Hy-Drive Announces Annual Financial Results for 2009
MISSISSAUGA, ON, April 29 /CNW/ - Hy-Drive Technologies Ltd. today announced its financial results for the year and three-month period ended December 31, 2009. This release also covers Financial Statements for the Company and an accompanying MD&A released at www.sedar.com.
Highlights for the year and three-month period ended December 31, 2009:
The following outlines the key events during the year and three-month period ended December 31, 2009 and up to April 29, 2010, the date of the MD&A, in the development of the Company, the HGS(R) product, the mining product and the Class 8 truck market.
The following table sets out selected financial data for the year and three months ended December 31, 2009 and 2008:
-------------------------------------------------------------------------
Selected Financial Twelve months ending Three months ending
Data ----------------------------------------------------
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
Net loss (3,421,176) (5,868,405) (332,094) (52,141)
----------------------------------------------------
Loss per share (0.06) (0.10) (0.01) (0.00)
----------------------------------------------------
Total assets 11,096,270 14,629,376
--------------------------
Total liabilities 1,243,992 1,476,170
--------------------------
Total cash and
equivalents 54,043 2,193,612
Total short-term
investments 4,214,222 7,041,712
--------------------------
Cash & short-term
investments 4,268,265 9,235,324
-------------------------------------------------------------------------
The following outlines the key events during the year ended December 31, 2009 and up to the date of this MD&A in the development of the Company and the commercialization of the HGS product for the Class 8 truck and mining markets:
- On March 25, 2010 the Company announced the results of a review and
validation by Professional Service Industries, Inc. ("PSI"), a large
engineering consultancy, of an SAE/TMC Type IV Test conducted by the
Company in cooperation with Ontario Waste Management ("OWM"). The
Type IV Test followed an extended protocol to measure fuel
consumption on a commercial route greater than 320 km (200 miles).
The test, involving six (6) trucks, showed average fuel reduction of
11.9% in over 100,000 kilometres.
- PSI also validated results of SAE Snap Acceleration Tests indicated
an average of 45% reductions in opacity. Opacity is an indicator of
the particulates produced by the engine, which are considered
harmful.
- Following the successful completion of the extended SAE/TMC Type IV
Test Hy-Drive secured an order for the rental of eighteen (18) units
on a yearly rental basis from OWM. The installation of the HGS units
is being completed in April 2010.
- On March 16, 2010 the Board of Directors announced a management
change disclosing that Hugo Sørensen, President & CEO had elected to
retire effective June 1, 2010. Fred Florence, CA, VP & CFO was
appointed Chief Operating Officer. Additionally, the Chairman, Dan
Doucette, took on the role of Executive Chairman and announced the
commencement of a search process for a candidate for CEO. Mr.
Sørensen will remain in a consulting capacity for the balance of
2010.
- On March 8, 2010 the Company announced that it had engaged CapStone
Investments ("CapStone"), a U.S. based investment bank, to assist the
Company with a "best efforts" private placement financing. The
decision to proceed with an equity offering remains subject to, among
other things, the parties agreeing on a satisfactory term of the
offering (including size and pricing), completion of satisfactory due
diligence as well as receipt of all necessary approvals, including
that of the TSX Venture Exchange. Any capital raised is intended to
be used by the Company for working capital for the marketing program,
production of HGS units, production of the mining HGS and capital
expenditure required to complete the development of IP for engine
platforms other than Caterpillar. CapStone assisted the Company with
a successful private placement in 2006-07. In April 2010, CapStone
was issued 100,000 purchase warrants exercisable for common shares at
a price of $0.494 per share in consideration of financial advisory
services valued at USD$35,000.
- In 2010 Hy-Drive re-engaged in the Australian market; CAT engines
have a significant market share in Australia and diesel prices are
much higher than in North America. The Company shipped ten (10) HGS
units to its Australian sales agent, Sparta Capital Ltd., for sales
trials commencing in April 2010.
- In November 2009, the Company entered into an agreement with BKV,
Inc. ("BKV"), an integrated marketing and communications company with
specific, relevant experience in direct and interactive
business-to-business marketing in the truck aftermarket segment. BKV
was engaged to implement a marketing and sales plan for the HGS
system to assist Hy-Drive to achieve the commercialization of the HGS
in North America. BKV's mandate includes market research, marketing
materials, direct mail campaigns, show management, booth design, and
website re-development.
- In conjunction with the engagement of BKV, the Company launched its
HGS into the marketplace at the Ontario Trucking Association Annual
Convention. The company is offering qualified prospective purchasers
the opportunity to test HGS units on no-risk, 90-day trials. To date,
seven fleet operators are trialing the HGS on 18 trucks with
Caterpillar engines.
- On November 6, 2009 the Company entered into an agreement (the
"Agreement") with an arm's length third party to acquire intellectual
property assets (the "IP Asset") that would add to the performance of
the HGS. The Agreement included future development of enhancements of
the IP Asset (the "Modules") for the HGS. (See Note 13 to the
Consolidated Financial Statements, the Press Release issued
November 17, 2009 and the Capital Commitments Section in this MD&A
for additional details).
- The Agreement allows the use of the IP Asset for all engine sizes and
opens other potential markets for the HGS. In particular, management
believes the HGS is a viable economic alternative to other emissions
reduction technologies currently on offer to fleets with Class 4 to 7
size trucks because it offers fuel consumption reductions not
available from alternative emissions reduction technologies.
- In September 2009 the Company received $591,503 from the Government
of Ontario relating to 2005 to 2007 refundable credits arising from
an SRED audit. The Company has applied for SRED and OITC for 2008 and
will do so for 2009. Hy-Drive has $2.7 million dollars of approved
SRED Credits for reduction of future tax liabilities.
- In August 2009, the Company announced receipt of an order for 100 HGS
units from Mining Technologies International, Inc. ("MTI"). The order
was valued at $1,200,000 and the Company received a payment in
advance of shipment for $200,000. Timing for fulfillment of the order
was delayed pending confirmation of MTI's readiness to incorporate
the HGS into their OEM equipment. The Company's engineering
department worked closely with its counterparts at MTI to finalize
the design for a new HGS for mining application, which was signed off
in early 2010. Hy-Drive has started to build a modified Beta version
of the mining HGS for quality testing purposes. Once testing is
complete, the order will be fulfilled with the new design. The HGS
provides significant reductions in particulate emissions, as
confirmed in the PSI validated tests.
- In July 2009, Hy-Drive completed a third-party validation test of the
HGS. The Company engaged Professional Services Industries, Inc.
(PSI), who followed the industry standard Joint SAE/TMC Fuel
Consumption Test Procedure, Type II, SAE J1321 (Oct 86) to validate
and certify results. Tests were conducted over three days on Class 8
highway tractors with Caterpillar engines equipped with HGS units.
PSI's testing concluded that the use of the HGS resulted in an
overall average reduction in fuel consumption of 10.47% and reduced
opacity by 39.53%. A copy of PSI's report is available from the
Company's website (www.hy-drive.com).
- The Company's program of cash conservation was carried forward into
2009. Total cash and short-term investments used in operating
activities was $(60,657) and $3,347,244 for the three-months and
twelve-months ended December 31, 2009 (2008 - $59,438 and
$4,467,606). Positive cash flow in the final quarter resulted from
the receipt of refundable tax credits for SRED from Ontario.
- Net loss for the three-months and twelve-months ended December 31,
2009 was $332,094 and $3,421,176 ($0.01 and $0.06 per share
respectively) (2008 - $52,141 and $5,868,405 ($0.0 and $0.10 per
share respectively)).
- The Company reports cash, cash equivalents and short-term investments
of $4,268,265 as at December 31, 2009, compared to $9,235,324 as at
December 31, 2008; a reduction of $4,967,059 in the twelve-months.
- The Company received notice of an action brought against it by a
company with a foreign distribution agreement for the HGS. The
Company and its counsel believe the action is without merit. Hy-Drive
filed a defence in the action, the plaintiff posted security and the
matter is proceeding in the discovery stage.
- Management recognizes that the economic downturn presents risks to
the trucking industry. However, management believes that its product
will provide sufficient economic benefit to prospective trucking
customers for them to purchase the HGS. Industry statistics indicated
that sales of Class 8 trucks continued to decline in 2009 and early
2010. This represents an enhanced opportunity for Hy-Drive because
the HGS unit is most effective on engines built before 2007, which
are not being replaced at prior rates.
- Management recognizes the risk the current economic climate presents
to the Company if prospective purchasers of our HGS product are not
able to finance the acquisition of product in spite of the value
proposition that it represents.
About Hy-Drive
Hy-Drive is a technology firm that has developed a proprietary, patented hydrogen generating system. Hy-Drive's Hydrogen Generating System ("HGS(TM)") generates and injects hydrogen gas into a regular internal combustion engine, enhancing the combustion process by allowing fuel to burn more efficiently and completely. For more information, please visit www.hy-drive.com.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with the Company's business, and the economic environment in which the business operates. Forward-looking statements contained in this MD&A that are not statements of historical fact may be deemed to be forward-looking statements including but not limited to, statements about future development of Hy-Drive's products, commercial production in 2010, future working capital requirements, and validation of Hy-Drive's products, and can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", "thinks", or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved" and similar expressions to the extent that they relate to the Company or its management. These forward-looking statements are not historical facts, but reflect the Company's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed in the section "Risks and Uncertainties" below.
Although Hy-Drive has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Hy-Drive does not undertake to update any forward-looking information that is incorporated by reference herein, except in accordance with applicable securities laws.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
%SEDAR: 00016984E
For further information: Fred M. Florence, COO & CFO, Hy-Drive Technologies Ltd., Tel: (905) 542-3024 ext. 257, [email protected]
Share this article