mr. Abrams has thirty rears of extensive experience in negotiating with both domestic and foreign governments, municipalities, and states. In 1983 he purchased an interest in the Thermal Combustors technology and is responsible for its commercial development and several patents. He also has over 30 years of extensive experience developing many commercial and manufacturing projects in the public and private arenas.
Brett Abrams - CFO & Vice President.
As CFO and Vice President, Mr. Abrams is responsible for managing the financial affairs and operational affairs for the Nathaniel Tire division. Mr. Abrams was the former marketing agent for the Colorado Rockies .
Dan B. Hawkins – Vice President-Project Development.
Mr. Hawkins was the founder and owner of Retread Specialists Inc, based in Longmont Colorado with over 25 years of tire industry experience. |
