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Interview with dynaCERT Inc.

dynaCERT CEO Jim Payne on attractive hydrogen opportunities

  • Hydrogen
Photo credits: dynaCERT Inc.

dynaCERT is a Canadian company and has developed a hydrogen technology for diesel engines, that also provides significant fuel savings to the operator. The so-called HydraGEN™ technology uses a proprietary and patented electrolysis system to turn distilled water into H2 & O2 gases that are produced on demand. The company focuses on reducing the amount of Greenhouse gases (GHG) emitted by the combustion of carbon-based fuels. The technology works with internal combustion engines around the globe. CEO Jim Payne gives us more insides in our interview.

time to read: 11 minutes | The interview was conducted by Mario Hose on January 11th, 2021 in Toronto, Ontario (CAN).

Jim Payne, CEO, dynaCERT Inc.

Jim Payne
CEO | dynaCERT Inc.
101-501 Alliance Avenue, M6N 2J1 Toronto, Ontario (CAN)

+1 416 766 9691

Table of contents:

    Corporate History

    news|financial: "Hello Mr. Payne, dynaCERT is listed on the Toronto Stock Exchange, Canada’s most respected trading platform, and most German exchanges and platforms as well as the OTCQX Best Markets platform in the USA. Could you please tell how long your company has been around?"

    dynaCERT has spent 16 years and over CAD 60,000,000 to develop its HydraGEN™ patented technology and today is marketing its global solution to reduce pollution to 1 billion diesel engines globally.

    Electric Power Blackout

    news|financial: "Germany pays high subsidies for the acquisition of battery cars. Is that a competition for you?"

    No. Last Friday, the European power grid was almost facing a blackout, as you can find reports from credible sources. The market share for electric cars is still very small but imagine what a blackout would mean for battery car owners. Meanwhile, the German government is switching off the nuclear power plants.

    Electric transport is very vulnerable. The world’s second most widespread electric power blackout in 2003 in North America, after the big one in Brazil, following the Ice Storm in Quebec in 1998, showed us why diesel trucking is so important and how electric power is so helpless.

    The recent power problems in Europe caused emergency measures from Austria to kick in. We are lucky that the world still moves food and medicine by diesel, and we believe this will continue to be crucially important for decades to come.

    Shareholder Base

    news|financial: "Eric Sprott and Dr. Jörg Mosolf joined financings in the past. Who are the biggest shareholders of the company?"

    dynaCERT has many important shareholders. We have over 6,000 shareholders, in Canada, USA and Europe.

    It’s important to note that management holds over 30% of the company and has invested in this technology throughout its history and most investors have continually held the stock since its inception. Management has “skin in the game”, as we say.

    As well, our experienced finance team in 2020 has secured over CAD 8 million by bringing on approximately 20 new institutional shareholders, long term shareholders, as partners in the company, both from Canada and the USA, via 3 times oversubscribed institutional prospectus underwritten overnight bought deal financing, which included 5 of Canada’s top dealer-underwriters in the CleanTech space.

    In addition, many new institutional shareholders from Germany and USA continue to buy large positions of equity in the public markets, all of which supports the stock price.

    As importantly, we were blessed this year with over 20 million in-the-money warrants that were exercised which brought in another CAD 7 million as a result of our very encouraging stock performance. We are well capitalized at approximately CAD 20,000,000 as at our 2020-year end.

    Other shareholders include our dealers and many important family offices and portfolio managers in the USA and Canada. We have also welcomed many new investors in Germany and all of Europe in the last 18 months. Our shareholder base is very strong and loyal.

    We often trade over 2 million shares a day in North America and the same amount in Europe. Some months last year in 2020, we traded as much as 20 million shares per day! Our stock is liquid and well recognized in the financial markets. Globally.

    Use of Funds

    news|financial: "Your company is very well funded at the moment. Could you please tell us, what you are planning to do with the CAD 20 million?"

    As a high-profile hydrogen economy clean tech developer and marketer of products globally, we now have sufficient capital to carry out our world strategy of supplying the 1 billion diesel engines with our fuel savings and carbon emissions reduction technology.

    We expect to achieve certification by VERRA in Washington DC in the USA to have our technology recognized as one that can produce carbon credits for the transportation industry to provide a shared stream of cash flows.

    But most importantly, through our new subsidiary, dynaCERT International Strategic Holdings or “DISH”, we can now provide our customers with a monthly rental program. This is very important. Instead of paying for our innovative technology up front, our customers can now use our technology at virtually no cost. The monthly charge of renting our products now pays for itself in fuel savings. The monthly rental charge is less than the cost of the saved fuel for long haul trucks and logistics companies.

    Operational Situation

    news|financial: "Could you please tell us more about the current situation of the operational business?"

    Jim Payne, CEO, dynaCERT Inc.
    "[...] We are committed to stay as the number one Canadian and global leader in the Hydrogen-On-Demand diesel technology [...]" Jim Payne, CEO, dynaCERT Inc.

    During our brief Covid-19 shutdown, we took advantage of the situation to upgrade our assembly plant in Toronto, Canada. For example, we upgraded the capacity of the plant and made it much more efficient.

    We now have a computerized semi-automated assembly plant that can produce at full capacity approximately 72,000 HydraGEN™ units per year. At an average wholesale cost of approximately CAD 6,000 per unit, that would mean about CAD 432,000,000 revenue per year, if we push the capacity at 100% meaning net operating profit of over CAD 200,000,000 per year.

    During the Covid-19 shutdown, we also upgraded our R&D facilities at head office. We added engineers and professionals, space and equipment. We are committed to stay as the number one Canadian and global leader in the Hydrogen-On-Demand diesel technology to provide the world with a global solution to reduce pollution, while utilizing our years of experience to stay at the forefront of the ever-growing hydrogen economy.

    Hydrogen Hype

    news|financial: "What are you expecting with your products and platforms in regards to the current hydrogen hype?"

    Jim Payne, CEO, dynaCERT Inc.
    "[...] We have certifications and homologations throughout much of the largest markets in the entire globe with our patented hydrogen products. [...]" Jim Payne, CEO, dynaCERT Inc.

    We have certifications and homologations throughout much of the largest markets in the entire globe with our patented hydrogen products. We do not know of any similar company operating in the Hydrogen-On-Demand industry with a ready product, globally, with certifications like ours.

    For example, we have KBA certification in Germany; and this is very respectable, but this takes three years to achieve, so we are ahead of many others; there are huge barriers to entry in our technology and with the KBA homologations, we have the advantage of being first in Europe.

    We also have iCat in India, and PIT Group Certifications in Canada, which is the gold standard of all of North America.

    We are regarded by many as leaders in the diesel fuel reduction technology industry, while at the same time saving the planet from harmful GHG’s. As a result, dynaCERT’s products serve the globe everywhere where there are diesel engines: trucking, logistics, heavy construction equipment, mining equipment - even underground, diesel generators, marine and locomotives.

    Although this is not a priority, our technology also works on diesel cars by reducing fuel consumption and reducing car pollution. That is a market for the future, as we concentrate, with our 45 dealers world-wide, with the larger trucking markets that need our technology today.

    United Nations Program

    news|financial: "Where are your clients from and where is your target market from a global perspective?"

    There are approximately 1 billion diesel engines worldwide where our technology can be applied. At an assumed average cost to end users in Canada of CAD 9,000 per installation, that is a huge market.

    To serve this market, we have established and continue to establish a global network of highly knowledgeable and qualified dealers. Our dealers are trained, supported in their marketing efforts and buy from us and resell to their local markets in almost every continent of the world.

    Our dealers already have a network of established clients in trucking, generators, marine and rail in their local markets.

    Some specialize by industry also. The EDC, the government Crown Corporation in Canada, for example, is featuring our technology through specialized dealers, partnering with world renowned Marubeni, for instance, displaying our products and technology in many of the Embassies and Consulates of Canada in the world. So, for instance, in the mining industry, which is global but with a small number of players, we have made a huge impact in less than two years.

    In 2020, our professionals in Austria, who have very close connections with governments, were able to attract the United Nations to feature our HydraGEN™ technology to be accepted and certified under the “United Nations Smart Sustainable Cities Program”. Thanks to our dedicated people in Europe, out technology is now certified to all cities around the world that wish to meet Paris Accord carbon emission standards.

    Such recognition has led to Canadian cities to see our technology as an important step to reducing their own carbon footprint. In Ontario, Canada, for example, one of the mayors of such cities, the City of Woodstock, has taken the initiative of being the number one city in the globe to adopt our United Nations approved technology.

    Competitive Advantage

    news|financial: "What is the competitive advantage of HydraGEN™ and HydraLytica™ compared to other solutions?"

    Jim Payne, CEO, dynaCERT Inc.
    "[...] our clients can now see, in real-time, minute by minute, how well our technology works [...]" Jim Payne, CEO, dynaCERT Inc.

    Thank you for asking. This is an important distinction that dynaCERT offers. With HydraLytica™, our proprietary global software technology, users of dynaCERT’s HydraGEN™ Technology can see with their computers or cell phones exactly how much fuel consumption they are saving and how much CO2 they are generating, not just in aggregate, but for any particular truck or diesel engine. But it’s much more important than that: our clients can now see, in real-time, minute by minute, how well our technology works, be it on their very own trucks or on their very own construction machinery or generators. HydraLytica™ proves to our customers how well our fuel savings technology works in their very own particular circumstances.

    This is so important. Now, with HydraLytica™, customers can see that their payback or ROI is less than one year. For instance, in Canada, if a truck uses CAD 100,000 of diesel fuel in one year, and our technology saves up to 15% fuel, for example, at a CAD 9,000 installed retail cost, the payback can be demonstrated immediately that it is well under one year. Our technology is proving to be very compelling to clients with HydraLytica™. That is one of our greatest accomplishments of 2020. The proof is now measurable by every client.

    Bridge Technology

    news|financial: "What do you think, when people call your hydrogen solutions a bridge technology?"

    Jim Payne, CEO, dynaCERT Inc.
    "[...] we provide an opportunity to invest in an innovative and transformative technology that is available right now and today [...]" Jim Payne, CEO, dynaCERT Inc.

    Lots of people are interested in hydrogen, in Europe, America, Australia, Africa and Asia. Hydrogen is the future of very clean energy. They invest in technology that promises to be great, but most of today’s investments will not be commercial or profitable for many years.

    In our case, we provide an opportunity to invest in an innovative and transformative technology that is available right now and today. Investors don’t have to wait 10 years.

    But we are not sitting still on our know-how and our 5 families of existing world-wide patents. We are selling a line of products today, but continually using our proprietary intelligence to advance our scientific successes for the world of tomorrow. Every month, we improve the science and learn more. As diesel engines change, we adapt. We strive to maintain industry segment leadership, for which we are all blessed.

    Operational Goals

    news|financial: "What are your operational goals in the next 2 years?"

    Sales, sales, sales and global sales in transport vehicles, logistic companies, mining, generators and marine. We also hope to start to penetrate the locomotive industry much deeper, because, in all these industries, we can reduce diesel consumption and carbon emissions. dynaCERT provides a solution to pollution. Not tomorrow, but right now, today!

    Growth Potential

    news|financial: "On the revenue side, we would like to understand the growth potential in the next 12 months and what you are expecting for 2022?"

    We know that the diesel engine aftermarket, which is the market we now serve, is approximately 10 times the size of the OEM market. But in 2022 and beyond, we are advancing our science, our know-how and our engineering, in order to penetrate the OEM market.

    Once OEM manufacturers of diesel engines adopt our technology, it will be a comprehensive global repetitive business, a stream of cash flows, even if the OEM market is only 10% of our total market. To this end, we are in constant talks with professionals and industry leaders to advance our technology to retain industry leadership.

    Personal 5-Year Goal

    news|financial: "What is your personal 5-year goal for dynaCERT?"

    Jim Payne, CEO, dynaCERT Inc.
    "[...] We all think it’s a 10 year plan going forward to get every diesel engine in the whole world to adopt our technology [...]" Jim Payne, CEO, dynaCERT Inc.

    When our board of directors set out to endorse this business, we knew we were on to something possibly very huge. Something never done before. We all knew from day one that this was a journey of a transformative and disruptive global business. We all think it’s a 10 year plan going forward to get every diesel engine in the whole world to adopt our technology and take advantage of all its economic benefits and pollution reduction benefits, one diesel engine at a time.

    If we are successful, we will become a Fortune 500 company. So our personal goals are to see this through. Our goal is in sight, even though, of course, it’s a lofty one. But there are not many opportunities like this one in any one’s whole life, so its well worth moving forward for our children and generations to come after them.

    news|financial: "Thank you very much for talking to us."

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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