The EESTOR StoryIntroduction: This short write-up is intended to give a bit of background about EESTOR for anyone considering an associated investment in its EESTORCORP component currently traded on the TSX Venture exchange (ESU.V)and in the US over-the-counter market (ZNNMF). Keep in mind this isa highly speculative stockand chances are your investment advisor would tell you to steer clear of it. Nonetheless, it represents a unique investment opportunity in that, due to its tortured history, the small retail investor has a chance to participate early in something that could turn out to be really big while keeping in mind that it is still at the pointwhere any investment could be totally lost. On the other hand, its potential upside is huge with the possibilityfor an investment of say $10,000 toreturn $1,000,000+!
To understand the nature of this investment, one needs to understand two key components of its history: the original EESTOR Inc. and the newer EESTOR Corp. EESTOR Inc. is the original technology core with EESTOR Corp. being the current majority tradeable owner of the original EESTOR Inc. This relationship and its derivation will be elaborated on further in this document.
The concept for EESTOR Inc. began pre-2000 as the brainchild of Carl Nelson and Richard Weir (more commonly referred to as Dick Weir or DW). Carl Nelson receivedhisBS in Chemistry in 1953 and MS in Chemistry in 1956from MIT. Nelson writes, "I have conducted research and development in ceramic materials and in the purification of ceramic components for 50+ yrs. In particular, I worked with Dr. Von Hippel, an early researcher and developer of composition-modified barium titanate (CMBT) powders, from 1956-1964."He goes on to say “The resulting composition modified barium titanate powders have an average dielectric constant (permittivity) of approximately 33,518 and an average breakdown voltage greater than 6000 V. In addition, the dielectric constant is not a strong function of temperature, having a tolerance of less than 15% over temperature range of -55°C to 125°C.”
These unique CMBT powders are at the core of EESTOR’s potential value. EESTOR has patented unique composition mixtures and production methodology that allow their CMBT powders to maintain at ambient temperatures the paraelectric properties required to support their application to the high voltage capacitor and energy storage markets that are being targeted. More on this later.
Dick Weir, a former marine pilot, receivedhis electrical engineering degree from California Polytechnic State University and met up with Carl Nelson earlier in his career while they both worked in the technology industry on disk storage technologies. During that time, they discussed betweenthemselves the potential application of the CMBT powders that Nelson had worked with, to the energy storage field via the production of ultracapacitors of significantly higher energy storage density than anything currently produced. Capacitors are a standard electrical component used in a wide range of electronics and electrical system applicationswith their primary function being to temporarily store electricity.
The path EESTOR Inc. has followed since then has been a circuitous and “tortured” one but it is the nature of this path that has led to the current unique investment opportunity. EESTOR Inc. was formally launchedin the 2000’s with funding from angelinvestors and the venture capital firm Kleiner Perkins.The initial focus of the company was on the processes required to produce the required CMBT powders at high purity and low cost. Then these powders were to be used in the production of components to
build the target ultracapacitors to be utilized in a range of applications but with an initial focus on powering electric vehicles.This is where the linkage to Ian Clifford(IC), the current CEO of EEStorCorp comes in.
Mr. Clifford began his career as a photographer. Mentored by Ansel Adams, he quickly became one of Canada's leading corporate photographers. In 1995, Mr. Clifford co-founded digIT Interactive, a full-service Internet marketing company serving Fortune 500 clients at the peak of the market. After selling digIT Interactive to Quebecor World in March of 2000, he sought a more world-changing endeavour and co-founded Feel Good Cars Inc. (the precursor to ZENN Motor Companyand eventually EESTOR Corp).Feel Good Cars was founded with the intent to develop electric cars for the automotive market. Their initial product was a low speed electric car powered by lead-acid batteries that ended up being market-challenged because it was not certified for use on public road infrastructurein many jurisdictions.IC was looking to build a more robust electric car but to do that he needed a much better electricity storage technology. On a quest to find that technology, he linked up with DW and in 2004 had Feel Good Cars (now ZENN) take a 3.8% stake in EESTOR for an investment of $2.5 million which also gave ZENN worldwide licensing rights forthe technology for automotive applications. In 2009, ZENN upped its ownership to 10.7% for an additional investment of $5 million.In 2010, it completely abandoned all plans to build any type of automotive product and instead was going to focus on the development and licensing of the EESTOR technology rights it had acquired.
Meanwhile, EESTOR Inc. had completed its pilot production line for the CBMT powder to be used in the ultracapacitors and was producing powder meeting permittivity targets. It was then suggested, both publicly and privately, that production ultracapacitor energy storage units (called EESUs)were less than a year away.
But a year passed and nothing. Was DW actually building EESUs and if so, was there an underlying problem? For now, for competition related issues, we don’t know specifically what the issue was but there is speculation that the planned method to build the EESU components by encapsulating the CMBT powder in a glass substrate was not working out as the resulting “layers” were failing over time, potentially from cracking problems.
EESTOR then switched its focus to using polymers to encapsulate the CMBT powder. Despite claims via independent third party tests (where the independence of the third party has been questioned) that the polymer CMBT mix was producing groundbreaking levels of energy storage density, there were major issueswith leakage in that the polymer CMBT mix could not hold a charge more than a few seconds! By then Ian Clifford had stepped aside and James Kofman had taken the reins as CEO at ZENN. Things came to a head towards the end of 2013 where Kofman pushed for some definitive testing of EESTOR technology for energy storage applications. The results of this testing were not able to prove that EESTORs technology at the time was anywhere near ready for application in the energy storage market.With future prospects looking bleak, in January 2014 DW agreed to sell controlling interest in EEStor Inc. to ZENN to try and salvage what value there was from EESTOR’s technology. After evaluating the near term prospects for the company, Kofman left ZENNindicating that his interim role as CEO was now complete
At this point, IC resumed his role as ZENN CEO and with a now 71% stake in EESTOR Inc., refocusedthe now closely linked EESTOR corporate entities. ZENN was renamed to EESTOR Corp. and the focus of the company was shifted in the short term to leveraging the technology in the high voltage capacitor market where the current leakage issues would not be a limiting factor. In 2015, EESTOR released a series of test results that purportedly demonstrated unique properties that could be leveraged in the high voltage capacitor market. Backed up by a leading capacitor industry marketing consultant, Dennis Zogbi, and the results of the testing conducted by the accredited testing company Intertek, EESTOR claimed it could be disruptivein a market segment of $1.8 billion dollars annual sales
The challenge for EESTOR was that just as it was ready to do the initial commercialization of EESTOR’s technology via licensing agreements with existing capacitor industry companies, it was runningout of money. As a result, IC was forced to hit the pause button while he tried to secure additional financing to move EESTOR forward. A challenging capital market, in combination with EESTORs tortured history, made it a challenge to raise the necessaryfunds. As a result, EESTOR was not able to close the associated private placement until June 2016, at which time it had secured the target of $3 million of additional funding. With the funding secured, EESTOR was able to restart operations and in November 2016 released a fourth set of testing results from both Intertek and another testing company well known in the capacitor industry. This testing further demonstrated the advantages of the EESTOR technology including a “stacking effect” that further improves capacitance and reduces leakage. With the testing results, EESTOR released a white paper that claimed that with these new test results, EESTOR could be competitive in an approximately $25 Billion annual sales segment related to electricity grid applications and of that market segment, it would be “market disruptive” in 40% of it.As a result of this new information release, the stock price climbed considerably and as a consequence warrant holders provided an additional $2million of funding to EESTOR as they executed a series of warrants due to expire.
In addition to traditional capacitor applications, EESTOR is also continuing to pursue its original goal of using the technology for electricity storage applications. To this end it is investigating using ahigh-polarity polymer to mix with its CMBT powder to achieve the desired energy storage and retention levels. In December 2016, the company signed an agreement with Alchemy Synergy Group, Inc.to work with EESTOR to develop and test specialized high-polarity polymers. If EESTOR is able to leverage these new polymers to improve the energy density and retention characteristics of the end capacitor product, the scope of potential markets is huge. Just the grid application market alone is worth up to $2 trillionannually. Add to that transportation, defense, portable electronics and power tool applications and the market potential is mind boggling
In terms of valuating the stock, there are currently roughly the equivalent of 200 million shares potentially outstanding taking into account all available options, warrants and EESTOR Corp’s. 71% stake in EESTOR Inc.Given the planned licensing approach wherebyEESTOR would earn income via licensing fees, with little associated costs, $1 billion dollars of revenue to EESTOR would translate into a stock price of $50 at a P/E ratio of 10. Given that the potential markets may be measured in the trillions of dollars, the potential of this stock is incredible if EESTOR can deliver the goods, even considering that
EESTOR may only get a 10-20% licensing fee on sales. The stock in the 4thquarter of 2016 has been trading in the 40 to 70 cent range!
If EESTOR can deliver the goods, what are the key risks to be aware of? The biggest risk would come from competing technologies be they in energy storage or energy production. There are many, many fronts currently being pursued to achieve the holy grail of high density, low cost electricity storage. Cheap, highly compact energy production via LENR or related technology couldalsobe a challenge but the emergence of such technology is still a long shot at this point.
So here in January 2017, where do things currently sit?1)EESTOR believes it has capacitor technology that can be competitive and/or disruptive to large segments of the multi-billion dollar high voltage capacitor market.2)EESTOR is pursuing research with high-polarity polymers it believes can enable the application of EESTOR’s CMBT powders to the electricity storage market which has vast potential. Testing and publishing of results related to this research could come at any time. As results along the two key dimensions of energy storage density and retention time improve, more and more potential markets open up to EESTOR’s technology.3)EESTOR has test kits ready to provide to leading capacitor industry players it is seeking to partner with via licensing agreements to bring its technology to market and is planning to conduct meetings with these organizations in the January timeframe to move things forward in terms of securing such licensing agreements.4)At the end of October 2016, EESTOR extended warrants representingover $5 million in additional investment to the end of March 2016, but made this the last extension of these warrants (priced at $1.50 per share). This suggests that EESTOR expects to have releasedsufficient good news by then to put these warrants “in the money”!
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