We got lots of questions over the weekend about the latest Microcap Insider teaser pitch, so that’s how your friendly neighborhood Gumshie is starting his week… Alex Koyfman’s ad about the “oil killer” starts out like so…
“A Little-Known Fuel Is Set to Revolutionize the Energy Sector in the Coming Years — This has NOTHING to do with Batteries, Hydrogen, or Nuclear Fusion”
And it leads off with a patent for “producing ammonia from air and water,” which is the basic promise — ammonia (NH3) is mostly a fertilizer, so producing it more cheaply or efficiently is always welcome, but the pitch here is for using ammonia as a fuel.
That idea is not brand new, ammonia has been proven to work as a fuel in both internal combustion engines and in fuel cells, and chemical methods for producing ammonia have been around for more than 100 years, but fixing nitrogen from the atmosphere to create ammonia is a fairly energy-intensive process, and there’s been a meaningful push for creating “green ammonia” in recent years, both from “reverse fuel cells” and from just replacing the energy input for “brute force” conversion of ammonia (using solar power, for example, instead of other energy to create the pressure required to make the old Haber-Bosch process work).
And that’s what Koyfman is teasing today, some little Canadian company that has a machine and a technology for generating ammonia… and which therefore could slit itself in as a “green” business that generates ammonia in modular machines, where it is needed (for farms, for refueling stations, for clean energy storage, etc.) Is this just the latest iteration of a dream we’ve seen touted before (like this story about portable ammonia factories a decade ago?), or is this the real breakthrough that will make a leap forward possible?
Here’s some of the pitch…
“This disruptive invention was developed in cooperation with the University of Ontario, and one sub-$1 Toronto-based company is behind it all.
“Right now, it’s preparing this revolutionary technology’s full-scale product launch.
“As soon as it’s released I expect it to almost instantly disrupt nearly every aspect of the $5 trillion global energy market.
“Because this technology could unlock an unlimited supply of cheap zero-emission fuel.”
And apparently ammonia is pretty impressive as a fuel…
“… this is a universal fuel. It can be used for everything.
“It can power your car…
“Propel cruise ships…
“And thrust aircraft.
“These are not hypothetical examples. This has been happening for years.”
And then, of course, we get to the “one tiny company” bit of the pitch…
“A New Energy Hierarchy Has Emerged and This Fuel Is the Undisputed King
“As I said, the science behind this fuel is NOT new.
“Chemists have known how to produce it for over 100 years. Half of the world’s population would not be alive today if it wasn’t for this discovery.
“The problem was they couldn’t figure out how to produce it on the mass scale required to fulfill our energy needs.Are you getting our free Daily Update
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“That’s what this Canadian company’s invention is about. It puts this Nobel Prize-winning discovery within reach of the mass market.
“I’ve been investigating this company since it was reserved for insiders as an exclusive private placement.
“Recently, this opportunity opened up to everyday Americans.”
So that’s the spiel, a secret stock, a new process for creating ammonia, a little Canadian company, and riches await… so what’s the stock?
We do get a few specific clues, beyond the partially obscured patent image they share…
“As of this publication, the stock was trading at a barely $15 million market cap.”
OK, so we can be pretty sure that’s not true anymore — even just recommending a $15 million penny stock to a midsize newsletter will usually cause the price to go bonkers, teasing it out to thousands of other folks, some of whom will subscribe and/or sleuth out the answer and want to buy it, quite often leads to a really big pop.
More of the clues are in the intro to this specific company’s story:
“Why don’t we run our cars, airplanes, and ships on ammonia already?
“Well, unfortunately, the Haber-Bosch process, aside from helping to create the modern world, is also quite dirty and expensive.
“It requires enormous amounts of heat, pressure, and fossil fuels — such as coal, oil, or natural gas — to make NH3 in chemical plants….
“Creating NH3 this way consumes so much energy that it’s simply not economically feasible to use it as a mass-consumption fuel.
“When compared with the abundance of cheap, easy-to-refine oil in the ground, ammonia as fuel just didn’t make sense.
“And that’s the way things have been for more than a century right up until a few months ago…
“Because one inventor from a small town in Ontario found a way to produce NH3 without using any fossil fuels at all.
“His machine generates it from nothing but air and water.”
Well, air, water and some kind of catalyst, one assumes, whether that’s brute force energy or something else. Nitrogen molecules (N2) don’t split themselves and reform with hydrogen, they need a push.
“This invention has caught the attention of the highest levels of government and business…
“Canadian Prime Minister Justin Trudeau…
“Former Ontario Environmental Commissioner Gord Miller…
“And Shark Tank’s Kevin O’Leary all have praised this upgrade.
“Its inventor traveled to Saudi Arabia to meet a Saudi prince wishing to jumpstart the ammonia revolution in the kingdom.”
And some clues about the inventor…
“Before Roger started working on his invention, he spent his career as a CEO. His company produced pharmaceutical ingredients for sale around the world. One of them was ammonia.
“With decades of experience in the ammonia market, Roger realized its potential as an alternative fuel.
“It took him almost nine years before he had an active prototype. But today, he’s driving a converted Ford F-350 that runs on NH3 he’s generating in his garage.”
The ad describes the “early prototype” and even shows a photo, and talks about how this machine pulls in air (for nitrogen) and water (for hydrogen) and combines them “in a cyclinder” to make ammonia….
“A pilot system built and housed at the University of Ontario, Institute of Technology is currently producing over 500 liters of NH3 per day. That’s more than 50 times the amount of ammonia made by earlier versions of this machine.”
And yes, it’s more than air and water…
“As you might have guessed, this whole process requires electricity. But as strange as it may sound, that’s exactly what makes this opportunity so exciting… “
Which is the energy storage aspect of this story… if you can use electricity from green sources (solar, wind, etc.) to create ammonia, then what you’re effectively doing is storing that potential energy in the form of the chemical bonds of NH3, and that can be burned to release the energy, in an engine or a power plant, converting it back to electricity.
That’s true of hydrogen gas, too, by the way, and we certainly hear a lot about hydrogen’s potential as a greener fuel. Hydrogen can be created using electrolysis (using electricity to split water into hydrogen and oxygen), with hydrogen then available as a fuel either for burning or for fuel cells — I have no idea what the different efficiency levels of these storage techniques might be, or the relative appeal of those two fuels for different purposes.
Koyfman has some other exciting potential to pitch, including the idea that this system might be a beneficiary of clean energy tax credits, just like the electric vehicle makers. But the part we’re interested in is the immediacy, of course — lots of little R&D projects are in development, they often sound impressive and get featured in science magazines, what investors usually want to know is whether they’re actually going to create a product that can be sold, and when.
Here’s how he describes the timeline:
“After extensive experimentation, the Phase I system first produced NH3 in 2009.
“In 2012, the Phase II pilot system at the University of New Brunswick was completed and operational.
“The Phase III pilot system, built and housed at the University of Ontario, Institute of Technology, was completed in late 2019. It was more than 50 times as effective as Phase II.
“And right now, this company is finalizing Phase IV to further improve system efficiency while lowering capital and operating costs.
“This is expected to be the last step toward a full-scale product launch. When this happens, investors will rush into this stock in droves.”
And the 11,300% bit? That’s just some spitballing based on “what if this became 1% as big as Chevron,” which sounds like a small and achievable goal but is, of course, completely hypothetical…
“Even if it were to capture just one-tenth of 1% of this market through its disruptive innovation, that would still amount to control of a $1.5 billion per year revenue stream.
“That would make this tiny, young company about one-one-hundredth of the size of Chevron, which corresponds to a market capitalization of about $1.7 billion.
“That’s 113 times the size of the company today… meaning that even by the most conservative estimates, early investors could stand to make over 10,000% gains in the coming years.”
So what’s our little Canadian company? Well, that patent that Koyfman partially shows is from 2011, number US2011/0243828A1 … and yes, the patent was granted to inventor Roger Gordon, and the company that he formed to try to commercialize it (including some private fundraising, which it sounds like maybe Koyfman participated in last year) was Green NH3, whose website shows that same working prototype used in the teaser ad (along with Roger Gordon’s ammonia-powered pickup truck).
But Green NH3 isn’t a public company, so we’ve got another step to take to ID this investment — they entered into a letter of intent to be acquired by EEStor Corp last summer, with EEStor being the former Zenn Motors, a failed electric car company headed by Ian Clifford, and then a few weeks ago EEStor changed its name to FuelPositive with the ticker NHHH on the Venture exchange in Canada (so if you’re interested in researching, it’s NHHH.V in Canada or ZNNMF OTC in the US).
FuelPositive just raised one million dollars in a private placement about two weeks ago (at 10 cents, with a full warrant included with each share), and they had previously done a private placement at five cents a share in January to raise just $200,000, so that gives you some idea of how tiny the company is. The impact of Koyfman’s attention has been massive already, in just a few days that has driven the shares from about 13 cents to 26 cents (US).
From what I can tell, the deal to acquire Green NH3 has not yet gone through, but they’re still working on it. This is an excerpt from the MD&A from Fuel Positive’s (then EESTor’s) annual report filing with SEDAR…
“On August 6, 2020, the Company announced it has entered into a letter of intent, pursuant to which it proposes to acquire all of the outstanding share capital of Green NH3 Inc. (“GREEN NH3”). Based in Georgetown, Ontario, Canada, GREEN NH3 is a private company involved in research, development and commercialization of zero-emission NH3 fuel, generated from its patented and scalable process.
“Proposed terms of the Acquisition
“Subject to customary due diligence, negotiation of definitive documentation, board and regulatory
approvals, in consideration for all of the outstanding share capital of GREEN NH3, the shareholders of GREEN NH3 are entitled to receive common shares of EEStor which will represent 25% of the outstanding share capital of EEStor as of August 6, 2020. EEStor anticipates issuing approximately 48,300,000 common shares to the shareholders of GREEN NH3. Following completion of the acquisition, GREEN NH3 will continue as a wholly owned subsidiary of EEStor. Additional
performance related shares will be available to GREEN NH3 shareholders once key performance
intellectual property milestones are met….
“On December 31, 2020, the Company announced that the licensing and acquisition of GREEN
NH3’s patented technology continues to progress, and technical due diligence for this stage has now been completed.”
I have seen nothing from Green NH3 or from Fuel Positive about the potential timeline for the next phase of the prototype for Green HN3’s machines. If you add the latest private fundraising and the shares to be given to Green NH3 shareholders, then you end up with another 58 million shares to add to the count for Fuel Positive, for a total of about 230 million shares, so that means the pro forma market cap is creeping up… from about $15 million a month ago to about $60 million today. Still a very, very small company. And, of course, one that has never had any meaningful revenue in any of its previous guises (Zenn Motors, EEStor, or Green NH3 or the other small companies EEStor acquired over the years).
So in practical terms, the question is first whether the deal goes through to acquire Green NH3… and then, if it does, whether you want to own Green NH3 as part of this little green energy venture. It’s a great idea for daydreaming, and I won’t try to talk you out of wagering on it as a very high-risk speculation, but just be aware that using ammonia for fuel, whether to burn or in fuel cells, is not at all a new idea… and that there are a lot of companies aiming to refine the current processes for creating ammonia and/or using ammonia as an energy feedstock. I have no idea whether distributed NH3 production using small machines like Green NH3’s will be the future (or, indeed, if their patented technology is the best or only way to do that), or whether larger installations that create vast tank farms of ammonia as a more easily transported feedstock for the hydrogen economy will end up being the norm, or whether it will be something completely different.
So that’s the idea being pitched by Alex Kofyman, and it is a very, very early stage company, and very speculative. I have no idea whether or not it will amount to anything over the next 5-10 years, but over the next few months the stock will mostly move up or down based on whether it gets some “green” attention from somebody else to pile on, and there’s not really any predicting that — penny stock investors are just as irrational as the rest of us, and they do love a story. If you want to apply some rational financial assessment to this project (not that this often means much for penny stocks), do note that the deal Green NH3 made to sell itself was made when EEStor was trading at about five cents a share, so on the face it of it seems like the Green NH3 folks thought it was reasonable to sell control of their technology for about $2 million. Maybe they thought it was worthwhile to join with Ian Clifford for promotional reasons, or just didn’t want to take the next step by themselves so joining as 20% owners of a different company was an easier path to commercialization, maybe they just like the science and the green goals and want someone else to worry about building a commercial product… I don’t know. When they were last raising money as a private company it was with the goal of establishing three pilot projects in the field, probably at other university installations or farms (who could use the nitrogen generated directly as fertilizer), and there’s been no public commentary about that moving forward that I’ve seen.
Go forth, dear readers, and researchify on this one to your heart’s content — it’s a cool idea, it seems to work, it’s not particularly well-known (since the deal isn’t complete, FuelPositive doesn’t even have information about it on their website), and maybe eventually it will become scalable. Right now, it’s a R&D project with a prototype, and is about to be purchased (they expect) by a company that itself is tiny and speculative. The shares will presumably be very jumpy, given the attention from Koyfman’s pitch and perhaps from other green energy enthusiasts in the future, but I should note that most penny stocks that double from a little newsletter attention do give back those gains in the months that follow, especially if that attention dries up. If I were excited about this technology and convinced enough to buy shares (I’m not, yet), I’d try to buy half of a speculative position and set it aside for a few years, and maybe, if the Green NH3 deal does go through and I’m still convinced of the merit and the progress they’re likely to make, make it a full position if the stock comes back down from this recent surge. The market is so speculation-happy these days that pretty much anything could happen, but for now it will be happening without me.
That’s just my quick reaction after spending a few hours poking around this morning, though, and your opinion might differ — have any insight into Green NH3 or its potential (or competition) in the ammonia or hydrogen economy? Like dabbling in these kinds of penny stocks? Prefer to avoid penny stocks and set your hundred dollar bills on fire the old fashioned way, by lighting your cigars? Do let us know with a comment below…