By Jeff Brown, Editor, The Bleeding Edge 
I hope all our U.S.-based readers had a happy Thanksgiving yesterday. For today’s AMA, we’ve got a couple of follow-ups on the docket. First up is a follow-up on the crowdfunding deal from Starfighters Space – a private company attempting to shift its focus from pilot training on F-104 fighter jets and civilian rides to using its jets to launch payloads into space. I’ve gotten questions from several readers over the past several weeks on its potential as a Day One Investor deal. I have some serious concerns about the company and valuation, so we’ll discuss more today. I also received another question about another live Reg CF deal that I believe subscribers should stay very clear of. This one had me shaking my head. We’ll also revisit the mighty mega-conductor that has the materials science industry all abuzz – graphene. Readers have also written in about potential hackers getting into the systems driving autonomous vehicles, as well as some important questions and points on the global shift toward nuclear energy. How safe is nuclear fission as an energy source, really? What about storing the radioactive waste of nuclear power plants? And what are the costs to bring a nuclear reactor back online? All excellent questions to keep in mind as we think about how we’ll meet the increasing global energy demands and at the same time reduce our carbon emissions – an unstoppable trend. We’ve got an exciting stack of questions to get to in today’s AMA, so let’s dive right in… Revisiting Starfighters Space Hello Jeff. Thanks so much for your hard work and fantastic insights. I have learned so much from your research. I ran across an offer on Equifund for a company called Starfighters Space Inc. They want to launch satellites from F104 fighter jets. I've seen comments from pilots who seem to think payload size may be an issue and 747s would be a better choice. Plus, the age of the jets could be a problem as well. I was wondering if you thought this may be a feasible offer, maybe for the Day One Investor site. Thanks again. You are the best in the business! – Russell F. Hi Russell, Thank you for the kind comments. Starfighters Space seems to have caught the attention of quite a few of our readers. As you’ve pointed out, there are some concerns about Starfighters Space and its ability to follow through on everything it claims… and I have my own reservations about the company, its approach, and the offering itself. For the benefit of new readers, Starfighters Space is a private company that provides pilot training on F-104 fighter jets and also pilots fighter jet flights for civilians. It’s currently attempting to rebrand itself away from pilot training and civilian fighter jet rides into a company that launches payloads into space with F-104 fighter jets. It is trying to raise capital via Reg A+ crowdfunding regulations. However, I have some serious concerns. I’ve researched and written on Starfighters in AMAs past. Most recently, in The Bleeding Edge – AI for All Mankind, I responded to one reader’s question about Starfighters’ potential cost advantages of being able to launch satellites into orbit more cheaply than SpaceX could, but I also addressed your valid concerns about the payload size… [The] question was whether or not this company could mount a competitive offering to SpaceX because it claims that it will be able to launch satellites more cheaply than SpaceX. First off, let’s consider the basics. An F-104 is a fighter jet that can carry a rocket within which there is a payload (i.e. the satellite). This means F-104s are only capable of carrying very small satellites – small enough to fit inside the cone of the rocket carried under the belly of the F-104. The payload is only about 100 kilograms (kg). That’s it. The SpaceX Falcon 9 stands 70 meters tall (229.6 feet) with a payload of 22,800 kilograms to low Earth orbit (LEO). These two companies aren’t even operating in the same space. But what’s far more concerning is that Starfighters Space uses incorrect data in its offering. 
Source: Starfighters Space Note what it claims to be the Falcon 9 cost/kg to low Earth orbit – $16,093 (there was even a typo of the cents symbol). The actual cost to LEO per kg is as low as $1,520, and typically well below $5,000/kg. Note Starfighters’ “initial” costs of $22,000 dropping at “scale” to $15,000. SpaceX is already as low as $1,520/kg and once the SpaceX Starship is operational, those costs will drop to around $100/kg. Even when I look at the RocketLab data, the above image claims RocketLab’s Electron is capable of 150 kg to LEO, but the actual number is 300 kg to LEO. These numbers appear to have been chosen to make Starfighters look more competitive than it actually might be. This is false information which paints an incorrect picture of the investment opportunity. This kind of nonsense makes me upset as investors are being misled. To your other point Russell, if Starfighters Space were to use a 747, it could indeed carry a larger rocket under the belly of the aircraft. And a larger rocket could carry a heavier/larger payload. Still, the costs would also increase which brings us back to my earlier point about Starfighers’ cost structure not being competitive with SpaceX or RocketLab. Ultimately, my initial assessment from The Bleeding Edge – Never Miss the Brownstone Beat stands… It’s important to note that there are no notable institutional investors who are active in the aerospace industry backing this company. The company had zero revenues from operations in both 2022 and 2023 and only small amounts of revenues in those years from training and test flights. This is a company with more than $11.5 million in liabilities that will suffer dilution due to a number of issued warrants and convertible debt that has been issued. It’s raising at a $65 million valuation which, from my perspective, is way too high, and with a number of related party transactions that give me concern. Still far too many red flags for my liking. This is not a deal I would ever recommend, but it does serve as a good example of what to watch for and avoid in a private crowdfunding deal. Nuclear Safety and Storage Hello, I just read Mr. Brown’s column in my E-Mail today, and while I agree with every word he wrote, he ignored the two elephants in the room: Safety and Storage! Safety as in reducing the risk of a catastrophic accident, such as in Chernobyl or Fukushima, and Storage as in the storage of high-level nuclear waste, preferably after the useable fuel has been separated from the spent fuel for recycling! Without a facility to recycle spent fuel into new fuel, and a repository for the remaining high-level nuclear waste products that can’t be recycled, nuclear power will remain a “third rail” of American politics, untouchable by any politician without risking their political death at the ballot box! Until safer reactor technologies have been demonstrated to reduce, or even better, eliminate the risk of a meltdown or similar catastrophic accident, and we have a verified safe storage facility up and running to replace the on-site storage of spent fuel at nuclear power plants, nuclear fission power will remain politically dead in the United States and Western Europe, with France and Poland as notable exceptions. Indeed, the French have been European leaders for nuclear fission power, and not only reprocess all of their own spent fuel, but they also accept spent fuel from other nations, such as Japan, for reprocessing, at a price, of course! The French get 68% of their total electrical demand from nuclear fission power (Source: US Energy Information Agency, see link below), and once upon a time, the goal was to generate 100% of France’s electricity from nuclear power! That goal may have been modified recently, under pressure from the French “Green” Party, but it’s still an impressive figure nonetheless. Would that we should be so lucky! I’m still upset that President Jimmy “The Peanut” Carter canceled our own spent fuel recycling facility, on specious non-proliferation grounds. As a Rickover-trained nuclear engineer, he of all people should have known better! The result is that spent fuel continues to accumulate at operating nuclear plants, and sits quietly at closed plants, waiting to be picked up and processed for re-use. Don’t get me wrong. I loved your column, I just thought that more attention needs to be paid to solving nuclear fission power’s most politically unpopular issues, to make acceptance of future nuclear power plants more politically palatable, and therefore, more likely. – Robert A. Hello Robert, You raise some important points that are definitely worth understanding. And this is a topic that I have directly experienced as I was living and working in Tokyo at the time of the Great East Japan Earthquake in March 2011. Due to Tokyo’s proximity to Fukushima, we were within range of radioactive clouds in the aftermath. I had to send my family south to live in Fukuoka while I remained in Tokyo to work through the crisis with my team. What happened in Fukushima was both a failure of TEPCO’s management and the engineering design of the reactor facilities which made the backup power supply and cooling systems vulnerable to the tsunami. The actual reactors had no problem withstanding the incredible seismic activity. It was the backup systems that proved to be the weakest point. And while three TEPCO employees died in Fukushima, the cause was from the earthquake and tsunami, not the nuclear accident. Despite the age of the reactors in Fukushima, the meltdowns were completely avoidable. What happened is so heartbreaking and extremely frustrating as it was so unnecessary. Your example of France as best in class is representative of how strong energy policy can prove to be both safe and resilient. France stands in stark contrast to countries like Germany which has shut down its nuclear power generation, found itself short on energy production, and reverted to electricity production by coal… the exact opposite of clean energy. Or the U.K. which cuts down old-growth trees in Europe, processes them into wood pellets, and uses them to generate about 7% of the country’s energy. France’s nuclear fission power plant infrastructure is not only a best-in-class example of a resilient clean energy policy (no carbon emissions), but it also demonstrates that nuclear waste can be safely managed and even recycled. I wouldn’t expect that any progress would be made in the U.S. regarding the storage of spent nuclear fuel until there is a major shift in energy policy that supports the expansion of nuclear power in the U.S. Today, almost all nuclear waste in the U.S. is stored safely on-site at nuclear reactors in dry casks made of steel and concrete. There is a solution for long-term nuclear waste storage at the Yucca Mountain nuclear waste repository in southern Nevada. At least $9 billion has been spent already on the Yucca Mountain project, which can store 70,000 metric tons of nuclear waste. To your point, this has been so highly politicized. Not only does the state of Nevada not want the storage facility, but other states don’t want nuclear waste transported across their borders to get to the Nevada location. The most ironic part about Yucca Mountain is that it neighbors the Nevada nuclear test sites used by the U.S. government which executed 904 atomic bomb tests between 1945 and 1992. Also worth noting is that even if Yucca Mountain were to be at capacity with nuclear waste storage, the radiation from the facility would be about half as much radiation compared to what residents of the state of Colorado receive naturally due to the altitude of the state. Not to mention that no one lives near the storage facility, which is the opposite of nuclear power plants which tend to be close to large populations. Hopefully, the shift in policy support for nuclear fission, as evidenced by the approvals to recommission nuclear reactors in the U.S., will likely lead to more widespread support for the nuclear energy industry which will open a rational dialog for the storage of nuclear waste. I am certain that the regulatory environment for nuclear energy will improve over the next four years in the second Trump administration, as will the support for carbon emission-free energy in the form of nuclear fission and fusion. Aside from storage, some of the fourth-generation nuclear fission reactor designs can recycle spent fuel. Assuming that these new reactor designs are approved and commissioned, we will see a radical improvement in managing spent nuclear fuel. And nuclear fusion represents what I see as the perfect source of clean energy with little to no radioactive waste. We’re going to see some incredible developments in the next few years on both nuclear energy policy, as well as nuclear fission and fusion technology. We have reason to be very optimistic. The Cost to Recommission a Nuclear Reactor Hi Jeff, After reading the Bleeding Edge this week, I was left with a couple questions. Why does it cost more than a billion dollars to restart a nuclear power plant? And if 24M has indeed invented the perfect battery and they just haven't found a way to mass produce it, why not unleash AI on the problem and see if it can come up with a manufacturing process that we haven't thought about? – Jarod R. Hi Jarod, Your question is a very logical one. After all, if the current administration is really supportive of reducing carbon emissions, it shouldn’t require more than a billion dollars to restart a nuclear power plant. It’s an absurd amount of money. A large part of the problem is caused by overly burdensome regulations that have stifled the nuclear energy industry in the U.S. for decades due to anti-nuclear fanatics. It’s very easy to see when those regulations kicked in by looking at the chart below. 
Source: Energy Information Administration New nuclear power plant construction came to a screeching halt in the early 90’s. We’ve only recently seen some new nuclear reactors in 2016 with the Watts Bar Unit 2 in East Tennessee, and more recently in 2023 with the Vogtle Unit 3 in Georgia. But those two reactors are new units built on already permitted power plants. We haven’t seen a new siting in decades. It’s the overly burdensome regulations that drive the costs to restart a reactor to more than $1 billion. They require major upgrades to the reactors, extensive permitting, excessive studies, and a painful process that can take 5–10 years…. All in the name of “safety.” Of course, safety is critically important, and it can be achieved at a fraction of the cost, in a fraction of the time. The same is true for new reactors, regardless of third- or fourth-generation nuclear fission technology. Late last year, NuScale had to cancel its first small modular reactor (SMR) in Idaho because the cost of building and permitting the reactor had risen from $5.3 billion to $9.3 billion. The costs of being compliant with the regulations were a big part of that, the other was the impact of inflation in the last three years on the costs of materials and construction. Both causes are driven entirely by government policy. These kinds of costs required for restarting nuclear reactors, or building new ones will never get us to a carbon emission-free world capable of providing grid-scale clean electricity. The costs have to come down, which means that the U.S. needs a new regulatory framework for nuclear energy and responsible fiscal policy to get inflation under control and interest rates down (which is necessary to finance construction). As for your question about 24M and using AI to improve battery design and manufacturing, this is already happening. In fact, about a year ago there was a major breakthrough in novel material design when Google’s DeepMind division announced its Graphical Networks for Material Exploration (GNoME) generative AI. GNoME is like the materials equivalent of AlphaFold for proteins. GNoME discovered 2.2 million new crystals which DeepMind equates to about 800 years’ worth of knowledge. More useful is that around 380,000 of these new crystals are more stable, which makes them candidates for experimentation and potential commercialization. GNoME is directly applicable to the semiconductor industry, photovoltaic cells for solar panels, and of course, materials used for batteries. The more challenging and time-consuming task is to experiment with these new materials, choose the best of them, and then commercialize them. What works in a lab at a small scale isn’t always the technology that will work economically at a mass-production scale. And you’re right, the industry will ultimately need to develop new manufacturing techniques to help solve this problem. The trick is developing a manufacturing process that can produce products economically. The use of artificial intelligence is already helping to accelerate development. It’s not clear yet if 24M’s approach is the “right” one; but with GNoME and more broadly the use of neural network technology with materials and manufacturing technology, a breakthrough isn’t too far behind. Can Self-Driving Cars Be Hacked? Jeff, [I have a] question on self-driving vehicles: It's clear that self-driving vehicles are safer than those driven by humans. However, do you have concerns about the potential havoc that may be wreaked upon society by bad folks hacking into a self-driving system? We know that many of our utility systems are only marginally secure, at best, and I wonder whether self-driving systems are any better off. – Gary B. Hi Gary, The reality is much worse. Any electronic device with some form of connection to the internet can be hacked. And this includes all modern cars, not just electric vehicles. Modern cars all have a wireless connection, typically with 4G wireless technology. They basically have a tiny phone embedded in the car and GPS that keeps them connected to emergency services and also supports the navigation system. I remember back in 2015 when some hackers demonstrated taking remote control over a Jeep Cherokee. It was done intentionally to prove a point, but it was real. The hackers were able to take control of the entertainment system, the steering, and the braking. They basically had complete control over the car and the driver couldn’t do a thing. This is a cybersecurity problem to solve, which is all about reducing the possible attack surface for any electronic device. Automotive manufacturers have typically been very poor at addressing these vulnerabilities. Technology companies are far better at mitigating and reducing the risk. Tesla, one of the most bleeding-edge technology companies in history, and a company that I have long maintained is one of the world’s most important and successful artificial intelligence companies (not a traditional car manufacturer), is going to be far better equipped to design a technology architecture to protect against a hack than a company like General Motors or Ford. Said more broadly, companies that are adopting modern cybersecurity technology as it applies to any kind of vehicle will be more resilient, and those companies that don’t will be most at risk. What's Going on With Graphene? I am reading a great deal about how graphene is going to revolutionize so many industries, I wonder what Jeff thinks. Also, I just read about a private company, Frontieres that is going to revolutionize “the coal industry. Again I would love to hear what he thinks. Thank you for all you do Jeff! – Allen L. Hello Allen, Thanks for writing in. Graphene has come up in recent AMAs as well… It’s an incredible material 200 times stronger than steel and five times lighter than aluminum. It can also handle heat up to 1,300 degrees Fahrenheit. Due to its high conductivity, a lot of its allure lies in its potential as an alternative to less conductive materials in industries where efficient heat management is essential. It comes up in conversation a lot when we talk about heat management in semiconductors. However, graphene production as of now is just too expensive and too energy-intensive to apply it widely in the industries where we’d hypothetically see the most use of it, among other issues. I previously wrote… Graphene can cost as much as $200,000 per ton. The industry is, of course, working towards a breakthrough that could radically reduce the costs of producing graphene. But until that happens, it is very difficult to scale production for commercial manufacturing. And not to get too technical, but one of the reasons that graphene is so good at conducting electricity is because it doesn’t have an energy band gap. There is an energy band gap in silicon which is the difference between the valence band (which is filled with electrons) and the conduction band (which is an empty state). And without a band gap – as is the case of graphene’s natural state – graphene can’t stop conducting electricity. This makes it hard to use for applications like transistors and thus semiconductors. There are some solutions to this problem, but they have not been commercialized. And it would make the manufacturing process more complex, which means even more expensive. It’s an incredible material, no doubt. I’m still very excited about future applications. But as of now, the economics just don’t make a lot of sense. However, I’m always keeping an eye on the materials science industry as any breakthroughs directly impact a wide range of industries we follow here at Brownstone Research. As for Frontieras, this is a deeply concerning company. They are currently attempting to raise $5 million in a Reg CF crowdfunding deal, so we have the company’s public filings for additional insight. The company in its current form was only organized in 2021 and has zero revenues in 2023 and a net loss of $562,095. The company claims to have revolutionary technology for fractionating coal, basically breaking up the coal into various gases, liquids, and chemicals. Let’s put that aside though, because the warning signs are all in the Reg CF offering. Check this out, in its Form C filing, which you can find here, is the following gem: The Company has ascribed no pre-Offering valuation to the Company; the Securities are priced arbitrarily, and the Company makes no representations as to the reasonableness of the ascribed price. That makes me want to throw up. They just made it up according to their own filing. But it gets better. Here’s a comment from the company’s CEO on the website in the Q&A section: Early conservative valuation is $1.56B reflected in the share price. This was done utilizing a "discounted cash-flow" model. This price offers significant opportunity for early shareholders. – Frontieras CEO, Matthew McKean To put this in context, Frontieras is selling shares to the public using crowdfunding regulations at a $1.56 billion valuation for a company that has no free cash flows, no revenue, no proven technology, and no plants. This makes Starfighters Space’s valuation look like a bargain. We don’t need to look any further. This valuation is absurd. They are selling 0.32% of the company for $5 million. Ridiculous. This is nothing more than taking advantage of crowdfunding regulations and investors that do not understand the valuation, or even know enough to ask. This is nothing more than an attempt to fleece investors. A more reasonable valuation would be less than $20 million for a company at this stage. This offering feels deeply fraudulent to me, and even if it is not, I believe investors have no chance of winning if their starting point is a $1.56 billion valuation. I recommend steering clear. Thank you to everyone who wrote in for this week’s AMA. My team and I love hearing your feedback and your questions. If you have anything you’d like to send in, you can reach us right here. Have a great weekend. Jeff | 
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