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Filed new patent application for a new pyrolysis oil based biofuel.
On July 21, NBF field a patent application for a new type of biofuel based on
pyrolysis oil. Pyrolysis is a thermo-chemical decomposition of organic
material at high temperatures in the absence of oxygen. It is most commonly
used for organic materials. The chemical process is heavily used in the
chemical industry (e.g. to produce charcoal, methanol and other chemicals
from wood, to produce coke from coal and to convert biomass into syngas.
INVESTMENT RISK
Investment risks include difficulty sourcing adequate and economical
feedstocks, rate of customer acceptance, lack of profitability, adequate
funding and the ability to achieve economies of scale.
VALUATION METHODOLOGY
We use a 5-year discounted cash flow analysis to value NGBF. Our $1.25
target utilizes a 10x terminal EBITDA multiple and 17% discount rate. Our
sensitivity analysis yields a range of $0.95-$1.52.
Fuel Sales 0 0 0 22,943 0 0 42,637 21,252 73,644 137,533 6,477 0 4,373 17,639 28,490 307,253
Blending / Tax Credit 0 0 0 0 0 0 0 13,160 28,246 41,406 0 0 0 6,000 6,000 102,691
Tolling Fees & Other 0 0 0 0 22,943 0 0 0 0 0 0 0 0 0 0 175,000
Total Revenues $0 $0 $0 $22,943 $22,943 $0 $42,637 $34,412 $101,890 $178,939 $6,477 $0 $4,373 $23,639 $34,490 $626,021
Y.o.Y. Growth NM NM NM NM NM NM NM NM 344% NM NM -100% -87% -77% NM 17.1%
Q.o.Q. Growth NM NM NM NM NM NM -19% 196% -94% -100% NM 441%
Cost of Sales 0 0 0 307,541 307,541 208,655 597,840 584,745 920,336 2,311,576 580,948 526,404 539,168 566,985 2,213,504 2,584,253
Gross Profit 0 0 0 (284,598) (284,598) (208,655) (555,203) (550,333) (818,446) (2,132,637) (574,470) (526,404) (534,795) (543,346) (2,179,014) (1,958,232)
R&D 196,841 145,931 497,773 246,178 1,086,723 194,266 95,769 73,126 111,853 475,014 80,858 72,302 50,294 70,918 274,372 697,808
G&A 1,899,427 2,149,451 1,739,009 3,865,493 9,653,380 1,894,599 2,601,685 2,279,523 2,975,258 9,751,065 2,344,998 2,088,705 1,909,834 1,775,851 8,119,388 7,176,239
Other Expenses 0 359,595 0 1,600,369 1,959,964 0 0 0 0 0 0 0 0 0 0 0
Total Operating Expenses 2,096,268 2,654,977 2,236,782 5,712,040 12,700,067 2,088,865 2,697,454 2,352,649 3,087,111 10,226,079 2,425,856 2,161,007 1,960,129 1,846,769 8,393,760 7,874,047
EBIT (2,096,268) (2,654,977) (2,236,782) (5,996,638) (12,984,665) (2,297,520) (3,252,657) (2,902,982) (3,905,557) (12,358,716) (3,000,326) (2,687,411) (2,494,923) (2,390,114) (10,572,775) (9,832,279)
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
EBITDA ($1,941,826) ($2,522,799) ($2,099,454) ($5,683,151) ($12,247,230) ($2,021,185) ($2,964,282) ($2,595,901) ($3,531,264) ($11,112,632) ($2,715,854) ($2,354,301) ($2,128,586) ($2,033,985) ($9,232,727) ($8,679,523)
Operating Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Interest Expense 154,442 132,178 136,138 113,823 536,581 109,084 110,579 119,029 198,969 537,661 101,985 280,297 227,132 202,703 812,118 371,656
Interest Income 5,269 11,320 10,525 2,304 29,418 719 937 1,294 507 3,457 314 71 1,310 986 2,681 232,880
Other Income - Includes Blending Tax Credit 0 0 0 7,208 7,208 0 0 0 0 0 161,106 0 0 0 161,106 0
Pretax Income (2,245,441) (2,775,835) (2,362,395) (6,100,949) (13,484,620) (2,405,885) (3,362,299) (3,020,717) (4,104,019) (12,892,920) (2,940,891) (2,967,637) (2,720,746) (2,591,832) (11,221,106) (9,971,055)
Pretax Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Tax Rate 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Earnings Before Adjustments (2,245,441) (2,775,835) (2,362,395) (6,100,949) (13,484,620) (2,405,885) (3,362,299) (3,020,717) (4,104,019) (12,892,920) (2,940,891) (2,967,637) (2,720,746) (2,591,832) (11,221,106) (9,971,055)
Net Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
Nonrecurring Gains / (Charges) 0 (9,765) 0 9,048 (717) 138,300 (1,762,288) 736,211 (616,106) (1,503,883) 0 (12,102) (12,102) (12,102) (36,306) (48,408)
Preferred Dividends (1,477,750) (1,772,475) (225,976) (213,116) (3,689,317) (4,211,804) (170,017) (167,919) (141,639) (4,691,379) (148,692) (125,787) (126,416) (127,048) (527,943) (509,192)
GAAP Net Income ($3,723,191) ($4,558,075) ($2,588,371) ($6,305,017) ($17,174,654) ($6,479,389) ($5,294,604) ($2,452,425) ($4,861,764) ($19,088,182) ($3,089,583) ($3,105,526) ($2,859,264) ($2,730,982) ($11,785,355) ($10,528,655)
Net Margin NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM -1682%
EPS before Adjustments / Dividends ($0.12) ($0.15) ($0.13) ($0.32) ($0.72) ($0.12) ($0.13) ($0.11) ($0.14) ($0.49) ($0.09) ($0.08) ($0.07) ($0.07) ($0.30) ($0.21)
Adjustments / Pfd Dividends per Share ($0.08) ($0.10) ($0.01) ($0.01) ($0.20) ($0.19) ($0.08) $0.02 ($0.03) ($0.24) ($0.00) ($0.00) ($0.00) ($0.00) ($0.02) ($0.01)
GAAP EPS ($0.20) ($0.24) ($0.14) ($0.33) ($0.92) ($0.31) ($0.21) ($0.09) ($0.16) ($0.73) ($0.09) ($0.09) ($0.07) ($0.07) ($0.32) ($0.24)
Y.o.Y. Growth -260% -12% 7% -42% -39% -52% -16% -37% -50% -21% 70% 58% 15% 58% 56% NM
Q.o.Q. Growth 69% -20% 44% -140% 6% 34% 58% -90% 44% 7% 14% 7%
Fully Diluted Shares Outstanding 18,227,292 18,639,757 18,882,266 19,151,931 18,725,312 20,900,675 25,726,050 28,465,378 29,732,892 26,236,636 33,614,160 36,337,173 38,837,173 39,837,173 37,156,420 47,375,000
Percent of Revenue
Cost of Sales NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 413%
Gross Profit NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM (313%)
R&D NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 111%
G&A NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 1,146%
Other Expenses NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 0%
Total Operating Expenses NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 1,258%
Operating Sources:
Net Income ($2,245,441) ($2,775,835) ($2,362,395) ($6,100,949) ($13,485,337) ($2,405,885) ($3,362,299) ($3,020,717) ($4,104,019) ($12,892,920) ($2,940,891) ($2,967,637) ($2,720,746) ($2,591,832) ($11,221,106)
Depreciation and Amortization 154,442 132,178 137,328 313,487 737,435 276,335 288,375 307,081 374,293 1,246,084 284,472 333,110 366,337 356,129 1,340,048
Total (2,090,999) (2,643,657) (2,225,067) (5,787,462) (12,747,902) (2,129,550) (3,073,924) (2,713,636) (3,729,726) (11,646,836) (2,656,419) (2,634,527) (2,354,409) (2,235,702) (9,881,058)
Non-Operating Activities: 5,035,235 3,538,375 791,625 3,371,864 12,737,816 3,462,622 1,075,311 3,728,691 2,866,224 11,132,848 1,388,301 2,093,996 2,250,000 20,000,000 25,732,297
Beginning Cash and Invest. (a) $1,644,145 $4,493,574 $5,478,083 $3,779,073 $1,644,145 $1,476,246 $2,600,388 $537,857 $1,300,728 $1,476,246 $567,647 $239,660 $262,031 $197,159 $567,647
Net Cash Flow 2,849,429 984,509 (1,699,010) (2,302,827) (167,899) 1,124,142 (2,062,531) 762,871 (733,081) (908,599) (327,987) 22,371 (64,872) 15,526,623 15,156,136
Ending Cash and Invest. (a) $4,493,574 $5,478,083 $3,779,073 $1,476,246 $1,476,246 $2,600,388 $537,857 $1,300,728 $567,647 $567,647 $239,660 $262,031 $197,159 $15,723,783 $15,723,783
(a) Includes short-term marketable securities
Assets
Cash & Equivalents $4,493,574 $5,478,083 $3,779,073 $1,476,246 $2,600,388 $537,857 $1,300,728 $567,647 $239,660 $262,031 $197,159 $15,723,783
Accounts & Other Receivables 78,559 85,421 160,751 22,943 0 39,784 18,237 63,900 23,108 41,406 16,775 6,476
Inventories 0 0 0 0 0 0 11,708 11,708 11,708 11,708 7,189 9,072
Prepaid Assets 0 0 0 195,369 703,970 478,780 373,064 237,635 118,950 59,230 59,230 59,230
Other Current Assets 0 0 0 0 0 0 77,820 41,406 56,106 48,354 48,354 48,354
Total Current Assets $4,572,133 $5,563,504 $3,939,824 $1,694,558 $3,304,358 $1,056,421 $1,781,557 $922,296 $449,532 $422,729 $328,707 $15,846,915
Net PP&E 0 0 131,967 378,946 809,263 963,197 914,150 1,120,911 1,113,278 1,131,212 1,057,912 992,938
Other Assets 0 0 82,031 392,208 424,361 388,543 390,452 346,073 343,525 385,184 385,184 385,184
License Agreement 8,061,300 8,061,300 8,061,300 6,267,460 6,112,068 5,956,676 5,805,106 5,650,988 5,496,871 5,282,487 5,127,095 4,971,703
Total Assets $12,633,433 $13,624,804 $12,215,122 $8,733,172 $10,650,050 $8,364,837 $8,891,265 $8,040,268 $7,403,206 $7,221,612 $6,898,898 $22,196,740
Liabilities
Acct Payable & Accrued Liabilities $533,371 $630,025 $658,565 $1,385,311 $1,436,494 $1,429,419 $1,393,546 $1,472,519 $2,352,150 $3,113,612 $2,962,462 $623,060
Loan Payable - Related Party 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
License Agreement Payable - CP 1,396,590 671,598 807,736 928,730 573,792 683,501 794,416 624,533 640,039 662,647 846,481 944,305
Accrued Dividends 290,813 496,505 722,480 765,369 812,020 945,579 1,068,388 1,078,003 1,226,695 864,148 990,564 1,117,612
Other CL 149,038 82,500 43,986 0 0 0 0 110,874 85,319 97,421 97,421 97,421
Current Liabilities $2,419,812 $1,930,628 $2,282,767 $3,129,410 $2,872,306 $3,108,499 $3,306,350 $3,335,929 $4,354,203 $5,441,177 $5,491,385 $3,286,112
License Agreement Payable, net 3,535,869 3,543,039 3,543,039 3,535,868 2,999,890 3,000,760 3,008,874 3,377,726 2,464,204 2,532,026 2,464,204 2,464,204
Common Stock Warrant Liability 0 0 0 0 1,545,913 1,606,822 0 0 0 0 0 0
Other Long Term Liabilities 0 0 0 0 0 0 0 324,409 304,273 284,137 284,137 284,137
Total Liabilities $5,955,681 $5,473,667 $5,825,806 $6,665,278 $7,418,109 $7,716,081 $6,315,224 $7,038,064 $7,122,680 $8,257,340 $8,239,726 $6,034,453
Shareholders' Equity $6,677,752 $8,151,137 $6,389,316 $2,067,894 $3,231,941 $648,756 $2,576,041 $1,002,204 $280,526 ($1,035,728) ($1,340,828) $16,162,287
Total Liabilities and Equity $12,633,433 $13,624,804 $12,215,122 $8,733,172 $10,650,050 $8,364,837 $8,891,265 $8,040,268 $7,403,206 $7,221,612 $6,898,898 $22,196,740
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Explanation of Ratings
Strong Buy: Describes stocks we believe have the potential to appreciate by 30% or more over the next twelve
months.
Buy: Describes stocks we believe have the potential to appreciate by 15% to 30% over the next twelve months.
Hold: Describes stocks we believe could change plus or minus 15% over the next twelve months.
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No Rating: Describes stocks we cover on which adequate information to make a recommendation is not available.
The analyst(s) principally responsible for preparation of this report received compensation that is based upon many factors,
including the firm’s overall investment banking revenue.
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(their) compensation was not, is not, or will not be directly or indirectly related to the specific recommendations or views contained
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