Today, we are bringing our readers coverage on a new name; Renewal Fuels, Inc. (OTCMKTS:RNWF). The company produces “high quality fuels from a variety of non-food feedstock sources and waste streams“. The business is quite unique. The fact is that the company seems so focused on its business. It does not communicate a lot to the market. This is, on one side, quite good, because it shows that the company has better things to do. However, on the other side, it makes our work much more difficult, as the recent share price jumps cannot be justified.
Renewal Fuels, Inc. produces and designs “high quality fuels from a variety of non-food feedstock sources and waste streams.” The management of RNWF believes that fuels from waste will be in the future a very relevant alternative to biofuel feedstock sources. This is what we found in the last 10-Q released. Undoubtedly, the strategy seems interesting and the business objective is quite ambitious. The company noted in the same document that it uses three subsidiaries to run its operations: Renewal Biodiesel, Inc., Biodiesel Solutions, Inc., and Renewal Plantations, Inc.
Renewal was founded in Delaware on March 9, 2007 when it acquired the “business, fixed assets and inventory of the FuelMeister business” of Biodiesel Solutions. The transaction was effective on March 30, 2007. The business objective of this subsidiary is the designing and marketing of “personal biodiesel processing equipment and accessories to convert used and fresh vegetable oil into clean-burning biodiesel.”
What’s the strategy of Renewal Biodiesel?
The last 10-Q noted that the company is able to produce biodiesel fuel, which can power traditional diesel fuel engines for approximately 70 cents per gallon. Is the company alone? No, it was stated in that document that the company uses a network of dealers in the US for the sale and commercialization of its products. RNWF states that the manufacturing facilities of this subsidiary are located in Sparks, Nevada.
Biodiesel Solutions seems to be another manufacturing division of RNWF. According to the same document, this subsidiary could produce 350,000 gallons of biodiesel per year. Until this company was acquired by Renewal, its manufacturing facilities were located in Sparks, Nevada, adjacent to the manufacturing facilities for Renewal Biodiesel. As it usually happens, the acquisition created some double costs, so RNWF sold and wrote-off some unnecessary assets.
Renewal Plantations is the subsidiary focused on the growth of cellulosic feedstock for the biofuels industry. This subsidiary has an agreement with a third party, Emerald Energy, LLC. The business agreement is to “establishing nurseries for the growth of unique high density, short-rotation trees, which are designed to provide a very high concentration of biomass per acre“. In the document, we could read that the agreement had already been consummated, but failed, because the PH level of the soil wasn’t proper for the sustained growth of the root sections. It was said that the two companies still work together in the next project. Any news about it may make market participants push up the share price. Thus, stay vigilant regarding this subsidiary and its agreement with Emerald Energy.
On July 9, 2007, Renewal Biodiesel, Inc. merged with Tech Laboratories, Inc., which was already trading on the OTC Markets. All the small details are hidden in the company documents, and market participants can have a look here.
Patents and know how – Conclusion
Market participants making an investment in Renewal Fuels will surely do it because of the technology being developed by the company. RNWF accumulates intangible assets obtained through acquisitions of other businesses operating in the same area allowing for the combined companies to pursue joint R&D activities. That is the hidden value of the company; the know-how acquired in the past. If the company commences to send the due documents to the OTC Markets’ website, the exchange may delete the “Buyer Beware” symbol from the RNWF’s profile. Thus, more market participants would have a look at the intangible assets hidden in the balance sheet. To sum up, check the company’s communications as this company could surprise soon.
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Disclosure: We have no position in RNWF and have not been compensated for this article.