- Q2Power Technologies (QPWR) is about to move from concept & beta testing to commercialization, bringing rapid growth in revenue this year with estimated 40% margins
- Some of the best investments I’ve made feature companies like QPWR as they began initial commercialization of a technology and then report a strong ramp in sales in following quarters
- The “waste-to-energy” market is experiencing high growth and key trends QPWR is set to capitalize on
- QPWR has patented technology in the renewable and green energy space that literally pays for itself
- QPWR has a newly formed board of directors which includes globally respected leaders with extensive experience and a track record of success in the renewable and alternative energy fields
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Q2Power Technologies, Inc. (web site), a renewable power company, converts waste fuels and waste heat to power. Its fuels include biogas and methane, which occur from the decomposition of organic waste at water treatment plants, landfills, farms, and industrial sites; and waste liquid fuels, such as used motor or cooking oils. The company also provides multi-faceted technology integration solutions for renewable power production; process heat generation; distributed waste management; and other services. Q2Power Technologies, Inc. is based in Lancaster, Ohio.
Q2Power Technologies Inc. (QPWR)
Shares issued/outstanding: 27.8 million
Closing Price 5/13/2016: 0.29
Market capitalization: $8 million
Float: ~ 3.8 million shares (management & key investors own approx. 24 million shares)
Publicly traded as of Q4, 2015
QPWR to Leverage Key Trends in Waste Water Management and Waste-to-Energy Markets
Q2Power Technologies is poised to take advantage of several trends in the wastewater management space:
- The concept of waste-to-energy is rapidly growing as more municipalities, companies, and organizations from restaurants to schools to farms, look for ways to turn their own wastewater into reusable products and even energy
- Instead of paying to dispose of the byproducts from waste water, the trend is to use it as a feedstock for gasification. This reduces disposal costs and landfill space, and converts those wastes to electricity and fuels
- Most facilities, especially smaller ones, simply flare and destroy their biogas – a practice now under intense regulatory scrutiny
- Large established players in the both the solid waste and wastewater treatment areas simply don’t offer small-scale solutions. However, the trend is for smaller and more localized management of waste and wastewater effluent
- The high growth, global waste-to-energy market is expected to reach $37.6 billion by 2020 (Grand View Research)
QPWR has identified 400 prime targets that under-utilize methane waste for power or heat. These are smaller scale targets that have been overlooked and are not served by large, established waste companies. Targets include farms and commercial operations that utilize anaerobic digestion for wastewater treatment. Anaerobic Digestion, (AD), is a proven process that reduces bio-solid volume, treats pathogens, and produces methane as a by-product. The remaining solid materials that result from the AD process are used as fertilizer, compost and animal bedding. Additional revenues can be realized by selling those byproducts as well as receiving tipping fees for digesting local waste.
Q2Power Technologies aims to be the supplier of total waste management solutions for these customers by deploying proprietary and patented methane-fueled power systems. These systems can be combined with conversion processes and distribution channels to be secured by Q2Power for products produced from bio-solids. In doing so, QPWR can reduce operating costs and increase “green” credentials by creating value from all wastes generated at these customers’ sites.
Anaerobic Digestion is expected to play a bigger part in sustainable waste management strategies in the future
The foundation O2Power will establish early on with wastewater treatment plants is expected to expand dramatically in the future:
Patented Technology with Competitive Advantages
Q2Power Technologies has an exclusive license on a worldwide basis for multiple patents from Cyclone Power Technologies, including:
- U.S. patent on engine
- 3 PTO patents in China, Australia, South Africa
- 16+ additional patents pending in Europe, Brazil, Canada, Mexico, etc.
and 29 additional patents on broader engine technology
- 2 U.S. patents on larger engine model
- 8 U.S. patents on engine components o condensing system | heat exchangers | heat regeneration o valving mechanisms | bearing systems
- 19 PTO patents – Europe, China, Russia, Brazil, etc.
QPWR’s patented technology has the following five advantages:
- Simple Engine Design
- Broad Fuel Quality Capability w/o Pre-Treatment
- Fuel Quantity and Pressure Robustness
- Clean Emission External Combustion
- On-site, mobile construction
Moreover, due to its simple, robust design, QPWR’s engine is more cost effective to build and ongoing maintenance for the customer is far less than other systems. This gives Q2Power Technologies a strong selling point and competitive advantage.
(click picture to enlarge)
QPWR = Winning Solution for Customers that Pays for Itself
- Reduction in operating costs by 10% to 20% at wastewater treatment plants
- Eliminates regulatory liabilities of flaring methane and landfilling bio-solids
- Allows customer to become a sustainable “green” facility
- Power created is connected to the grid and can be sold back to customer/facility owner at a discount to the typical utility price paid
(click picture to enlarge)
Last year QPWR installed a beta modular, containerized system at the Lancaster Ohio Waste Water Treatment Plant. The beta system has been running smoothly and generating power from methane. Future systems will be able scalable to 200kW.
Additional Revenue Stream from Engineered Soils
Besides sales the of the modular, containerized green waste-to-power system, Q2Power Systems will be converting sludge to engineered compost and enhanced soil products. These engineered soils and bio-solids can be developed for nutrient and water retention, lightweight rooftop locations, stormwater basins, and more. Margins on these engineered soils run between 30-40% and can also be sold through multiple landscape contractors and landscape supply chains to municipalities, parks, farms, and a long list of other customers.
Turning waste into usable, sustainable, soil engineered to meet specific requirements for a 30-40% margin is a win for QPWR, customers, and the environment.
Aggressive Growth Model with Management in Place to Deliver
After becoming a publicly traded company late last year, QPWR is about to engage on a very aggressive growth model as shown below. The company estimates each waste water treatment plant (WWTP) ecosystem can deliver approximately $300,000 in gross profit.
10 MGD WWTP / 30kW CHP Unit / 25 ton-day sludge
|Est. Annual Revenue to Q2Power*|
|Bio-Solids Tipping Fees (net of contracted services)||$30,000|
|Total Annual Revenue from WWTP Ecosystem:||$683,000|
|Cost of Equipment per Year (w/ maintenance – 7 years)||$22,000|
|Cost of Co-Product Production||$360,000
|TOTAL GROSS PROFIT PER WWTP ECOSYSTEM PER YEAR:||$301,000|
* Actual results may vary materially based on risks provided in the Company’s SEC filings
Having an aggressive business model and growth target is one thing…being able to deliver them is another. To help meet these aggressive targets, QPWR has recruited top-tier Directors (see management team) with significant industry experience: Kevin Bolin, the former Chairman and CEO of Alter NRG, and Scott Whitney, the former President of NYSE-traded Covanta Energy’s European business. CEO Christopher Nelson led the spin-off of Q2Power, secured $3.6M in early stage funding, is Managing Director of GreenBlock Capital, former President and General Counsel of Cyclone Power, and former M&A/SEC attorney with Greenberg Traurig.
Thinking Big, Thinking Green
In a recent shareholder update, CEO Chris Nelson explained:
Our current technology based on our proprietary, scalable and modular external combustion engine is just one facet of a greater vision. For our customers we want to build “Resource Ecosystems” – small-scale, localized and networked solutions that give businesses and communities the power to manage and monetize waste in a financially and environmentally sustainable manner. We see the development of these Resource Ecosystems as critical steps towards the inevitable decentralization (reducing transportation and increasing resource utilization) of the $75 Billion waste management industry in the United States. Our vision is to become an agent of change and leader in this transformational shift from “wasteful” to “resourceful” attitudes and practices. In this way, we will work to contribute to the long-term sustainability of our customers and our planet.
I look forward to providing updates on QPWR in the weeks and months ahead as the company continues down the path of revenue growth, attracting a larger pool of investors, and achieving milestones in the vision statement above.
Disclosure: Receipt of $7,500 from Q2Power Technologies for 3 month investor awareness program.
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