An investment in the Company is speculative because, although it has access to a substantial amount of research and data which has been compiled regarding the EHG project and has a full IP exploitation licence granted by the IP owner, the EHG has been proven to produce hydrogen in the laboratory and test-cell environments only.
Mitigation –The Company commissioned a report on the energy efficiency and potential scalability of the EHG technology by Professor Keith Scott of Newcastle University, and used Intertek Tickford, an automotive industry-recognised facility, for the measurement and analysis of the outputs from the EHG in the test-bed environment. The data, and the results of the report state that the technology is “97%+ efficient”, which means that it is the most efficient hydrogen producing technology today. Furthermore the report strongly suggests that the output of the technology can be improved significantly. (See pages 2 to 4 and pages 99 to 114 of the IM).
Whilst the engineering being utilised to enable the EHG to be driven by waste energy within an ICE environment is ‘industry standard Turbine Drive technology’ it has not been used to drive an EHG to date. Therefore there is a possibility that the process could not deliver the desired results and the project could fail. Although best endeavour has been used to verify all the scientific research and data the Company is relying on for this project, it may transpire not to be reliable.
Mitigation – VNA has entered into an agreement with Jon McGuire of BlueBox Energy Ltd to develop a solution. John McGuire was a founder and Technical, (R&D) Director of Bowman Technology, a company that develops turbo generator systems that deliver either; more power output or greater efficiency in static generators by using and optimising the exhaust gas pressure and flow. VNA has also signed a licence and JV agreement with G-volution, the industries leading co-firing technology (The mixing of diesel with other fuels, e.g. bio-methane, in existing Trucks to create a more cost effective solution for running Truck fleets), specialist in the Heavy Goods Vehicle sector (See pages 9 to 13 and pages 65 to 76 of the IM).
The market uptake for this type of technology is unproven. Whilst this project is driven by legislation forcing the Automotive Industry by 2020 to reduce emissions by 30% more, and increase fuel efficiency by another 20% from where it is today, there is no guarantee that the EHG will become the industry’s ‘preferred’ solution.
Mitigation – Developing an independently tested solution on an already popular static generator, which is also used in trucks, gives VNA the best chance of success.
Estimates of potential value and costs may not be reliable. The potential licence income values are illustrations only, based on available comparable industry information. These illustrations are subject to market input variables that cannot be determined until the unit is developed and ready for market.
Mitigation – The Directors of VN Automotive have used extremely conservative, industry reference-able figures in the projections and estimations of market penetration and uptake. Furthermore, the Directors have used industry recognised metrics and multiples for valuations and shown how these estimates and projections are put together.
The illustrations of potential income value in this Information Memorandum may, accordingly, not be reliable despite the Directors best efforts to judge them accurately.
Mitigation – The Directors of VN Automotive have used extremely conservative, industry reference-able figures in the projections of income and estimations of market penetration and uptake.