Nanalyze

Is Graphene 3D Labs a $40 Million Company?

In a recent article, we talked about Lomiko Metals (CVE:LMR), a junior graphite miner that intends to supply graphite for “graphene 3D printing” to Graphene 3D Lab, a company of which they recently acquired a 15% interest in for $50,000. With both graphene and 3D printing both being hot topics among investors at the present, speculations were made as to the viability of this venture to produce “3D Printed Graphene Nanocomposites”.

It now appears that Lomiko made the right decision. Over the last week, Lomiko’s equity ownership in Graphene 3D reaped exponential rewards having reached a paper value of $6 million when Graphene 3D Lab (CVE:GGG) began trading this week on the TSX Venture Exchange. This represents a +24,000% return on investment for Lomiko. Was this much value really created in just 9 months?

Founded in 2009 as a spinout of Graphene Laboratories, Graphene 3D Lab conducted a reverse merger to begin trading on the TSX and at the same time completed a private placement of 6,000,000 common shares at .25 cents per share. As of today’s writing, Graphene 3D Labs is trading at $1.07 per share with a market cap of over $40 million. Just what are investors buying when they purchase shares in this $40 million company? In looking at Graphene 3D Lab’s financial filing statement dated July 29th, 2014, we see that the Company has assets of $1.3 million (likely the cash from the private placement), almost no liabilities, a deficit of $1.6 million, and no revenues. Graphene 3D Lab’s intellectual property is composed of two patent applications (61840464 and 61928573), neither of which appear yet in the USPTO database.

Since having 2 patent applications and $1.3 million in assets does not seem to merit a $40 million valuation, investors in Graphene 3D will be betting heavily on the Company’s management team to create value. In looking at the Company’s management we see that husband and wife team, Daniel Stolyarov and Elena Polyakova, have been appointed CEO and COO respectively. Both these individuals founded Graphene 3D Labs along with Michael Gouzman, a 3D printing expert who was granted 20% of the Company’s shares and who now works as a part-time external consultant. With relationships among employees being discouraged at most companies, a marital relationship between two of the most senior executives of a company could constitute a conflict of interest. The Company’s CFO, Robert Randall, performs services to Graphene 3D through his company Randall Consulting, Inc, an arrangement which seems to also present a conflict of interest.

Even some of the company’s expenditures show conflicts of interest. Between Sept 2013 and May 2014, Graphene 3D Labs made the below purchases from a third-party company controlled by common officers and directors of Graphene 3D:

  • Reimbursed research costs: $35,930
  • Laboratory equipment: $26,110
  • Rent, accounting, R&D, etc.: $26,580
  • Expenses and equipment rental: $18,936
  • Professional fees: $7,500

The third-party company referred to above is most likely Graphene Laboratories, Inc., a company controlled by the CEO and COO of Graphene 3D Labs. These transactions seem like the company directors are borrowing from Peter to pay Paul, and it’s difficult not to see another conflict of interest here.

Regardless of whether or not there are conflicts of interest to be concerned about, the fact is that investors in Graphene 3D Lab own shares in a company that has two patent applications and $1.3 million is cash yet commands a market cap of $40 million as of today’s trading. The Company’s financial statements do show a great deal of due diligence, and the below table provides a timeline of milestones the Company is looking to meet:

Graphene_3D_Labs_Milestones

While investors will be watching to see if Graphene 3D Lab (CVE:GGG) is able to produce a prototype printer in 1 year’s time, they should pay closer attention to the progress being made in the Company being granted patents that will protect their technology. In the meantime, the question still remains. Does Graphene 3D Lab really merit a $40 million valuation?

Note: All of the above numbers are in Canadian dollars. 1$ Canadian is currently equivalent to $.92 in US dollars.

Do you want to start trading stocks? Ally charges just $4.95 a trade which makes it one of the cheapest brokers out there. Start trading now.

  • Gary Anderson

    Interesting article.

    For me, the answer to your implied question, which is Graphene 3D Lab “worth” $40 million dollars?

    My feeling is it’s worth $80 million dollars.

    GGG.V is on record saying they’ll begin sales of graphene filaments for existing FDM printers “within 3-6 months” in this article:

    http://business.financialpost.com/2014/06/24/printing-the-worlds-hardest-substance/?__lsa=33d9-d870

    They look to be in the lead in commercialization of graphene-enhanced materials by EOY and once sales begin, you won’t touch this stock for under $1.50.

    Gary Anderson

    • Nanalyze

      Thank you for the comment Gary. Do you have any speculations as to what revenues are expected for this year or next?

      • Gary Anderson

        It’s difficult to speculate as I don’t know what distribution agreements Graphene 3D Lab will have by end of this year and into next year.

        I will say that I expect revenues from Graphene 3D Lab to be more than the $372,000 that Organovo (ONVO) has reported for the trailing twelve months, and Organovo has a market cap of $600 million…which puts things into perspective. Also, filaments are a very high-margin consumable in 3D printing. Margins typically are > 50%. I don’t know what exactly GGG.V margins will be of course, but I think it’s safe to say they’ll be high as well.

        I think you’re spot on that investors are “betting on management to create value” and I think that’s a good bet. The CEO and COO hold PhDs in Physical Chemistry from the University of Southern California and launched Graphene Laboratories (which is profitable) a year before the discovery of graphene was awarded the Nobel Prize in Physics. They have over 15 years of experience each with graphene …. true pioneers in the space and regarded by academia and industry as nanomaterials experts. This is exactly why they have the lead in commercialization of graphene filaments for existing FDM printers. Stratasys is only beginning R&D with a private company (announced in June), and I’ve seen nothing concrete from 3D Systems on the graphene filament front. So it appears very likely that GGG.V will be 1st to market with graphene filaments.

        Also, listing in the U.S. is now underway and should be finalized in the next 60-90 days. My understanding is they’ll be on the OTC QX, the tier just below Nasdaq. Any potential issues you raised above will of course be vetted and will have to pass SEC regulations just as they did for their TSE-V listing. Once listed in the U.S., I’d expect shares to get a boost as I’m sure there are many investors here who will find this stock compelling as I do here.

        Gary Anderson

        • Nanalyze

          It would be good to hear management make a statement about expectations of revenue since nothing has been said yet about potential buyers. In regards to the Organovo comparison, trying to do comparative valuations using a company’s market cap across industries is difficult and seldom accurate. There’s a bit of “if you build it they will come” thinking here. Even if Graphene 3D Lab can start producing filament this year, manufactures will want time to evaluate the filament, and even more time to develop and test commercial applications for it before committing to any large orders. The company has two patent applications as their sole IP. There are apparent conflicts of interest, and being listed on the OTC is hardly a stringent screening process.

          Countless OTC companies have lost investors money over the years. Anyone who decides to invest in an OTC company should read the below article and bear in mind the risk they are taking:

          https://www.nanalyze.com/2013/08/the-dangers-of-over-the-counter-otc-stocks/

          We’ll certainly take a second look at Graphene 3D Lab as soon as revenues are realized or when a patent is granted.

          • Gary Anderson

            Well, I’m sure management will be providing updates re: commercialization soon. To date they are on record saying sales will begin within 3-6 months. How much revenue of course is dependent on what distribution agreements they can carve out.

            As for the screening process for OTC companies, everything you’ve pointed out above as issues would be part of the process. I’m not sure if you’ve been closely associated with a public company as they undergo the process or not. I have, and the public information you’ve written about is all included in the process- especially for a QX level listing (just below Nasdaq).

            Agree completely that OTC companies can be a minefield. But some (like ONVO) work out very well. I first bought (and wrote about them) when they were in the pink sheets.

            Another company that’s worked out quite well is Sigma Labs, which Nanalyze panned in July of last year at .06/share and it’s up 100% since then.

            If you get into OTC companies that have strong management (as I believe Graphene 3D Lab does) and that company is first to market with a new, innovative product, (as I believe they will be), then you’ve got in ahead of the market. And that is Exactly where I like to be as an investor.

            Just my 2 cents…

      • panasian

        Revenues, what revenues? Their product is a story. graphene+3D printing+rechargable batteries = Fat Worm to hook in gullible investors in to sell inflated stock too.

        https://www.youtube.com/watch?v=uDn2v-YKTOE

        Compared to microelectronics these FDM printers have the resolution of a 1960’s circut board. You can buy a multi material FDM printers off the shelf for between $1K and $2K. They are large, slow and unreliable, heck you would be lucky to get one good print a day out of one. a printer and then you would need to test it thoroughly for errors.

        They print plastics, costing around $1/lb wholesale. The company mixes it with graphene to produces conductive plastic. The plastic supporting the graphene has a low melting point of between 200C and 250C and they talk about making batteries for aircraft.

        Stop!

        Can you imagine any battery not least an aircraft battery being certified as fit if it starts to disintegrate at 250c and is made with such an error prone printing technology. An internal or external short circut could produce much more. Just look at the Dreamliner to see how important reliability and high temperature tolernce is is in rechargeable batteries.

        I believe they will never produce a commercial product other than their promotional material and I don’t believe they planned to. I think this share price has peaked and now on its long slow decent with the odd rally.

        • Nanalyze

          Thank you for the comment panasian.

          We’ve rarely seen any success stories with OTC stocks and as a rule, would never invest in one, not even just to speculate. The below article highlights some of the typical characteristics of OTC companies that we see repeated time and time again:

          https://www.nanalyze.com/2013/08/the-dangers-of-over-the-counter-otc-stocks/

          As in all cases, there are exceptions.

        • Gary Anderson

          FDM printers are the most commonly seen consumer grade printers on the market, and revenues start this Q with 1st to market (on an industrial scale) launch of graphene-enhanced filaments. The potential for a JV with a larger player always exists. It’s important to keep in mind that management are true pioneers in graphene/nanocmposite materials and are highly respected in that space. They operate the largest graphene supply outlet in the world with over 7,000 customers and began that business a year before graphene’s discovery was awarded the Nobel prize in 2010.

  • Jonathan harvey

    Exciting,tell more

  • CsabaG

    Hi Gary Andersen…
    It’s hard to take anything you say about this company seriously when you make the following statement on your website:

    Due to the strengths I found in management and the technology of Graphene 3D Lab, I approached the company and key investors while the company was private, offering my services as a consultant. I have since signed a contract for those services with Numus Financial of Canada which began August 14, 2014 and runs through December 2015. Cash value is $110,000 USD with options for 100,000 shares at a price to be determined by the Toronto Stock Exchange on or before September 1, 2014. I do not have a contract directly with Graphene 3D Lab and comments have not been directly endorsed by Graphene 3D Lab management.

    What sort of “consulting work” are you doing besides promoting the stock on your website and in every discussion forum around including this one?

    Why is there no information at all on Google about “Numus Financial of Canada”?

    Stinks of a pump here mate…

    • Gary Anderson

      CsabaG

      It’s more than simply writing investment-based articles. I’ve helped introduce the company both to large investors and 3D printing industry executives.

      Stock up 80% since you posted on 8/27 and will be going much higher based on my research and their first to market position in several areas that combine graphene with 3D printing.

      I get approached by P&D scams in the space to write about them for cash. I’ve never done that and never will. This is a company I sought out personally to work with, and I couldn’t be happier.

      Thank you for your comment.

      • Hong Chen

        Hi Gary ,
        Can you give me your address for your website?

        • Gary Anderson

          it is at 3DPrintingStocks.com

  • CsabaG

    Thanks for the reply Gary.

    Congratulations on your new found wealth! Just to let you know, I did buy when you first posted and sold when it was up about 60%. Should have held longer to get 100%! One thing is for sure, when you post a stock on your site initially it’s good to get in for the ride up and quickly get out as the price comes back down to reality.

    I know you have good intentions but my point in that you like to only say positive things about a company that has pratically nothing, just a few patent applications and 1.3 mil in cash. The fact that the share price has increased just shows how detached the price has become from these shoddy fundamentals and that hype is driving the price up. That and press releases. I read your posts on Investors Hub and I have to say that your post about press releases that will come out just stinks of insider knowledge. Investors hub is a notorious place for stocks to get pumped and your regular posts there don’t do well for your reputation. Anyone who buys shares of this now with the intention to hold them until retirement will be sorely disappointed.

  • A. Paul GIll

    A word of warning. There is no proof that Nanalyze has any real qualified analysts at all. It appears they simply put out reports to manipulate stocks to cover their shorts of companies their clients have made.

    Is Nanalyze compliant with SEC and OSC regulations? I think its time to investigate this site to find out who is behind it.

    • Nanalyze

      Hi Paul.

      This is an accusation that has no merits whatsoever. We very clearly state that we never short any stocks discussed on this site. Shorting OTC stocks is also notoriously difficult.

      https://www.nanalyze.com/2013/08/the-dangers-of-over-the-counter-otc-stocks/

      Those who publish factual objective information about stocks that are being hyped are always accused of being involved in some sort of short conspiracy. As opposed to attacking the site, why not post your points of contention? We’re happy to discuss anything you find factually inaccurate.

      We’re not here to win popularity contests. We’re here to publish objective factual content about investing in disruptive technologies. This is why we have such a large established reader base.

  • A. Paul GIll

    I will ask direct questions: 1) What are the qualifications and backgrounds of your analysts 2) Do your reports comply with SEC and OSC regulations? 3) If they don’t, how are we are to take seriously a company based on Hong Kong (outside the jurisdiction they could be prosecuted easily) 4) Who are your advertising and/or sponsors (a full and complete list)?

    A group issuing reports that is lacking transparency leads to suspicion about motives. I have addressed your questions and I am now turning around and pointing the camera on you. Answer the questions.

    • Nanalyze

      Thank you for the questions Paul.

      1. Please see the “About Us” section. We are a group of individuals who enjoy reading and writing about investing in disruptive technologies.
      2. This is a technology investing blog. The writers create their articles with integrity and present the facts as they are. This complies with any regulations in any jurisdiction.
      3. You may have noticed we have two addresses. One is in the States. One is in Hong Kong where one of our writers resides.
      4. We only use Google Adwords. We have no sponsors and nobody pays us for advertising except Google.

      Since you belong to the Graphene Council group on LinkedIn you would have seen the below post:

      http://www.expatsblog.com/news/2001145951/new-financial-scam-involves-graphene

      It is well merited for investors to be very skeptical about “graphene investment opportunities”.

  • Gary Anderson

    re: “It is well merited for investors to be very skeptical about “graphene investment opportunities”.

    I agree completely. But it’s also well merited for investors to remain informed with timely, accurate information- which is not always easy, I know.

    In the interest of keeping your readers informed, I suggest an updated article on Graphene 3D Lab following their 1st to market launch of graphene-enhanced filaments for 3D printing.

    The company has now a production capacity of up to 10 KG/hr of graphene filaments: (Yahoo News removed the link Gary had put for whatever reason) and revenue flow begins this Q.

    Gary Anderson

    • Nanalyze

      Thank you for the comment and additional information Gary.

      We’ll certainly look to highlight Graphene 3D Labs again when they start bringing in revenues. For OTC companies, we try to avoid talking to much about “science by press release” and instead focus on recorded revenues, major partnerships (not just MOUs), and substantial 8-K events. It is expected that a company is hitting milestones as time goes on.

      We’ll be watching the events unfold and appreciate your insight as always!

  • robert Saville

    I am interested in someone explaining to me the difference in the symbols GGG.V VS GPHBF? Any insight into this would be very helpful. Seems GPHBF is slowly drifting down to its low, of low 50’s. I live on long Island and reside about 10 minutes from where this company is on Middle Country road in Calverton, NY. I am intrigued so much to take a ride over there and have a look around for myself.

    • Nanalyze

      Hi Robert. You certainly should! Do report back your findings if you do.

    • Bill Ryan

      Robert, I don’t see that you really got an answer to your question. I easily could be wrong about this, but I believe that the “F” designation behind GPHB (BPHBF in entirety) just indicates the symbol that is used in the United States for trading. 3D Graphene is a Canadian based company so it is “foreign” to the US, those the “F” at the end of a 5 digit stock symbol. Stocks with a US base have anywhere from 1 to 4 digits stock trading symbols and would not normally end with “F”. I am not sure what the “.V” designation refers to unless it refers to something about US Dollars. I could not find the stock on the Canadian Ventures Excahange. Hope someone else will do a better job of explaining that.

      Here is a link to Stock Ticker symbols that goes into some detail from Wikipedia: http://en.wikipedia.org/wiki/Ticker_symbol

  • robert Saville

    Seems that the GPHBF trades on the QB exchange, yet where should my focus be?

    • Nanalyze

      Hi Robert,

      If you trade GPHBF the shares will be less liquid. A bigger “bid ask spread” will not be inb your favor either. Trading GGG also gives you some currency diversification as well.

  • Denis Yesil

    Does anyone know when 3d lab is going to publish latest financials? What I found were from February 15 only.

  • Laura Kiefel

    Seems like Graphene 3D Labs was never listed on the OTC. Does anyone know why and if this is true?

If you love us, sign up for our newsletter

If you hate us, sign up your enemy.