The ad claims: “Discover the ‘Miracle Material’ (BBC) that’s crucial for the future of battery technology. Early investors could see returns as high as 6,908%.”
And, of course, there’s the classic urgency tactic. So what’s this about? Details follow…
I don’t want to dampen your excitement, but this is a familiar tale we’ve seen before — and one that has already been explained. Despite that, questions keep coming up as Alex Koyfman continues his “battery arms race” ads for Microcap Insider ($1,999 for the first year, renewal cost unknown, with a 90-day refund policy).
The promotional message highlights a “miracle material” that supposedly gives a small company a key advantage in battery production. Here’s a snippet from the beginning of the ad:
Yes, it’s about graphene—a material that emerged about a decade ago as a potential breakthrough solution for countless challenges. But the real question remains: Can it be produced affordably, in large quantities, and made viable for manufacturing?
And there’s more to the ad…
Then comes the promise, where he hints at a company positioned to supply graphene and potentially even bring it to the commercial market.
And there’s a catch — the Company is small, and the stock trades for mere cents, so there’s a cautionary note:
This type of pitch presents a reasonable target, such as capturing just 3% of the market, while implying it’s conservative. To clarify, it’s not actually “conservative” to expect a company yet to release its batteries to secure 3% of the global consumer market. Possible? Yes. Conservative? No.
Koyfman’s pitch continues:
Much of the pitch focuses on how this Company plans to produce graphene batteries free of lithium…
This indicates that they will become a critical supplier in the future…
What makes it superior? Here’s Koyfman’s take…
I would feel out of my depth in a chemical engineering class and rely on their expertise. What else do we learn about this small Company? Koyfman mentions that its market cap is under $50 million and provides some insights into the team behind it…
For those keeping track, this is the third year running that Koyfman has recommended this stock as an “urgent buy” tied to its graphene battery technology. In previous years, he used similar headlines, such as, “This Sub-$5 Stock Is Set to Lead the ‘Battery Arms Race'”—and yes, the “special report” marketed at that time was titled “Graphene: An Exclusive Guide to the Next Millionaire-Maker.”
We first covered a comparable advertisement from Koyfman in February 2022, so here’s a look at how the stock has fared since then (with GMGMF in purple and the S&P 500 depicted in orange for comparison)…
The Company has been refining its graphene production process since 2017, with an initial emphasis on “clean technology” applications. While it generates revenue—around $35,000 quarterly—from products like Thermal-XR paint and lubricants, this amount is significantly outweighed by expenses, which hover around $2 million each quarter. As a result, the Company remains a relatively small player in the graphene market with limited sales activity.
They assert they can scale up their production equipment to enhance graphene output. Yet, their primary focus is improving graphene quality and integrating it into their Thermal XR products and battery technologies.
Regarding their pouch battery, which is central to their growth strategy, earlier this year, the Company anticipated having samples available by the summer, specifically around the end of June. This would enable them to conduct practical testing and explore material combinations to enhance efficiency. However, those samples still need to be produced. The Company is still at “battery technology readiness level 4,” indicating they continue working on the battery’s chemistry. Their most recent press release noted that “the performance of the pouch cells will be shared once a repeatable and 3rd party tested 1000 mAh+ battery pouch cell is successfully created.”
The Company maintains its original roadmap as outlined in its press release, expressing confidence in starting construction of its pilot plant this year. They also plan to decide on a commercial-scale facility within the next two years, aiming for completion around 2027. It’s important to note that they lost nearly a year during the development phase because they initially prioritized coin batteries instead of pouch batteries, a decision they reevaluated about 18 months ago. However, they focus more on aspirations than on realized milestones.
As of March 31, the Company reported about $1.5 million in cash reserves. They have an at-the-market distribution agreement allowing them to raise up to $20 million through share sales as needed. This funding will be crucial in the coming years if they intend to build their pilot plant or scale production. They remain hopeful about securing additional investment from more significant partners. In May, they issued approximately eight million shares (and warrants) at C$0.42, which provided some financial support. Their second-quarter results have yet to be disclosed.
Several customers are currently evaluating the existing Thermal-XR product, primarily for its corrosion-resistant qualities and ability to enhance cooling efficiency—an appealing aspect for data centers and LNG facilities, where even minor improvements can lead to significant benefits. Although they have not yet submitted an EPA approval application in the U.S., they are moving forward with this goal and have recently hired a consultant to facilitate the process. They expect to submit their application by October and hope to receive feedback from the EPA in the following year.
The list of risks associated with a small research and development company like this one is extensive, particularly as it seeks to develop a commercial product while meticulously managing costs. Here’s an excerpt from the prospectus highlighting a significant risk faced by all companies focused on “next-generation battery designs”:
“… there is a risk that the Company may not successfully produce a prototype, fail to create a scalable production process, or struggle to find a suitable licensee. For instance, the collaboration with the University of Queensland (“UQ”) on G+AI Batteries has yielded promising results, such as high energy density in early coin cell pre-prototypes. Despite these advancements and ongoing research with UQ, GMG may find it challenging to transition this technology into a commercially viable G+AI Battery pouch cell prototype. Even if a high-performance technology is developed, there may be hurdles in electrochemical development, material sourcing, component production, and scaling up the production of cathode or cathode materials. Furthermore, even if GMG successfully creates a high-quality product capable of large-scale production, it might not meet the specifications required by potential customers. For example, if GMG develops a G+AI battery or a component thereof, it may not satisfy the stringent requirements of the electric vehicle sector or other targeted industries. The occurrence of any of these challenges could significantly impact the Company’s business, operational results, and financial health.”
It’s worth noting that even a well-funded company like Quantumscape (QS), backed by major automotive partners such as Volkswagen and Continental and receiving favorable media attention, continues to face financial hurdles. Despite its efforts to develop a groundbreaking solid-state lithium metal battery for electric vehicles, Quantumscape has been burning hundreds of millions of dollars annually, fifteen years after its inception and four years post-SPAC merger. They will likely continue this trend for several years, especially considering that Volkswagen’s initial tests of early-stage sample cells occurred over five years ago—a milestone GMG arguably has yet to reach. (Volkswagen has supported and funded QS since 2012 to establish solid-state battery production by 2025. QS has been testing its batteries with OEM auto manufacturers since late 2022 and is currently evaluating various prototype designs.)
I mention Quantumscape not to suggest that it has solved the challenges of battery development but rather to emphasize the lengthy and complex process of creating new battery chemistries. This involves determining effective production methods, conducting safety and performance testing with potential customers, and continuously improving efficiency while developing systems for mass production. Lithium-ion batteries benefited from several decades of development. Still, it took significant time for their chemistry and mass production processes to be optimized and standardized for commercial use.
GMG can only progress as far as a small company with substantial additional capital. They may form more advantageous partnerships in the future or continue raising funds through share sales to advance their technology. They may also experience favorable developments, attracting attention from investors and battery enthusiasts, especially during events like the upcoming conference. However, building a solid business foundation will take time. Suppose you’re considering an investment based on potential partnership announcements or positive headlines. In that case, assessing the likelihood of success and determining when you want to exit your position is crucial.
Please share your thoughts in the comments below.
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