Gediminas Jasionis

Hydrogen Horsepower

by Gediminas Jasionis February 8, 2008
HEC_hydrogen_engine_2.jpgWith its stock (HYEG) in free fall for much of the last year, can Hydrogen Engine Center turn things around?

Iowa-based Hydrogen Engine Center, Inc. (HEC), develops alternative fuel internal combustion engines and associated technologies for use in industry and power generation. The alternate fuels include propane, natural gas, ethanol, ammonia, and of course, hydrogen. The engines are sold under the brand name Oxx Power™.

On November 26, 2007, the company announced a new CEO, Don Vanderbrook, who stated in a letter to shareholders on February 4, "On the business end of the operation, I will lead the organization as President and CEO, and I accept this challenge with deep enthusiasm." He concluded this SEC-filed letter with a cautionary note: "This is not a short term or shooting star type of market or investment. It is for those who have a long-term time horizon with regard to their investments and the vision and the patience to watch Hydrogen Engine Center achieve great things in a turbulent and unpredictable global economy."

Indeed, the company will likely be bleeding money for the foreseeable future, with sales of just $86,047 hardly denting the operating expenses of almost $1.3 million for the three month quarter ending September 30, 2007. Furthermore, sales were down almost 32 percent compared to the same quarter in 2006.

This has resulted in belt-tightening, and operational expenses have also dropped compared to 2006. The company's SEC filing explains: "Because we have not to date received the level of financing we anticipated, we have initiated action to streamline our operations while continuing our mission and commitment to developing and delivering carbon-free energy solutions." For a company in its situation, HEC's interest payments are relatively modest, under $47 thousand for the three months that ended September 30, 2007. The company wants more financing - it just has not been able to get it.

On September 30, 2007, according to its SEC filings, the company had $1.5 million in cash on hand, with total assets of $7.5 million and liabilities of $3 million, plus the shareholders' equity of about $4.6 million. Sometimes companies try to pad out their assets, like with questionable value patents that they allege are worth millions of dollars, but HEC plays no such games with their balance sheet.

HYEG.JPGHEC's stock price for the last 12 months is not a pretty picture. Can you imagine if you bought in for $3 a share a year ago, and now hold shares worth just $0.45 each? It just gets uglier if you look further back in time. At one point in 2006, the stock peaked over $20 a share.

It's a pity, since here is a company with several actual products, which is more than many other companies can say. Yet, their revenues are not nearly enough to support the company.

On January 25, 2007, Hydrogen Engine Center announced the passing of Dr. Tapan K. Bose, who was President of Hydrogen Engine Centre Canada. Ted Hollinger, founder of HEC, said, "We are profoundly affected by the loss of our friend and colleague, Tapan." Coincidence or not, HEC's stock subsequently fell from $0.55 to $0.40 over the days following the announcement.

The company's website is www.hydrogenenginecenter.com

Comments 1

1. Guest
November 06, 2008, 06:13AM

Quotes i am student & i am interst in invesment i would like to join your organisation.

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