NEW YORK, Oct. 24, 2006 (PRIMEZONE) -- Digital Gas, Inc. (Pink Sheets:DIGG) announced today that it has signed an agreement with Techno Rubber, Inc. of Detroit, Michigan to commercialize tire, medical and other waste streams.
Techno Rubber, which has been actively discussing a partnership with Digital Gas for several months, has 5.5 permitted acres in Detroit, Michigan that will have a capacity to process seven million tires annually after an expansion of its present 12,000 square foot industrial building from a planned 42,000 square foot facility.
Phase One of the above project involves processing tires through the cutting and chipping of the tires and the subsequent resale to end-users, such as local power plants. Phase Two of the project involves processing through hydrocarbon recovery and either using the hydrocarbons for electric generation or resale of it to end-users. The present permit covers the cutting and chipping of the tires and their resale to end-users (Phase One) and not the recovery of hydrocarbons (Phase 2).
Techno Rubber can presently process one million tires with its existing building, equipment and land. This can be expanded to three million tires per year with an investment of an additional $500,000. Techno Rubber anticipates Phase One processing of three million tires in 2007. When the permits are acquired to recover hydrocarbons, anticipated to be issued by year-end 2007, all seven million tires will undergo Phase Two processing. This processing will lead to the recovery of oil, gas and carbon black.
A second waste processing operation is planned for medical waste on a 6 acre site several miles away. The second property has an existing 28,000 square foot industrial building with 30 foot ceilings. Permits are currently being prepared for this site as well.
Digital Gas will have 75% of the equity or common shares of the new joint venture and will provide management and financial services while the existing owners will run the tire processing operation. By signing the deal with Digital Gas, Techno Rubber has a partner that can access advanced tire processing technologies that can significantly expand profitability beyond mere cutting and selling of tires. In addition, since Digital Gas anticipates operating across North America and internationally, it opens up many opportunities for Techno Rubber not normally available to it. The management of Techno Rubber has agreed to cooperate fully with Digital Gas, its management and financial personnel, as well as its investment bank and banking contacts.
Digital Gas will form a Special Purpose Corporation ("SPC") to hold its 75% interest. The SPC, which will be formed as a fully reporting company to facilitate eventual trading on the public markets, will issue a $2.5 million promissory note to the present owners of Techno Rubber to compensate them for the purchase of the land, building and equipment, as well as for turning over the business and giving Digital Gas instant operator status in this potentially lucrative niche of the energy business. This subsidiary will not consider going public until a Phase Two business has been firmly established. The SPC will be formed in November, 2006 and Techno Rubber reports that full operation of Phase One processing could commence as early as December, 2006.
A request for funding Techno Rubber will be made to a U.S.-based energy funding group that has expressed interest in funding several of the company's subsidiaries. If funding for Techno Rubber is not available in the near-term, the business will proceed in December with Phase One processing of the projected minimum of one million tires per year. In that event Digital Gas will pay down the promissory note out of distributed profits. Techno Rubber will be responsible for the cost of the commencement of Phase One business activity.
There is no guarantee that funding for the expansion of Phase One processing or Phase Two processing by SPC will be obtained. However, the managements of both companies are optimistic regarding funding and the success of the business due to a strong, ready market for the processed tires with utilities in close proximity to the plant.
As part of the process of fully disclosing its assets, options and opportunities, including this deal with Techno Rubber, Digital Gas will engage an engineering or business valuation firm to prepare a report on the full nature of this business and its near-term and future potential, as well as that of its other subsidiaries. Support documents for the existence of Techno Rubber's tire processing permit will be posted to the Digital Gas website under "Assets". The permit Registration Number for the property in Detroit, Wayne County, Michigan is S-3-82-10015.
Regretfully, Benelux Capital has terminated its relationship with Digital Gas and its subsidiaries as a result of the recent Verified Complaint in the NJ Superior Court. After the termination the company thanked Benelux Capital for its efforts on its behalf.
Digital Gas had informed Benelux Capital on September 8, 2006 that it had received interest in providing funding for several of the subsidiaries from a U.S.-based source. Digital Gas informed Benelux at that time that it would pursue these funding avenues in an attempt to strengthen the basic financial position of the subsidiaries and would revisit opportunities with Benelux if and when this source provided investment. Digital Gas plans to contact Benelux at a later date for European-based and special funding provided the current action before the Superior Court is concluded in its favour.