NORWALK, Conn.—Green Recycling Solutions International soon will market, sell, own and operate the Tirex Cryo System, Tirex Corp.'s patented tire recycling technology.
The companies entered a license agreement in April that gives GRSI the right to set up facilities in North and South America, the Caribbean and Africa in addition to the right of first refusal to any territory not outlined in the pact.
Tirex's TC1 machine recycles about 270 tires an hour and roughly 2 million a year.
"We hope to make a significant impact on a massive problem," said Barbara Acuff, GRSI chief financial officer. "If one machine can solve the problem for 2 million tires, imagine what we can do globally with it."
The next step for Tirex, however, is to get its reporting status current with the U.S. Securities and Exchange Commission. As part of the agreement, GRSI will assume financial obligations for this undertaking and was compensated with approximately 288 million common shares in Tirex's stock.
"It's obviously a necessary first step before we can take the business to the next level," Tirex President John Threshie said."We anticipate in the days to come to announce a new auditor and a deposit that will go to that auditor to begin the final stage of our audit to get current."
Neither side expects Tirex's standing with the SEC to be an issue. GRSI already has engaged auditors and started compiling returns for Tirex. Acuff anticipates the process will be completed in about six weeks.
"At this point, it's just a matter of formality," Acuff said. "They haven't filed their reports since 2009. All they need to do is catch up on that, and they're back in good standing again. The bigger deal was it obviously required some significant funds. We're providing those funds, we've engaged the auditors and we're financially responsible for any obligations regarding that."
Targeting the East Coast
Tirex and GRSI have targets in mind for a first facility but declined to name an exact location. The first TC1 system will be built by Simpro, an Italian company that built the prototype. It will take about 11 months to complete.
GRSI plans to start manufacturing as soon as the compliance situation is complete.
The firm is negotiating with a few markets, but Acuff anticipates the first site will be somewhere on the East Coast. GRSI also has multiple Caribbean targets in mind.
"The disposal of used tires is a big problem throughout the Caribbean and Latin America," said GRSI CEO Julio Llaguno, who lives in the Dominican Republic. "I want to bring this technology to the Dominican Republic, throughout the Caribbean and as much of Latin America as possible. I think this technology is a great solution to the problem."
No waste from process
The TCS process freezes scrap tire pieces with cold air instead of liquid nitrogen, then breaks the rubber into a crumb rubber using a patented fracturing mill. The process also separates marketable strands of steel and fiber from the crumb rubber. Tirex claims its technology costs about two-thirds less than using liquid nitrogen and produces no waste because it uses no chemicals.
"Our crumb rubber produces a cleaner, free of steel or fiber, with a unique morphology," Threshie said. "It creates a type of crumb rubber that is unique for athletic fields. The cryogenic crumb rubber lets the rain drain through the field because it doesn't hold it or make puddles. It also adds a cushion to the field for more buoyancy, less injuries and easier on the knees and ankles."
The executive said Tirex wants to exploit the cryogenic segment of the market, as well as some of the ambient part of the market "where they will trade up to use cryogenic crumb rubber because now they will be able to afford it. If they use our process, it's more economically viable and even environmentally friendly than the competition."
Tirex generates revenue from commission on sales, license agreement in each market and commission on manufacturing. The exact share of the royalties from the license agreement with GRSI has yet to be sorted out.
"Ultimately we'd like to share in the partnership and joint venture with manufacturing recycled rubber products," Threshie said. "That's really where the high margins are downstream."
Tirex has been trying to get its technology to the market for some time and even had a partnership with Wyoming Corporate Headquarters in January 2012, to build a facility in Tennessee.
According to Threshie, Wyoming never came through with the financing.