Natural State Research seeks $3 million investment for its technology that converts plastic waste into fuel. It has spent $7 million developing this process. The technology can produce fuel from almost all types of plastic at a lower cost than crude oil. It aims to license this technology to waste management companies and fuel users. Projections estimate the $3 million investment would be worth $17 million by 2013 and $80 million for the 10% stake by 2023 as the technology is adopted globally reducing plastic waste and dependence on imported oil.

1. Mission Statement
Natural State Research, Inc.’s (NSR) mission is to provide an economically viable solution to the problem
of waste plastics while producing a low cost, ultra low sulfur fuel while providing outstanding financial
returns for NSR shareholders.
Background
Beginning in 2003, NSR has spent $7M to develop an innovative
and unique technology for cost effectively producing alternative
hydrocarbon liquid fuel from almost all types of solid waste
plastics materials.
Problem: Plastic Waste
Inventions of the twentieth century, plastics are everywhere.
Society has found ample ways to use plastics. But users are less
adept at managing the material when they are finished with it—often
after only one use. The volume of plastics being produced, used,
generated, and discarded is greater than ever before. Plastics
therefore require increasing effort and ingenuity to properly
manage. Annually, of the 60 billion pounds of plastics produced in
the United States only about 6% or 3.6 billion pounds are recycled. For all the talk of plastic bans, plastic
production is increasing.
Solution: Natural State Research
NSR has the solution at its disposal. This technology can produce approximately one liter 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 less than 5% of the weight of the plastic waste.
This residue is rich in carbon and may be an environmentally superior substitute for coal with a higher
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.
Technology Description
The NSR patent pending technology is a simple and economically viable process to decompose the
hydrocarbon polymers of waste plastic into the shorter chain hydrocarbons of liquid fuel. The NSR team
believes that it can convert approximately one ton of plastic into about 290 gallons of fuel at a cost of
about $0.75 per gallon when developed to commercial size. NSR’s refining process is uncomplicated and
promises to be very competitive with large crude oil installations. In financial projections NSR uses
$30/bbl for preprocessing and refining costs ($0.71 per gallon).
Advantages
Other plastic recycling technologies generally have a very narrow band of plastics they can use. Nearly all
recycling is done with plastic designations 1 or 2 while designations 3 through 7 are virtually untapped
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2. (over 70% of all plastic fall within these categories). A combination of economic and technological factors
account for this situation. The advantage of NSR technology is that it can produce a profitable product
from material that society generally pays to thrown away. It is this no or low cost of feedstock that is the
key advantage versus crude oil and biodiesel as seen in the table below.
Financial Benefits
Product in barrel (crude) % Crude Value $/gal Value $/bbl Total Value
Fuel gas, sulfur 4% $.50 $21 $0.84
Gasoline Blends 55% $2.33 $97.86 $53.82
Diesel, jet fuels 25% $2.18 $86.10 $21.52
Six oil, asphalts 16% $0.75 $31.50 $5.04
Total $81.22
Gross profit, $81.22 - $75 = Total net value $3/bbl
$6.22/barrel before refining
@ $3 to $5 per bbl
Product in barrel (NSR) % NSR Value, $/gal. Value, $/bbl Total Value
Fuel gas, sulfur 0% $0.50 $21 $0
Gasoline blends 55% $2.33 $97.86 $53.82
Diesel, jet fuels 40% $2.18 $86.10 $34.44
Six oil, asphalts 5% $0.75 $31.50 $1.57
Total value $89.83
Gross profit, $89.83- $5.55 = Total net value $44/bbl
$84.28/barrel before refining
@ $40/bbl
Product in barrel (Biodiesel) % Value, $/gal. Value, $/bbl Total Value
Biodiesel
Gasoline blends 0% $2.33 $97.86 $0
Diesel, jet fuels 100% $2.18 $86.10 $86.10
Federal excise tax credit 100% $1.00 $42.00 $42.00
Alternative Fuel tax credit 100% $0.50 $21.00 $21.00
Total value $149.10
Gross profit, $149.10- Total net value - $45.90/bbl
$126.00 = $23.10/barrel
before refining @ $69/bbl
(Note: These calculations assume NSR has to pay $50/ton for plastic feedstock that normally cost about $25/ton for landfill
disposal. It assumes that it will cost $180/ton to pre-process the plastic and that refining costs will be more than double
commercial crude refining. This is calculated with crude oil cost at $75/bbl and Biodiesel feedstock cost at $126/bbl)
Environmental Benefits
Plastic is one of the least recycled waste products in the United States. It is estimated only 6% of waste
plastic is currently recycled and that waste plastic represents about 20% of the waste that is currently
landfilled. The NSR technology can potentially dramatically increase the amount of plastic that is recycled
while also decreasing the United States dependency on imported oil.
Business Model
NSR plans to execute a strategy that includes some company operated plants as well as licensing the
technology to market-leading waste management companies and/or large fuel users such as UPS and/or
companies that have a vested interest in recycling plastic such as plastic manufacturers. The company may
also pursue a public franchising model in some locations.
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3. Management
NSR’s executives and advisors have extensive experience and have the personal relationships to reach the
board level of many of the targeted companies.
Intellectual Property
The inventor of the plastic to fuel technology, Dr. Moinuddin Sarker, Ph.D., MCIC, Vice President of
Research & Development at NSR, has assigned all patent rights to NSR.
Investment Opportunity
NSR is seeking a single investment of $3,000,000 in exchange for a 10% equity position to help fund its
expansion plans. Currently NSR is wholly owned by Karin Kaufman, Ph.D., President and CFO of NSR.
Dr. Kaufman has been the sole funder of NSR to date and has already investing over $7,000,000 since
2003.
Use of Funds
NSR plans 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 three stages:
1. Fabricate a mobile batch pilot conversion plant with 120 – 180 Kg per day (30 to 45 gallons)
capacity. This activity is already underway and is scheduled to be complete within 6 months.
2. Design, fabricate and operate a continuous flow demonstration plant that will be developed within
12 months with a production capacity of 185,000 to 275,000 gallons per year (525 to 785 gallons
per day).
3. Design, fabricate and operate a continuous flow commercial plant that will be developed within 24
months with a production capacity of 750,000 to 1,000,000 gallons per year (2,145 to 2,850
gallons per day) depending on the issuance of permits.
Return on Investment
Projections indicate that a 10% position in NSR calculates to be worth $17,018,000 by 2013. The goal is to
have the value of the Company to greatly increase after 2013 when large plastic recycling plants using
NSR technology start to come online.
Estimated Internal Rate of Return (IRR) per share ($3M investment).
Year 2010 2011 2012 2013 2014
Estimated Accumulated Total
Cash Distr. Per share $.30 $1.15 $2.32 $4.67 $8.24
Estimated Price per share $11.67 $ 13.50 $18.80 $37.70 $57.20
Multiplied by 400,000 shares $3M $5.4M $ 7.5M $ 15.1M $22.9M
Estimated Total Realized and
Un-realized Gain on 400,000 shares $120K $5.8M $8.5M $17.0M $26.2M
Earnings Multiple
The estimated private market value per unit was calculated by multiplying the p/e ratio of 8 times the
estimated net earnings per outstanding shares to arrive at the per unit figure at the end of each year.
Revenues
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4. The above calculations model royalty stream and operations revenues if the Company continued to receive
royalties and operational revenue for a period of 5 years along with the attendant calculated shareholder
values. The table below projects revenue through 2023.
Projected NSR Revenue
Year 2009 2010 2011 2012 2013 2014 2015 2016 2017
Royalty 0 $7.5 $10M $10M $10M $11M $12M $13M $14M
Revenue
Operations 0 $0.5M $5M $18M $47M $75M $103M $131 $159M
M
Consulting 0 0 $1M $2M $3M $4M $5M $6M $7M
Total 0 $8M $15M $30M $60M $90M $120M $150 $180M
M
2018 2019 2020 2021 2022 2023 Total
$15M $16M $17M $18M $19M $20M $192M
$187M $215M $243M $271M $299M $327M $1750M
$8M $9M $10M $11M $12M $13M $91M
$210M $240M $270M $300M $330M $360M $2033M
(Calculated using the world market penetration going from zero in 2009 to 1% by 2023. From a world market perspective,
revenue is projected to increase annually by about 1/10th of 1% per years 2013 through 2023.)
Exit Strategy
The tables below show annual cash distributions to be issued in the form of “Dividends” starting at the end
of 2010. NSR projects that the net profits will be 31.3% and that 50% of that amount will be re-invested in
projects while 50% is distributed as dividends. This means that 15.6% of the projected revenues in the
tables above are planned for distribution. This would calculate to $31M in distributions for a 10% equity
position over the projected period ending in 2023. Extrapolating to 2023 using 8X earnings as the basis for
share price, the calculated share price in 2023 would be $200 per share. The 400,000 shares representing
10% equity stake would have a calculated value of $80M.
2009 Awards
NSR received industry recognition from the Connecticut Technology Council and Society of Automotive
Engineers for its achievements.
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