Two major Japanese renewable-energy investors have so far taken a pass on putting their money into NB Power's hydrogen-power partner.

The province's publicly owned utility paid Florida-based Joi Scientific $13 million, hoping for a cut of potential profits from its mysterious technology.

But a pair of large-scale potential investors in Japan, Mitsubishi Hitachi Power Systems and Softbank's Vision Fund, have told Joi they need to see more results before they ante up, according to Joi's CEO in a conference call with investors.

On the same call, CEO Traver Kennedy also poured cold water on an apparent proposal to have Joi work with Mitsubishi Hitachi Power Systems to power the Olympic flame at next summer's 2020 Games in Tokyo.

Joi was in talks with Mitsubishi, a major Olympic sponsor, about demonstrating its technology during the event, but "so far they have not provided us funding or stepped up to make it a reality," Kennedy said.

The conference call took place when Joi was at what Kennedy called "an inflection point" — in the midst of a technological audit of their process, which is supposed to efficiently generate hydrogen energy from seawater.

The audit was prompted by the company's realization that it was calculating power incorrectly and that the technology's efficiency was poor.

During the call, Kennedy acknowledged results from its new calculations were "disappointing," revealing what he called "poor system efficiencies." CBC News obtained a record of the call, which took place between mid-July and the end of August.

NB Power CEO Gaëtan Thomas said earlier this year that Joi's secret technology could create hydrogen electricity from seawater — and could actually produce more energy than what it took to power the process.

One of the company's patents claimed results as high as 200 per cent.

But a former employee told CBC News that the energy output was only around 20 per cent.

We should be in a position in a few months to determine if we can go forward or not. - Gaëtan Thomas, NB Power CEO

Last Friday, Thomas told a committee of MLAs that only one test had been at the 20 per cent level and others had better results, showing "potential." But he said confidentiality agreements prevented him from naming those figures.

He said the numbers would have to exceed 70 per cent efficiency for the technology to be viable and they're not at that point yet.

Thomas told the legislature's Crown corporations committee that several large players in Europe, North America and Asia are working with NB Power to "scale" the technology to commercial levels.

"There's a number of players working with us on this now, and some pretty strong players," he said, "so we should be in a position in a few months to determine if we can go forward or not."

He refused to name those players.

NB Power paid Joi $13 million for licensing rights to use, market and profit from the technology, hoping it would provide an alternate energy source for its Belledune generating station, which must phase out coal by 2030.

So far NB Power has reported no profits from that licensing fee.

MOU last year

Softbank, owned by Japanese billionaire Masayoshi Son, "told us that once we have a unit built that can demonstrate commercial opportunity, they would be interested in investing," Joi CEO Traver Kennedy told investors during the call.

"Until we get there, and we're not there yet, they're not interested in investing. … We need to get the technology to product stage."

Softbank's recent investment of more than $20 billion in WeWork, a shared-workplace company, has been flagged by financial analysts as risky. The company's renewable energy investments have focused on wind and solar power.

Mitsubishi Hitachi Power Systems was still looking at Joi at the time of the conference call and visited the company's Florida offices earlier the same month, but hadn't seen enough to inject much-needed capital into the Florida company.

Kennedy told shareholders that Mitsubishi Hitachi signed a memorandum of understanding with Joi in August 2018 but didn't commit to investing.

"Once they complete their diligence, they then will develop a commercial business plan and will decide whether or not to invest in our company."

Joi Scientific, which is housed at the Space Life Sciences Lab in Merritt Island, Fla., received a $13 million licensing fee from NB Power, with $6.7 million from the Regional Development Corporation. (Karissa Donkin/CBC)

Mitsubishi is an enthusiastic promoter of hydrogen energy, though its chief technological officer, Akimasa Muyama, warned last year that hydrogen from renewable sources would be the norm only "in the long term," after technical advances brought costs down.

Mitsubishi is also a major sponsor of the 2020 Olympic Games in Tokyo, and during the summer conference call, Kennedy was asked whether Joi was "still working towards powering the Olympic flame" at those games.

"We remain very interested in this opportunity," Kennedy answered. "Not sure if it's going to be the flame, but MHPS presented the idea of participating in the Tokyo Olympics to do a demonstration along with their partners."

He said Mitsubishi officials "still have interest in this" and discussed it when they visited Joi's Florida labs, but did not commit any money to make it happen.

Mitsubishi and Softbank have not responded to requests for comment.

'Uncertainty' about calculations

Kennedy told the conference call that earlier this year, Joi "decided not to accept new investments" when it realized there was "uncertainty" about its power calculations.

The company launched a technical audit over the summer. Preliminary results were discouraging, forcing Joi to return to "square one," a former Joi employee told CBC News.

That meant "just basic research, reading scientific articles and finding out what the best avenue is from there," said the former employee, who CBC News is referring to as Alex to protect their identity.

According to the conference call, Joi's freeze on investment left the company with only enough cash to operate until the end of August, and the company decided to reopen itself to new investment while acknowledging its lack of a breakthrough.

"We're now seeking new funding based upon our new understanding of the system efficiency, realizing it will have a significant impact on the company's valuation," Kennedy said during that call.

He said Joi was "being very open and candid about where we are as a company and where we are in terms of our development of commercial product."

Company officials have refused to grant any interviews with CBC News about the state of the company and its research.

Despite other large investors holding off, NB Power continues to spend $20,000 per month operating a laboratory at Joi's Florida headquarters. Thomas called that "a minimal investment."