Valuation Commentary: dynaCERT Inc. (TSX: DYA) (OTCQX: DYFSF) (Frankfurt: DMJ) shares appear at the beginning of a major upside move as the market has only started to price in the reality of the magnitude developing for its Carbon Emission Reduction Technology. A move toward a $1billion+ market cap (~$2.50/share for DYA) near-term is not unreasonable as the level of interest for dynaCERT’s award winning HydraGEN (HG) technology continues to build globally as a solution to the problem of harmful exhaust emissions plaguing cities across the world. dynaCERT Inc. is an emerging Environmental, Social and Governance (ESG) company. dynaCERT's HG Carbon Emission Reduction Technology has taken many years (~C$60 million) to perfect and is now just beginning to scale, with major potential as the only company with the patents and technology, proven, in production, and able to provide an immediate solution to reduce global air pollution.

 - Commentary source: Market Equities Research Group

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dynaCERT Inc. presents opportunity for investors as being uniquely positioned in both the old-school carbon economy as an ESG solutions provider with award winning technology, and the new hydrogen economy of the future with 17 plus years of Research and Development, scientific knowledge, and design advancements within hydrogen generation.

On March 15, 2021 dynaCERT announced news entitled "dynaCERT Achieves Local and Global Milestones and is Part of Hydrogen Strategy Coalition"; we urge investors to read the full release -- in short: 1) dynaCERT is a Key Participant in New Hydrogen Strategy Working Group the government of Ontario is undertaking, 2) the Company announced new sales in both the trucking and mining industry, 3) the Company is advancing towards putting units on bus transportation for City of Woodstock after the City experienced highly favourable trials on garbage trucks, 4) although dynaCERT's core business is supplying hydrogen on demand (not stored) -- the Company announced new product development of hydrogen production and storage units including pressurized hydrogen that will significantly cut down the compression cost making it affordable to use in small- and large-scale applications such as off-grid power supply, fuel cells etc., and 5) dynaCERT committed to achieve and participate in 'net zero emissions goal by 2050', reiterating the fact that Carbon Credits remain a huge future revenue stream for dynaCERT with its Patent Pending Carbon Capturing Methodology while capturing credits for the Carbon Saved with its Hydrogen Generating (HG) electrolysers.

What is particularly interesting in the press release is that it is apparent dynaCERT is looking to leverage its expertise to become a significant player in the new hydrogen economy. In the release dynaCERT’s Head of Research and Development mentioned upcoming products such as the Anion Exchange Membrane and the Cation Exchange Membrane electrolysers that will produce pressurized Hydrogen to meet the global demand. These are new revelations with significant potential to act as share price appreciation catalysts as related news flow occurs.

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dynaCERT Inc. possesses potential trillion dollar carbon credit patent:

• In a recent year-end/new-year corporate interview, the CEO of dynaCERT disclosed the extreme level of latent potential poised to be realized -- the CEO recounted an opinion expressed to him in the closing weeks of 2020 by a securities analyst; “that one worldwide patent you've got on the means and methods of monitoring and monetizing carbon credits within an internal combustion engine, that's a trillion dollars in itself.” (See related interview URL link: https://www.newsfilecorp.com/release/71201 online).
   

• dynaCERT holds the world wide patents on the means and methods of monitoring and monetizing carbon credits within emission reductions in diesel engines, dynaCERT holds this in 12 different verticals. dynaCERT has received approval of its concept submission from Verra and is proceeding to the next steps (details should be forthcoming shortly) that will see carbon credits generated and tracked in order to be sold on the open market. The Verified Carbon Standard, Verra or VCS, formerly the Voluntary Carbon Standard, coordinates one of the largest voluntary carbon credit exchanges and is a standard for certifying carbon emissions reductions. Once dynaCERT’s arrangement with VERRA is developed and gains traction, it has serious potential to catapult dynaCERT toward becoming a multi-billion Fortune 500 company. dynaCERT is the only approved mechanism of its kind in the voluntary carbon credit market, and this puts dynaCERT center-stage for governments globally to adopt for coming home-grown jurisdictional carbon credit programs (incentive-oriented and mandatory). See overview further below of dynaCERT’s proprietary HydraLytica™ tracking & auditing software, how it key for the Company’s carbon credit plans, and just how big this is setting up to be.
   

• dynaCERT’s HydraGEN™ (HG) technology is proven (on diesel trucks) to result in up to 88.7% reduction in NOx emissions, ~50% reduction in CO, 6-19% reduction in CO2, up to 57.1% reduction in Total Hydrocarbon emissions, 55%+ reduction in particulate matter (no black smoke), up to ~20% reduction in fuel consumption, provides better torque, and lower maintenance costs.

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Emerging from COVID-19, the Company has more than adequate cash reserves (reporting $23,162,965 working capital as of Dec. 31, 2020), a better Assembly Plant, an improved R&D facility, significant product improvements, and has been working on clearing a continued backlog of previously announced purchase orders, additionally new orders (including many reorders from highly satisfied clients looking to expand adoption of the technology that saves them money) continue to come in.
 
dynaCERT is now recognized in important circles as the future of carbon credits: The United Nations has certified dynaCERT’s product under its Smart Sustainable Cities Program. dynaCERT is at the forefront of the coming Carbon Credit market, and is now the clear leader in clean technology poised for wide-spread adoption across all sectors of businesses. Order of Canada member Eric Sprott, plus Dr. Jorg Mosolf (of Europe’s MOSOLF Group) are two of the most recent strategic investors that have taken significant shareholder positions and made business commitments in DYA.

dynaCERT Inc.'s CEO & President, Jim Payne, was interviewed on Bloomberg BNN (Business News Network) on February 26, 2020 in a segment entitled "Power Shift: Eric Sprott invests in dynaCERT's carbon-cutting technology". In the interview dynaCERT’s CEO disclosed he was invited to be a keynote speaker at the World Climate Summit (originally scheduled for November-2020) in the UK, they asked the CEO to speak on the world's carbon credits and the future of the world's carbon credits. Due to COVID19 the summit has been postponed until the later part of 2021, but the fact dynaCERT is earmarked as a keynote guest speaker speaks volumes to the level of coordinated governmental support for dynaCERT's carbon credit tracking/auditing technology to be advanced globally as the only universally accepted standard ready for mass adoption. 

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Analyst Coverage

1) Haywood Securities

dynaCERT Inc. (TSX: DYA) (OTCQB: DYFSF) (Frankfurt: DMJ) is the subject of coverage by analysts at Haywood Securities which issued an ‘Uncovered Radar Flash – Watchlist Report’ on June 2, 2020 entitled “An ESG Benefactor; A Carbon Emission Reduction Technology that Took Years to Perfect is Now Ready to Scale”. Environmental, Social, and Governance (ESG) investment themes are accelerating in interest and Haywood Securities has identified dynaCERT Inc. as a top candidate for portfolio consideration.
 
The full report may be viewed at https://sectornewswire.com/Haywood-DYAJun22020.pdf online.
 
The report discusses how the investment landscape has changed in the last year and that timing is right for an opportunity to scale ESG technologies. The Haywood analysts also discuss dynaCERT’s current production capabilities (at its Toronto facilities alone), margins, and provide a rough 12-month forecast with both a Base Case and an Upside Case scenario (Based on a class-8 engine HG-1 unit going out the door to a dealer for ~C$6,200 to dynaCERT netting 50% gross margins);
 
Base Case (full capacity) = 24,000 units/yr. Revenue (as C$6,200/unit) = C$148M in revenues … Gross Profit (at 50% GM) = C$74M.
Upside Case (3 shifts) = 72,000 units/yr. Revenue (at C$6,200/unit) = C$446M in revenues … Gross Profit (at 50% GM) = C$223M.
 
Additionally, the analysts point out the future potential for recurring revenue streams from carbon credit revenue as an attractive added value proposition.

NEW: Haywood Securities lists dynaCERT Inc. in its 'Haywood Top Picks 2021' publication

To see excerpt copy: [Click here to open a PDF image of the source document 'Haywood Top Picks 2021' of the related DYA section]

2) Investment bank GBC AG

dynaCERT recently received its first institutional coverage; the independent investment bank GBC AG, headquartered in Augsburg, Germany, initiated coverage with a 'BUY' rating and a target price per common share of dynaCERT of $1.90 Canadian (or in US dollars: USD$1.43 or in Euros: €1.30) -- click here to view full copy of this report. The price target has since been revised upwards (on August 10, 2020) to $2.20/share (click here to see synopsis of upgrade from analyst). The report also outlines a pathway for significantly higher price potential from 2022 - 2028 via a multi-phase adoption curve covering three distinct product lines; 1) HydraGEN^TM, 2) HydraLytica^TM, and 3) dynaCERT's carbon credit management system, each requiring their own set of specialized competences in various fields. The Company has successfully developed a suite of products that can act as their own ecosystem for the transportation industry including emissions reduction, fuel efficiency and a fleet management solution while providing the client with a steady source of income with its carbon credit management program. Not only is each product unique in a standalone fashion, but when combined, the analysts believe that "we could be witnessing the birth of a giant." With over a billion diesel engines in the world and interest building from multiple entities and jurisdictions, the team of analysts believe dynaCERT has a product line that can reach a total market of USD 6 trillion with no known direct competitor (dynaCERT only needs a tiny fraction of the market potential to become a multi-billion dollar market cap valuation); "There is no known competitor to dynaCERT’s HydraGEN TM unit, especially when combining it with the HydraLytica TM software that offers in one solution, an emissions and fuel consumption reduction device, a carbon-credit management program (projected) and a fleet management software. Adding all these elements together not only sets dynaCERT apart but makes it a closed ecosystem that, once implemented in a trucking fleet, becomes extremely hard to replace by any other product."

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Three Key Product Valuation Drivers

1) HydraGEN^TM

Figure 1a. (above) HG1 Unit installed on diesel truck.

dynaCERT Inc. currently has a market cap of only ~C$160 million, miniscule compared to where the Company is headed.  dynaCERT announced the results of official European TUV testing of it’s HG units, verifying emission reduction in NOx of ~55%+, CO of 50%, and particulate matter of 75%, all while saving fuel, providing better torque, and lowering maintenance costs. TUV is facilitated by the Federal Motor Transport Authority in Germany which does testing in the EU, nothing can be installed on a vehicle without its testing and the subsequent ABE (German for “permit of operation”) certification license -- dynaCERT announced it has received its ABE certification on August 26, 2019 -- a significant catalyst for sales.

Note: The head of TUV testing in Germany was so impressed with dynaCERT's results that he quit his job to join dynaCERT. See related July 10, 2019 news release "TÜV Süd, Lahr Germany, Head Engineer Resigns to Join dynaCERT GmbH and dynaCERT’s HydraGEN(TM) Wins Gold Award from ESQR in Germany".

The MOSOLF Group has taken the lead in Europe, opening dedicated showrooms, and hiring scores of new employees dedicated 100% full-time to marketing and installation of dynaCERT's HG technology in Germany, France, Benelux, and Poland.

So impressive is the HydraGEN^TM technology dynaCERT won the 2019 German Innovation Awards prize for Energy Solutions, additionally, dynaCERT is the Gold Award from ESQR in Germany, and the Gold Medal winner of the prestigious 2018 Edison Award for Best New Product.

Validation through both on-road and accredited 3rd party testing of dynaCERT’s HydraGEN™ Technology have produced results of;

1) Up to 19.2% reduction in Fuel Consumption
2) Up to 88.7% reduction in NOx emissions
3) Up to 46.7% reduction in CO emissions
4) Up to 9.6% reduction in CO2 emissions
5) Up to 57.1% reduction in Total Hydrocarbon emissions
6) Up to 55.3% reduction in particulate matter (no black smoke)
7) Increased engine power and torque
8) Extended engine and oil life (lower maintenance costs).

Technology that pays for itself: Noteworthy excerpt from Sept. 24, 2018 release regarding results, "While the dynamometer test showed a 8.9% fuel savings, separately, during the on-road break-in period after the baseline test, the on-board diagnostic (OBD) record of the 2018 MAN TGX 18-460 long haul truck with an HG1-45B showed a 20.1% average fuel savings for the 188 hours of tests, travelling through the mountainous terrain of southern Germany in a heavy load commercial operation."

As the trajectory for HG unit sales accelerates it won't take long for the economics to flourish, especially considering the healthy gross profit margins per unit and the fact there is a market with desperate need globally for millions of HG1 and HG2 units, capable of drastically cutting greenhouse gas emissions from diesel engines. Diesel engines are the lifeblood of all economies, and the size of the market potential is enormous -- there are 60 million diesel-powered trucks, trailers and equipment in North America alone and one billion diesel engines operating worldwide on all types of diesel equipment.

Figure 1b. (above) HG units.

Figure 1c. (above) Industries Served in 12 Different Verticals.

dynaCERT’s current market: The Company currently installs HG technology on buses, refrigerator trailers, small trucks, class 8 trucks, electrical power generation units of all sizes, farming equipment and agriculture equipment, construction equipment, mining equipment, and it is now moving into marine vessels. The Company believes it will also at some point in the future installing its technology on ocean going vessels, train locomotives, and it is currently working with a group in Europe to develop a unit for passenger vehicles.

dynaCERT has spent over $60 million perfecting this technology. The company now sells its HG units world-wide. It has an assembly plant in Toronto, Ontario Canada which it has just recently upgraded to a more computerized semi-automated system in order to streamline production and quality control. dynaCERT’s goal is to open an assembly plant in Mexico, Europe, and eventually India. dynaCERT’s cost is 50% of the wholesale price, so there is good profit margin. The HG-1 units for class 8 trucks typically wholesale to dealers for ~USD$5K. The Company has a global dealer network, some dealers have also significantly invested into the Company. E.g. the MOSOLF Group have invested directly into dynaCERT, and they are also opening 23 showrooms across Europe with distribution channels in Germany, France, Netherland, Belgium, Luxemburg, Poland, and the Czech. H2Teck in Canada has aggressively moved dynaCERT into the mining industry across Canada, USA, Peru, Chile, Brazil, Paraguay, and others.

Recent development of significance (A) Sales and Traction of HG units in USA: See May 11, 2020 news release "dynaCERT Invests in the USA and Receives a Purchase Order for 3,000 HydraGEN™ Units". dynaCERT granted KarbonKleen Inc. (“KK”), dynaCERT’s Preferred Service Provider, the exclusive Dealership rights in the trucking industry in the United States of America until December 31, 2024. The deal is subject to certain quotas, including a minimum of 150,000 HydraGEN™ Technology Units over a little more than three years. On May 9, 2020, KK has provided the Company with a purchase order for 3,000 HydraGEN™ Technology Units. KK essentially markets the product thru financing subscription agreement across North America.

Recent development of significance (B) regarding HG units in Europe's truck transport and marine sectors: This Q4-2019, the Company announced a Strategic Alliance with MOSOLF Group of Europe, including a MOU for an initial order of 1,000 units in 2020 and plans for penetration into the European market. According to the European Automobile Manufacturers Association (“ACEA”), there are over 398 million vehicles in the European Region. Approximately forty-five percent (45%) are diesel-powered. Almost all of the approximately 39 million commercial vehicles are diesel-powered and these are eligible for dynaCERT’s HydraGEN™ Technology across the European Union and the rest of Europe. dynaCERT’s ABE Homologation from KBA applies to more than 560 MAN powered vehicle types and models. The December 16, 2019 news release "dynaCERT Announces Strategic Investment by Mosolf in Europe" demonstrates tremendous financial, manpower, and retail space commitment. MOSOLF is one of the largest automotive services organizations in Europe, used by a wide variety of businesses, including automotive dealerships. NOTE: MOSOLF is also initiating marine applications by installing dynaCERT's HG technology on vessels owned by Dutch shipping company F. Elbert B.V. and on the largest shipping line in Europe, the Grimaldi Group. The math on marine sales potential is staggering; example: to outfit just one container ship could easily generate close to $1 million in sales (as opposed to something in the trucking market which is short of $10,000/ unit.) and there are >90,000 commercial cargo ships alone operating world-wide. From a pollution standpoint; just one container ship puts out the equivalent emissions of millions of cars per annum [click to view related link]. Additionally, dynaCERT's recent (August 31, 2020) addition of the Alltruck Network in Europe is major and should contribute toward exploding growth (Alltruck has over 800 centers across Europe).

Recent development of significance (C) regarding HG units in Mexico : This Summer-2019 dynaCERT announced that it has received a purchase order with a deposit for 100 HG1 units destined for trucking in Mexico from a major service provider for its client, Alliance, which supplies trucking equipment to one of the largest federation of labour unions in Mexico. Alliance has a market of over 1,000,000 diesel-operated vehicles in Mexico. Additionally, associated with the order, dynaCERT signed an MOU whereby the first 10,000 units destined for Mexico are expected to be assembled by dynaCERT in its Toronto facilities, and dynaCERT will begin negotiations for the establishment an assembly facility in Mexico. Initially this new facility will service further Mexican demand for up to 1 million more HG units (see related July 2, 2019 news release here, and for Nov. 14, 2019 follow-up news of first units being shipped thru KarbonKleen click here).

2) HydraLytica^TM

HydraLytica^TM is dynaCERT’s proprietary software with remote real-time telematics which the Company has retained worldwide experts to establish an audit trail of fuel savings and future carbon credits. dynaCERT's telematics developer invented key systems for Apple PayTM and PayPalTM. Related to HydraLytica™, dynaCERT is greatly escalating its scope of applications and utility to respond to the growing industry needs of Logistics companies and the broader Trucking Management software ecosystem. On September 23, 2020 the Company announced that dynaCERT International Strategic Holdings Inc. (“DISH”), a wholly-owned subsidiary of dynaCERT, has agreed with Corsario Ltd. of Mississauga, Canada, dynaCERT’s HydraLytica™ software developer, to magnify and maintain the functionality of its new proprietary suite of FreightTech software applications. GP LogiX Inc., a wholly-owned subsidiary of Corsario established specifically for this single purpose, will market the functionality of dynaCERT’s new FreightTech software and share equally with DISH all financial benefits, thus providing yet another stream of cash flow to dynaCERT, through DISH.

3) dynaCERT's carbon credit management system

dynaCERT at the forefront of future carbon credits monetization

Synopsis of HG technology and its Smart-ECU controller: dynaCERT’s technology is packaged into a small compartment that fits on the side of a diesel engine powered truck. dynaCERT calls their units ‘HydraGEN’ (TM) or ‘HG’ for short. The unit interfaces with the truck engine’s computer and uses electrolysis to turn distilled water into pure (elemental) H2 & pure O2 gases (individually). The HG technology acts as a catalyst; hydrogen has a 9 to 10 times flame spread which helps the engine burn diesel more completely, resulting in more power, less carbon fouling, and a reduction in pollutants. The Company has taken ~10 years, spent >$60 million developing its technology, and has proven world-wide (in numerous rigorous high-level government and private testing programs) eye-popping results for its product for diesel engines which reduces pollution very significantly, but at the same time improves fuel economy on average 10% to 15%. More importantly, from an environmental health perspective, dynaCERT HG tech reduces harmful emissions (including NOx) clear across the board north of 50%. This HG technology is controlled by a smart-ECU (the brains of the unit that interfaces with a truck engine’s computer) which can record the fuel savings and emission reductions while in operation, and provide an audit trail, essentially a greenhouse gas tracking system with the ability to account for future carbon credits. David Bridge, one of the original developers from Virgin Mobile, and also formerly of Research in Motion (known for the Blackberry), is the brains behind dynaCERT’s Smart-ECU. The CERT in dynaCERT stands for “Combustion Emission Reduction Technology”.

With the ability to verify and log emission savings, dynaCERT is currently working with a group in the UK, experts on carbon credits, and is in the process of having the technology certified for carbon credits.

dynaCERT holds the world wide patents on the means and methods of monitoring and monetizing carbon credits within emission reductions in diesel engines, dynaCERT holds this in 12 different verticals. Looking at dynaCERT’s long-haul trucking market alone, each truck can generate as much as $3,000 in carbon credits per annum. dynaCERT’s plan is once it is operational with the VERRA authority exchange, dynaCERT will maintain 50% of the carbon credit$ and 50% of it will go to the fleet owners. The concept Methodology has already been approved by VERRA (see related January 25, 2021 news release), the Methedology uses dynaCERT's patented HydraGEN™ Technology to lower carbon emissions and its HydraLytica™ Telematics technology to securely record carbon emissions and other non-personal data from diesel and gas engines.

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 The future is extremely bright for dynaCERT as the level of enthusiasm is building globally for an immediate solution to greenhouse gas related climate change and the dire need for clean breathable air.