Hy-Drive Announces Financial Results for the Three and Six Month Period Ended June 30, 2009



    MISSISSAUGA, ON, Aug. 11 /CNW/ - Hy-Drive Technologies Ltd. today
announced its financial results for the three and six month period ended June
30, 2009. This release also covers Financial Statements for the Company and an
accompanying MD&A released at www.sedar.com .

    
    Highlights for the three month period ended June 30, 2009:

    Unaudited
    Interim Consolidated Balance Sheet as at June 30, 2009

    -------------------------------------------------------------------------
                                                     June 30,    December 31,
                                                        2009            2008
                                         Note     (unaudited)       (audited)
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Cash and cash equivalents                $      98,392   $   2,193,612
      Short-term investments                       5,902,859       7,041,712
      Inventory                                      762,043         544,449
      Prepaid expenses and other assets              130,156         155,977
    -------------------------------------------------------------------------
                                               $   6,893,450   $   9,935,750

    Property, plant and equipment              $     347,353   $     474,004
    Patents and trademarks                           819,411         870,052
    Development costs                      6       4,250,199       3,049,947
    Profit participation interest                    299,623         299,623
    -------------------------------------------------------------------------
                                               $  12,610,036   $  14,629,376
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued
       liabilities                             $   1,347,090   $   1,476,170
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Capital stock                          8   $  55,594,987   $  55,527,647
    Contributed surplus                    9       5,081,851       5,015,712
    Deficit                                      (49,413,892)    (47,390,153)
    -------------------------------------------------------------------------
                                               $  11,262,946   $  13,153,206
    -------------------------------------------------------------------------
                                               $  12,610,036   $  14,629,376
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The following outlines the key events during the three months ended June
30, 2009 and up to the date of this MD&A in the development of the Company,
the HGS(R) product and the Class 8 truck market:

    -  In July 2009, subsequent to the quarter end, Professional Services
       Industries, Inc. (PSI) completed additional third party validation
       testing of the HGS(R). PSI followed the Joint SAE/TMC Fuel Consumption
       Test Procedure, Type II, SAE J1321 (Oct 86) to validate and certify
       the results. The tests were conducted over three days with Class 8
       highway tractors with Caterpillar engines equipped with HGS(R) units.
       PSI's testing concluded that the use of the HGS(R) resulted in an
       overall reduction in fuel consumption of 10.47% and reduced opacity by
       39.5%.

    -  The Company continued to invest in internal testing the reliability
       and performance of its HGS(R) and component parts. That testing was
       both in-lab and on-road and related to Thermal Ranges (-40C to +50C),
       Vibration Testing, Salt-Spray Testing, Altitude Testing,
       Electromagnetic Interference and Conduction Testing (EMI/EMC), and
       Shock Testing. Reliability Demonstration Test results for the current
       HGS(R) design show it meets performance requirements for a minimum of
       9000 hours of operational hours.

    -  Hy-Drive commenced building HGS(R) units incorporating the latest
       refinements developed over the past year. These units are expected to
       be used for future on-road IPT testing and for sales.

    -  Hy-Drive's IPT Program continued in the quarter with several partners
       using the latest HGS(R) technology.

    -  The Company implemented a program of cash conservation in 2008 that is
       carried forward into 2009. Total cash and short-term investments used
       in operating activities was $1,357,077 and $2,057,669 for the three
       months and six months ended June 30, 2009 (2008 - $1,329,552 and
       $3,066,351).

    -  Net loss for the three months and six months ended June 30, 2009 was
       $1,150,246 and $2,023,739 ($0.02 and $0.03 per share respectively)
       (2008 - $1,763,440 and $3,293,764 ($0.03 and $0.05 per share
       respectively)).

    -  The Company reports cash, cash equivalents and short-term investments
       of $6,001,251 as at June 30, 2009, compared to $9,235,324 as at
       December 31, 2008; a reduction of $3,234,073 in the six months.

    -  The Company received notice of an action brought against it by a
       company with a foreign distribution agreement for the HGS(R). The
       Company and its counsel believe the action is without merit. The
       plaintiff was required to post costs prior to further action being
       taken. Hy-Drive has filed a defence in the action.

    -  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(R). Industry statistics indicate that
       sales of Class 8 trucks have severely declined in 2009. This
       represents an enhanced opportunity for Hy-Drive because our HGS(R)
       unit is most effective with older truck engines, 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(R) product are not
       able to finance the acquisition of our product in spite of the value
       proposition that it represents.

    -  Management believes that the growing importance of sustainability and
       carbon trading in North America, Europe and elsewhere, combined with
       the current business climate, will create an increase in interest in,
       and the value of, our HGS(R) product and the Company. Our HGS(R)
       should create sustainable carbon credits that our customers or the
       Company will be able to market and further increase the value
       proposition of purchasing our product.

    -  The Company settled a long-term purchase contract by a combination of
       payment and return of unutilized goods. Hy-Drive intents to continue
       its relationship with the supplier for use of the suppliers' product
       in conjunction with the HGS(R) unit on a referral fee basis, the
       details of which are still to be finalized.
    

    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 MD&A 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 2009, 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:

For further information: Hugo T. Sorensen, President & CEO, Hy-Drive
Technologies Ltd., Tel: (905) 542-3024, ext. 222, hsorensen@hy-drive.com; Fred
M. Florence, Vice President & CFO, Hy-Drive Technologies Ltd., Tel: (905)
542-3024 ext. 257, fflorence@hy-drive.com

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HY-DRIVE TECHNOLOGIES LTD.

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