Bob Reuss

Raleigh, NC (USA)
Role(s):
C-Level Executive (CEO, CFO, etc.)

Maverick BioFuels, Inc.

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Location: Raleigh
Industry: Bio-Technology
Year Founded: 2007
Number Employees: 1-10 people
Description: “Converting Today’s Waste Into Tomorrows Fuel” The Foundation Concept: Maverick Biofuels, Inc. (MBF) was founded to commercialize a patent pending process to produce a mixed alcohol biofuel, replacing gasoline, derived from municipal and biomass waste feedstocks. The fuel will be produced using three well understood thermochemical and chemical processes that have not been previously linked (Figure 1). Each of the major steps is commercially available and currently used to produce other commodities. Figure 1. Schematic illustrating the 3 major steps of converting waste or biomass feedstock to mixed alcohol fuel. Step 1 is the thermochemical conversion of the feedstock to syngas. Step 2 is the catalytic conversion of syngas to a liquid intermediate. And step 3 is a catalytic conversion of the liquid intermediate to mixed alcohols. The letter designations A through D denote the transfer steps between the feedstock and each intermediate product. Advantages vs. Ethanol and Alternative Production Technologies: This mixed alcohol fuel has several performance and production advantages over ethanol and other biofuels produced by fermentation methods. Some of the key advantages are: • Maverick Biofuels can produce its mixed alcohol fuel without a direct impact on agriculture and food supply. • The process will consume significantly less water than fermentation of sugar biomass to produce ethanol. • The process can function using many forms of low or no cost feedstock including: municipal solid waste; construction waste; timber and sawmill waste; paper mill waste; animal waste; wet natural gas; and, agricultural byproducts like bagasse, corn fodderstover, etc. • Mixed alcohols can be distributed using the existing fuel infrastructure for storage, blending, wholesale distribution and retail sale. • Although the highest economic return will be realized as a gasoline replacement, the fastest route to the initial market will be as a gasoline additive. • The product can be blended with gasoline in any proportion to substitute for gasoline or used unblended in flex fuel internal combustion engines. • Maverick's mixed alcohol product has higher octane and significantly higher energy content content per gallon than ethanol. Intellectual Property: David Bradin, who serves as Maverick’s CEO and Principal Scientist, filed a patent application covering this concept in May, 2007. Recently, an International Search Report and Written Opinion was issued in connection with this application, indicating that all of the pending claims are novel, inventive and have industrial applicability. The above mentioned patent application and two additional patent applications pertaining to this technology have been assigned to MBF by Bradin. One of the additional patent applications covers the production of bio-polypropylene and the other covers use of the technology to produce higher carbon content alcohols than the foundation patent application. MBF expects that opportunities for developing additional patentable technologies will emerge as the intermediate steps in the process are perfected during plant design and engineering. The market for Maverick’s biofuel: The market opportunity for biofuels is growing due to government programs designed to reduce dependence upon foreign oil and demand from consumers to be more ‘green’ while reducing the cost of energy. For example, the Energy Independence and Security Act of 2007 include incentives for the US to produce 36 billion gallons of renewable fuels by 2022. Some statistics concerning the current gasoline and biofuel markets include: • Over 141 billion gallons of gasoline was consumed in the US in 2007. • The market for liquid biofuels is growing. – Over 4 billion gallons of ethanol was consumed in 2007. – Biofuel consumption is expected to grow by 10% annually. – Growth is limited by supply, not demand. • The current federal tax credit for biofuels is $1.01 per gallon and goes to the producer. Commercial Development of Maverick’s Technology: This technology can be exploited using a variety of business models and revenue generating opportunities including, alternatively and additionally, the direct commercial sale of olefins and the conversion of olefins to bio-polypropylene which is a commonly used plastic. MBF’s first commercial plant will be operated by MBF, but likely co-located with a business partner as a means to secure a consistent feedstock, to help minimize the cost of plant construction, and to aid in controlling operating costs. Some logical locations for future facilities would be on or adjacent to landfills when converting municipal waste or near a pulping facility if using pulp or timber waste. Future locations and/or business models may include joint ventures with waste hauling and landfill management companies, total vertically integrated facilities, etc. Thus, the future revenue stream for MBF will range from royalties to joint ventures to direct sales of product from company owned and operated facilities. In the short-run (through first commercial production facility) revenue is expected to be derived from the sale of product produced in North Carolina at an MBF operated facility. Some key facts concerning production of Maverick’s mixed alcohol fuel include: • DOE analysis has concluded that, economically, feedstocks for gasification must originate within a 50 mile radius of the gasification facility. – Thus, regional production facilities will be required. – This will bring good paying jobs to non urban areas. • The production process at each plant site, once started, will be self supporting using excess energy from later stages to power earlier stages and will have low to no net carbon footprint. • When combined with landfill operations, the production of mixed alcohols will dramatically increase the useful life of the associated landfill. • Methane generated from the landfill operations can also be used as a fuel source in the MBF process. • Facilities and technical experts to support all necessary steps in commercialization exist and have been identified in North Carolina. • In April 2008, the wholesale price per gallon for ethanol was $1.90 and was $2.90 for gasoline. Based on the expected energy content of the MBF mixed alcohol, the wholesale price will be around $2.45. The commercial development timeline and investment requirements for the MBF process is summarized in the following points: • From initial funding the time to a first commercial scale plant with positive cash flow and profitability will be on the order of four to five years and will be aided by the opportunity to joint venture with existing and experienced syngas producers and landfill operators reducing the upfront capital requirements and investment risks. The company has identified and is in discussions with several such producers. • Once proven in commercial operation, the concept has rapid national and world-wide expansion possibilities through licensing and joint venture as well as company constructed and operated fully integrated production facilities. Progressively higher levels of long term debt financing are anticipated as more plants are built and prove profitable. Possibly these can be sold to investors (sale and lease back) to further improve the efficient use of capital. • There are minimal risks of significant delays in commercialization from governmental licensing and certification requirements as precedents for ethanol blends up to 85% and other alcohol products have already been approved. The Environmental Protection Agency has an accelerated program in place for biofuel registration. • Initial financial models show that the process will be profitable without government subsidies and will be enhanced as future world wide demand for motor fuel grows and the competition for declining worldwide supplies of petroleum from developing economies and alternative uses increases. In the initial stages of Maverick’s growth both profitability and capital efficiency will be enhanced by government subsidies at the federal, state and local levels. This includes production subsidies on a per gallon basis, grants and low interest loans for commercial development and plant construction, low or no cost land grants, tax abatement tied to job creation, etc. Precedents for all of the above currently exist in North Carolina, South Carolina and Georgia. Founding Management Team: • David Bradin – Founder, CEO and Principal Scientist – Many years of process development and petroleum chemistry experience and expertise and a number of patents and patents pending relating to fuel technologies. – David’s inventions underlie at least three start up biofuel companies in which he is the CSO or Principal Scientist. – David is a successful patent attorney practicing in Chapel Hill, North Carolina. – M.S. in Organic Chemistry (OSU), J.D. from Rutgers. • Sam Yenne – COO – Sam has over 20 years of product development, project management, and business operations experience with companies ranging from large multinational operations to startups. – Sam is currently acting as a self employed consultant to companies in the Research Triangle area of North Carolina. – Ph.D. in Plant Physiology, MBA. • Bob Reuss – CFO – Bob has served as President, CFO and director of a number of companies and been a financial advisor/ consultant in the Research Triangle Region of North Carolina for the past ten years. – Bob has extensive M&A experience as both a principal and a professional intermediary in transactions involving both public and private companies. – Bob has been a CFO in two IPO’s. – BS in Electrical Engineering and MS in Industrial Management from Purdue University, CPA in Minnesota 1969-1994 Financial Requirements and Development Milestones: The development of the MBF mixed alcohol production technology has been divided into logical milestones including an initial proof-of-concept phase designed to generate the necessary data for engineering of the pilot plant. Data and product from the pilot plant will be used to secure federal and state registration of the mixed alcohol fuel and to develop the information required to construct the self-sufficient production facility followed by construction of facilities in multiple locations. 1. Initial Seed Investment of $1,500,000 to $2,000,000 • Identify the optimum process conditions • Computer simulation of the entire process • Techno-economic analysis to more precisely determine cost/barrel of production • Engine tests and fleet studies using a proxy fuel • Research deals with potential partners including engineering and design, syngas producers, landfill operators, and wholesale marketing outlets • Matching grants or loans may be available in NC to leverage investors capital • Six months to one year from funding to achieve 2. Pilot to Small Scale Production ($20 Million) • Scale up small scale pilot/production plant (500,000 gallon per year) production rate • Negotiate deals with potential partners (gasification technology, source of biomass, etc.) • Work with automotive manufacturers to gain accreditation of fuel for use in their flexible fuel engines • Develop distribution channel as an additive for gasoline (similar to current ethanol use) to ease introduction to the market place • The MBF mixed alcohol can be used as a replacement for gasoline. As a replacement fuel, the mixed alcohol will create a higher return to the company vs. when used as an additive. • Market output to fleet customers (government agencies, etc.) to generate approximately $1.0 M per year in revenue. • Gain EPA certification as both a fuel and a gasoline additive • Eighteen months to two years from funding to achieve 3. Self Sufficient Commercial Scale Production ($60-90 million) • Build commercial scale production facility at 20 million GPY capacity (approximately 40 X the small scale production facility) • Market the fuel as both a blending additive and for commercial fleet use in flex fuel vehicles • Governmental support in the form of loan guarantees, land grants, tax abatements and job creation credits may be available to leverage capital investment • Profitable and cash flow positive operation • Two years from funding to achieve 4. Multiple Production Facilities ( Sale or IPO) • Expand to multiple commercial scale production facilities co-located with partners who provide either access to feedstock and /or access to syngas • Roll out nationwide and world wide licensing and joint venture deals. • Provide liquidity for investors • Two to three years from start of commercial production Investment Proposal: Maverick Biofuels seeks $1,500,000 to $2,000,000 in initial private equity funding, for which a matching low interest loan of up to $250,000 may be available from the NC Biotechnology Center. Additional loans and grants may be available from the BioFuels Center of North Carolina, NC Green Fund, NC Idea and other development loan programs and matching grants. at the NC Biotechnology Center. Detailed documentation will be provided to qualified investors based on a formal expression of interest and execution of a Confidentiality and Non Disclosure Agreement.