Investors appear to be betting big on Freedom Energy Holdings, Inc. (PINKSHEETS: FDMF) following a pair of press releases issued by the alternative energy company that specializes in the identification and development of technologies with commercial applications in the energy industry sector. Those two press releases distributed on Wednesday have helped push FDMF’s shares from a 52-week low of 0.0017 on February 21, 2012 to a high of 0.0078 today while trading volume has already surpassed the 56 million mark.
Of course Wednesday’s spike is certainly welcomed by those who managed to build a nice position when shares were at that low but for those who bought in when shares were as high as 0.010 in early January there is still obviously some work to be done. For that to be accomplished FDMF may need to actually bring in some revenue and unfortunately that’s not what Wednesday’s releases announced.
Instead FDMF once again pointed to potential and while the news could be impressive if everything goes according to plan there are a number of shareholders who have seen this show before, namely for the company’s proprietary asphalt shingle recycling technology SR-139. FDMF spent quite a bit of energy predicting the success of SR-139 and back on January 9, 2012 company CEO Brian Kistler stated in a press release “I am receiving new inquiries weekly from other shingle recyclers both domestically and internationally. Word is beginning to spread and I look forward to bringing new updates and agreements as we continue to progress. Once the process is fully operational and the finished product is being produced, the true value of SR-139 will be recognized.”
Well those updates haven’t exactly been flowing nor has revenue from new partnerships. In fact FDMF has gone silent on their joint venture agreement they entered with Central State Shingle Recycling (CSSR) back in October. In the announced agreement FDMF said they would be providing CSSR with their proprietary asphalt shingle recycling technology SR-139 and part of the material terms of that joint venture “calls for FDMF to receive a royalty of $0.25 per gallon of the SR-139 required in the processing of the asphalt shingles. Initial expectations are for the processing of 50 tons of shingles per hour, which requires upwards of 1,000 gallons of SR-139, also per hour.”
That was last October and while FDMF had stated that they believed they would be fully operational with this program in the first quarter of 2012 and by the end of the year they would be processing up to 500 tons of asphalt shingles per hour there is little reason to believe this will actually be realized. It seems CSSR has had second thoughts about one of the conditions of this joint venture, specifically an investment of $700,000 in equipment to get on track. FDMF hasn’t mentioned anything new about this joint venture agreement.
What FDMF has mentioned is the potential of KC 9000, “a breakthrough technology” that “provides an effective and cost efficient system to enable heavy oil deposits to flow without heat.” On Wednesday FDMF announced that they had “received the funding to produce and ship KC 9000® for the previously mentioned Middle East trial.” That previously mentioned trial has been on the table for months so it should come as some relief top shareholders that it is finally moving forward.
Kistler provided some details about this advancement, saying “The first trial tentatively set to take place in April 2012 has been moved up to early March. The purpose of this trial is to show the effectiveness of cleaning, oil covered, drill cuttings from wells being drilled on shore. The parties requesting the trial have funded all expenses of product, shipping, travel and lodging for me to attend this event. The location for the trial has not been disclosed to me at this time; however all plans are being coordinated through our agent in Dubai.”
To give investors an idea about the potential of KC 9000 Kistler went on to note “There are approximately 1 million tons of drill cuttings that have been accumulated that are yet to be processed from this one location. The current cost of cleanup is $65 per ton. Using KC 9000®, costs show to come in under $50 per ton. Using this model would call for approximately 2 million gallons of KC 9000® to process the whole 1 million tons already accumulated. Moving forward the plan is to set up modular processing plants at the sight of the new wells being drilled so that the cuttings are able to be processed immediately which will save costs from transportation and storage of the cuttings.”
While the first trial has been moved forward to March FDMF has also announced tentative dates for two additional trials to process drill cuttings, those being set for late April 2012. FDMF has already said that the funding for these two additional trials has been secured and “The concentrated amount of KC 9000® already shipped is sufficient to supply the product needed for both of these additional trials.”
Well early March is right around the corner so FDMF has put themselves in a position where they better deliver some results or investors will simply assume KC 9000 is taking the same route that SR-139 took, what appears to be a dead end.
FDMF can hardly afford another disappointment as they had less than $5,000 in cash at September 30, 2011 and according to their filing they reported that as of September 30, 2011 and December 31, 2010 they had incurred losses of $5,487,536 and $5,379,240, respectively. During that three month period ended September 30, 2011 the only revenue brought in by FDMF was $51,000 in consulting fees, no revenue from net sales. Unfortunately FDMF is not a consulting business, they need to generate revenue from product sales and this may be their last chance to convince investors they have what it takes to follow through with their business plans.