NEWSTREAM ENERGY TECHNOLOGIES GROUP, INC. FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements concerning: our plans, strategies and objectives for future operations; new products or developments; future economic conditions, performance or outlook; the outcome of contingencies; expected cash flows or capital expenditures; our beliefs or expectations; activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by their use of forward-looking terminology, such as "believes," "expects," "may," "should," "would," "will," "intends," "plans," "estimates," "anticipates," "projects" and similar words or expressions. You should not place undue reliance on these forward-looking statements, which reflect our management's opinions only as of the date of the filing of this Quarterly Report on Form 10-Q and are not guarantees of future performance or actual results
Overview
Over the past decade,
The original process, called Pristine, is designed to remove moisture and
volatile matter, rendering a high-efficiency, cleaner thermal coal. The process
has been tested successfully on bituminous and subbituminous coals, and lignite
from various parts of
Our second process, called Pristine-M, is a low-cost coal dehydration
technology. In tests, this process has succeeded in drying coal economically and
stabilizing it using volatile matter released by the feed coal. Construction of
our coal testing plant was completed in
Our third process, called
Anticipated Benefits of the Technology:
• Reduction of undesired emissions and greenhouse gases through the removal
of compounds that are not required for combustion in conventional
boilers.
• Cost savings and environmental impact reduction. Our pre-combustion
solution is expected to be significantly less expensive than
post-combustion solutions such as emissions scrubbers. Not only are the
latter prohibitively expensive, they produce coal ash containing the
"scrubbed" compounds, which is dumped in toxic waste disposal sites where
it may pose continuing environmental risk. Coal treated using our
processes may eliminate the need for post-combustion emissions scrubbers
and the resulting toxic ash. By beneficiating the coal it requires less
coal to be consumed to achieve the same energy output. This will save on
transportation and handling costs.
• Potential use of compounds removed from treated coal. Volatile matter
captured in the Pristine process is removed in the form of hydrocarbon
liquids that we believe will be easily blended with crude oil or used as
feedstock for various products. For example, sulfur, which can be removed
using the Pristine process, is a basic feedstock for fertilizer. The
harvesting of hydrocarbon liquids from abundant, cheaper coal is a
potentially lucrative side benefit of our processes. All coal by-products
including Rare Earth Minerals extraction will be tested in the
second-generation facility.
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Successful testing of the Pristine M process resulted in an increase in BTU of the processed coal and a reduction in moisture content making it less expensive to transport (as moisture has been removed) with the end product being a dust free stabilized enhanced coal which we believe will address the issue of coal dust pollution during transportation.
• Energy Independence. To the extent that volatile matter is removed from
coal, coal's use as an energy resource is greatly improved, enabling the
United States and other coal-rich countries to move towards energy
independence owing to coal's greater abundance. Extraction of by-products
including Rare Earth Minerals is also expected to provide coal derivative
product independence.
Development Status:
Pristine process. Pristine process successfully lab tested on small scale and
through advanced computer modeling. As at May, 2020, various aspects of the
Pristine process were successfully tested at our test facility at the AES coal
Power plant in
Pristine-M. Testing of the Pristine M process on
Business Outlook •Wyoming New Power , a related party company, has agreed to sign a two million ton per annum license agreement to use Pristine M at a location inWyoming . They have paid a non-refundable$100,000 deposit on the license agreement. The definitive license agreement is expected to be signed following the receipt of commercial design which will incorporate the suggested changes proposed by theUniversity of Wyoming and our EPC contractor.Wyoming New Power is aRelated Party because it is controlled by a party that also controls the entity, which is the major lender and significant stockholder of the Company. • Jindal Steel & Power is expected to send though their coal for sampling immediately following the plants re-assembly. The bespoke commercial facility design is expected after the testing. In Q2, 2019 the Company signed a non binding MOU withUniversitas Indonesia in a combined effort to assess the impact of our technology on Indonesian Coal both from a coal beneficiation perspective and also coal by-products. The second-generation test facility will have the capability of producing Char. There is localWyoming demand for this product that the company expects to sell. • The Company entered into a partnership with theUniversity of Wyoming with the sole focus of using our suite of technologies to increase the use of and value ofWyoming Powder River Basin coal. Primary focus is on utilizing our technology to extract valuable derivative products from coal. Changes to the process have been identified by the University and the company EPC engineers and will be incorporated in the reassembly of the facility inWyoming . The University confirmed in Q2, 2019 that they had successfully validated the Pristine M process in their laboratory and as a result entered into an agreement with the Company. The agreement between the University and the Company is for the reassembly of the second generation test facility. The University will advance to the EPC contractor on a two to one basis up to$500,000 in 2019 and additional$500,000 in 2020. The company will need to first pay$1,000,000 per year for 2019 and 2020, in order for the University to advance their portion of the funds. As of the date of this filing the University has advanced a total of$811,000 directly to the manufacturer of the Rotary Kiln. An additional$200,000 will be paid to the manufacturer by the University upon delivery of the kiln. 13
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•
The Company has been engaged with AusTrade (The Australian Trade and
Investment Commission ) and through that relationship has partnered with
three separate universities in Australia . Like the University of Wyoming
these Universities have a focus on their local coal both from a
beneficiation perspective and also extracting derivative by products from
coal using our technology. The Company received full Australian patents
in Q2, 2019 so the company plans to move forward with this relationship
in Q2-Q3, 2020 following the assembly of the second-generation test
facility.
• The Company continues in discussions with the Minister for Coal in India
and a number of the Energy governmental bodies in India . Coal samples are
expected to be sent for testing once the Second Generation Test Facility
is assembled which is expected in Q2, 2020.
• Meetings occurred in Q2, 2019 with the US DOE, DOD and Wyoming State
Representatives to further our technology to benefit US coal. These
discussions continue through May 2020 in light of the recent coal mining
bankruptcies in Wyoming .
Employees
As of
Factors Affecting Results of Operations
Our operating expenses include the following:
? Consulting expenses, which consist primarily of amounts paid for technology
development and design and engineering services;
? General and administrative expenses, which consist primarily of salaries,
commissions and related benefits paid to our employees, as well as office
and travel expenses;
? Research and development expenses, which consist primarily of equipment and
materials used in the development and testing of our technology; and
? Legal and professional expenses, which consist primarily of amounts paid for
patent protections, audit, disclosure, and reporting services.
Results of Operations
We had no direct revenues for the three months ended
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For the Three Months Ended
Revenues
We have generated no revenues for the three months ended
Operating Expenses
Our operating expenses for the three months ended
Other Income and Expenses
During the three months ended
Net Income/Loss
For the three months ended
We anticipate losses from operations will increase during the next three months due to costs associated with moving the test plant to a permanent location, as well as anticipated increased payroll expenses as we add necessary staff and increases in legal and accounting expenses associated with maintaining a reporting company. We expect that we will continue to have net losses from operations until revenues from operating facilities become sufficient to offset operating expenses, unless we are successful in the sale of licenses for our technology once the coal testing plant testing is complete.
Liquidity and Capital Resources
We have generated minimal revenues since inception. We have obtained cash for operating expenses through advances and/or loans from affiliates and stockholders, the sale of common stock, the issuance of loans and convertible debentures
Net cash used in operating activities was
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Net Cash Provided by Financing Activities. Net cash provided by financing
activities during the three months ended
Cash Position and Outstanding Indebtedness
At
At
Our working capital deficit at
Contractual Obligations and Commitments
We lease office space in
Our engineering consultants has tentatively estimated construction costs for
each one million short ton coal complete cleaning facility of approximately
We are also actively pursuing technology license and royalty agreements in order to begin construction of other facilities without incurring the capital costs associated with the construction of future plants.
In
Construction of the coal testing plant was completed in 2015 and testing
commenced in
Based on our current operational costs and including the capital requirements
for our project deployments, we estimate we will need a total of approximately
Off-Balance Sheet Arrangements
We have not and do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of establishing off-balance sheet arrangements or other contractually narrow or limited purposes. Therefore, we do not believe we are exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
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