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.

 - Commentary source: Market Equities Research Group

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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 production capabilities, margins, and provide a rough 12-month forecast with both a Base Case and an Upside Case scenario;
 
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.

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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". The CEO provided insight into a few of the main drivers behind the Company's current and upcoming growth. At the 5 minute mark of the interview the CEO gave particularly insightful news of a new major catalyst regarding carbon credits lying in wake, one which Market Equities Research Group  has describes as "provides a pathway to >$20/share  near to mid-term price target for DYA". In the Bloomberg BNN interview the CEO stated "The sales globally are growing exponentially. You look at the carbon credits, we are just in the final stages of being certified for the carbon credits. It's quite interesting, just yesterday I received an invite; I've been asked to speak at the World Climate Summit in November in the UK, and they want me to speak on the world's carbon credits and the future of the world's carbon credits".

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 to $2/share. 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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1) HydraGEN^TM

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

dynaCERT Inc. currently has a market cap of only ~C$214 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.

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].

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 Apple PayTM and PayPalTM.

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 $3,000 in carbon credits per annum. dynaCERT’s plan is once it has gone through approval with VERRA authority, dynaCERT will maintain 50% of the carbon credit$ and 50% of it will go to the fleet owners. The Methodology now in for approval with VERRA USA 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. The application is currently being dealt with.

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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.