Hy-Drive Announces Financial Results for 2nd Quarter 2010

MISSISSAUGA, ON, Aug. 13 /CNW/ - Hy-Drive Technologies Ltd. today announced its financial results for the three-months and six months period ended June 30, 2010. This release also covers Financial Statements for the Company and an accompanying MD&A released at www.sedar.com .

Highlights for the three-months and six-months period ended June 30, 2010:

The following outlines the key events during the three-months and six-months period ended June 30, 2010 and up to August 12, 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 summarizes the Company's operating results for the three-months and six-months ended June 30, 2010:

    
    -------------------------------------------------------------------------
                                  Three Months ended        Six Months ended
                                        June 30                  June 30
                                      (unaudited)              (unaudited)
    -------------------------------------------------------------------------
                                    2010        2009        2010        2009
                                       $           $           $           $
    -------------------------------------------------------------------------
    General and administration   599,169     504,691   1,041,865     879,813
    -------------------------------------------------------------------------
    Sales and marketing          229,547       1,200     432,300       2,291
    -------------------------------------------------------------------------
    Research and development     210,899     297,811     650,872     607,078
    -------------------------------------------------------------------------
    Inventory write-off                -     163,776           -     202,222
    -------------------------------------------------------------------------
    Warranty costs                     -      66,218     (21,764)     66,218
    -------------------------------------------------------------------------
    Stock-based compensation       1,797      44,796       4,683      83,979
    -------------------------------------------------------------------------
    Amortization - property
     and equipment                27,551      63,601      55,606     128,149
    -------------------------------------------------------------------------
    Amortization - development
     costs                       239,585           -     482,145           -
    -------------------------------------------------------------------------
    Amortization -
     intellectual property        41,412      37,802      82,010      74,792
    -------------------------------------------------------------------------
    Total Expenses             1,349,960   1,179,895   2,727,717   2,044,542
    -------------------------------------------------------------------------
    Foreign exchange gain or
     (loss)                       12,225      (4,549)      5,022     (24,930)
    -------------------------------------------------------------------------
    Interest and other income      4,126      34,198       8,950      45,733
    -------------------------------------------------------------------------
    Net gain or loss for the
     period                   (1,333,609) (1,150,246) (2,713,745) (2,023,739)
    -------------------------------------------------------------------------
    Loss per share                 (0.02)      (0.02)      (0.04)      (0.03)
    -------------------------------------------------------------------------


    -   During the quarter and continuing in July 2010, Hy-Drive continued to
        execute its marketing plan. Three direct marketing mail packages were
        sent to approximately 1,500 fleets of varying sizes. Research showed
        those fleets own Class 8 trucks with Caterpillar engines of the type
        on which the HGS was third party validated. The mailers covered
        significant markets in Canada and the USA. Follow-up calls and
        referrals to the Company's sales agency, IntraLink Associates Ltd.,
        continued to produce leads for trials. Hy-Drive is offering 90-day
        risk free trials to prospective purchasers of its HGS to allow them
        to satisfy themselves with respect to Hy-Drive's third party
        validated reduction in fuel consumption and opacity.

    -   During the quarter, six additional fleets signed up for trials
        ranging from one to five HGS units. Subsequent to the quarter end
        four fleets agreed to commence trials with installation dates being
        scheduled for July and August. Trials are being monitored on a
        regular basis to ensure ongoing efficacy of the HGS units.

    -   Hy-Drive has targeted high profile fleets known to possess CAT
        engines in its "Bell Weather Fleet" initiative. Included in the trial
        fleets is one such fleet with over 300 CAT engines compatible with
        the HGS. Trials on that fleet commenced in June 2010.

    -   Hy-Drive's Australian sales agent, Sparta Capital Ltd. ("Sparta")
        started a sales trial and a marketing program to introduce the HGS to
        the Australian market has been finalized. Management thinks Australia
        represents an excellent market for its initial HGS product because of
        higher diesel costs and significant numbers of CAT engines in use in
        Class 8 vehicles.

    -   In May 2009 Hy-Drive engaged Olson-Ecologic Engine Testing
        Laboratories, LLC, Fullerton, California ("Olson") to conduct certain
        testing for the Company. The testing was to demonstrate that a 2004
        Caterpillar C15 engine modified by the use of the HGS met baseline
        emissions for that engine when measured by the Hot-Start EPA
        Transient Test Procedure (FTP). A Final Emissions Report was received
        from Olson in November 2009. Olson concluded that the engine
        emissions, with the HGS, were consistent with the baseline tests. On
        that basis they also concluded that the California Air Resources
        Board ("CARB") should make a finding that the Hy-Drive HGS system
        does not cause an emissions increase and, therefore, would qualify
        for the exemption under the Executive Order provisions of CARB. Olson
        recommended that Hy-Drive apply to CARB for an Executive Order. Hy-
        Drive deferred making application for the Executive Order pending its
        application for EPA verification of the HGS. Qualification for the
        CARB Executive Order means that the HGS is not a "defeat device" as
        defined in the Clean Air Act (40 CFR Part 86, Subpart A 86.004-2
        Definitions) in that it does not bypass, defeat or render inoperative
        the engine's emissions control system thereby making emissions worse
        than approved for the engine type tested.

    -   In August 2009, the Company announced receipt of an order for 100 HGS
        units from Mining Technologies International, Inc. ("MTI") valued at
        $1,200,000. MTI is an OEM manufacturer of underground mining
        equipment with plans to integrate the HGS into several of its models
        and to market it as an aftermarket retrofit for underground mine
        equipment. The initial order called for immediate delivery of 33 HGS
        units to be followed by a newly designed HGS for mining applications.
        Subsequently, the Company agreed with MTI to delay delivery of the
        existing design and to design a more compact HGS to meet MTI's
        requirements. Hy-Drive worked with MTI's engineers on that new
        configuration. In recognition of the change in the order, MTI paid
        Hy-Drive a deposit of $200,000 in the final quarter of 2009. The
        final design was approved in early 2010 and in July 2010, Hy-Drive
        started building ten Beta models of the mining HGS for qualification
        testing. Once testing is complete, Hy-Drive will build the balance of
        the order. Testing is expected to be completed by approximately
        December 2010 at which time the purchase order can be fulfilled. Hy-
        Drive and MTI believe the HGS provides significant reductions in
        particulate emissions, as confirmed in the PSI validated tests, which
        could improve air quality and reduce maintenance costs in underground
        mines. In order to be used underground the final product must receive
        approval from the relevant government agency.

    -   On June 29, 2010, Hy-Drive completed the third and final tranche of
        its previously announced "best efforts" private placement (the
        "Private Placement") bringing the total gross proceeds raised to
        $4,272,850 of a maximum of $5 million of Units. Proceeds are to be
        used by the Company for working capital, marketing and production of
        HGS units, production of the mining HGS and for capital expenditures
        required to complete the development of IP for engine platforms other
        than Caterpillar. The Company has issued a total of 14,242,830 Units
        pursuant to the Private Placement at a price of Cdn$0.30 per Unit.
        Each Unit was comprised of one common share (a "Share") of the
        Company and one-half of one warrant (a "Warrant"), with each whole
        Warrant exercisable for one Share of the Company at an exercise price
        of Cdn$0.46 per share for a period of five years. CapStone
        Investments, non-Canadian placement agent for the Private Placement,
        is receiving a cash fee of $193,496 and 794,989 broker warrants, each
        exercisable for one Share at price of Cdn$0.46 per share for a period
        of two years. All securities issued or issuable pursuant to the
        Private Placement are subject to a hold period expiring 120 days
        after closing, in accordance with the policies of the TSX Venture
        Exchange and applicable securities laws.

    -   On July 15, 2010, the Company received notice that the TSX Venture
        Exchange had accepted the filing documentation with respect to the
        Brokered Private Placement referred to above.

    -   Hy-Drive completed installation of the eighteen units previously
        announced as rented to Ontario Waste Management ("OWM"). Hy-Drive is
        renting the HGS units to OWM for a twelve month period. The Company
        is also renting and wrapping with advertising eighteen OWM trailers
        to increase the visibility of the HGS units on the highways in
        Ontario, Canada. The rental revenue to Hy-Drive for the term of the
        agreement will be offset entirely by the rental cost of the trailers.
        As a result, net rental revenue has not been reflected by Hy-Drive.

    -   On June 9, 2010, the Company announced that the Board of Directors
        re-elected Dan Doucette as Executive Chairperson of the Board. Dr.
        Richard Marceau and Fred Florence joined the Board of Directors on
        the retirement from the board of David Merrion and Hugo Sorensen. The
        latter two former Board members are continuing to provide assistance
        to Hy-Drive in consulting capacities.

    -   On June 9, 2010, the Board of Directors also announced the issuance
        of 121,875 options, 87,500 to Directors and 34,375 to an Officer of
        the Company. All options have an exercise price of $1.00, vest
        quarterly in 25% increments over one year and expire June 8, 2020.

    -   As previously announced, Mr. Hugo Sorensen, President and CEO,
        stepped down from his position and the Board of Directors effective
        June 1, 2010. The Executive Chairman, Mr. Dan Doucette, announced the
        commencement of a search process for a CEO, which is nearing its
        conclusion.

    -   The Company's program of cash conservation continues in 2010. Total
        cash and short-term investments used in operating activities was
        $1,162,556 and $2,445,086 for the three-months and six-months ended
        June 30, 2010 (2009 - $1,357,077 and $2,057,669). The increased use
        of cash chiefly reflects the increase in marketing costs and
        inventory production in 2010 resulting from the market introduction
        of the HGS product. Other operating cash usage is being largely held
        in line with 2009 levels.

    -   Net loss for the three-months and six-months ended June 30, 2010 was
        $1,333,609 and $2,713,745 (net losses of $0.02 and $.04 per share
        respectively) (Net losses in 2009 were $1,150,246 and $2,023,739 (net
        losses of $0.02 and .03 per share respectively)).

    -   The Company reports cash, cash equivalents and short-term investments
        of $5,782,194 as at June 30, 2010, compared to $4,268,265 as at
        December 31, 2009; an increase of $1,513,929 in the six-months as a
        result of the successful Private Placement.

    -   Hy-Drive continues to await the finalization of bankruptcy
        proceedings to receive funds arising from a Loan Receivable and
        accrued interest of $513,333 due from an arms-length party that
        declared bankruptcy. The Bankruptcy Estate Trustee advised the
        Company that realizations could result in full recovery of the Loan
        Receivable subject to Taxation of the Estate by the Saskatchewan
        Courts. Therefore, while Management believes there is a high
        likelihood of significant recovery, the Company did not include any
        recovery in the three-months ended June 30, 2010.
    

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 press release and 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

SOURCE HY-DRIVE TECHNOLOGIES LTD.

For further information: For further information: Fred M. Florence, COO & CFO, Hy-Drive Technologies Ltd., Tel: (905)542-3024 ext. 257, fflorence@hy-drive.com

Organization Profile

HY-DRIVE TECHNOLOGIES LTD.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890