Interview with: Tom Brown, President and CEO - featuring: their hydrogen-based energy and power technology.

Hy-Drive Technologies LTD (HGS-TSXV)

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In today’s economic climate Hy-Drive Technologies is offering an answer to escalating fuel costs and reduced emissions for truckers with their patented after market Hydrogen Generating System


Hy-Drive Technologies LTD

4-6705 Millcreek Drive
Mississauga, Ontario Canada L5N 5M4
Phone: 905-542-3024

Tom Brown
President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
August 17, 2006

BIO: Tom Brown, President, Chief Executive Officer and Director
Mr. Tom Brown of Calgary, Alberta, has extensive management experience in transitional and startup companies and has led numerous companies, including his own ventures. Mr. Brown was the founder and President of BRAC Management Advisors Ltd. ("BRAC"), a Consulting and Accounting firm for 12 years and has held several officer and director portfolios with both private and public companies. Mr. Brown is currently the President and CEO of Hy-Drive and has been in this position since 2002. He has lead the company through its’ formative stages, to become an internationally known Hydrogen based company which is located in Mississauga, Ontario.

Company Profile: Hy-Drive Technologies Ltd. is a hydrogen-based energy and power technology firm that has developed a patented Hydrogen Generating System (HGS). The HGS generates, on-demand, and injects small amounts of hydrogen gas into the combustion chamber of a regular internal combustion engine creating an enriched air mixture and a more complete and faster burn of the air-fuel mixture. The result is reduced emissions and improved fuel efficiency and torque.

The Hy-Drive system will give you increased performance and will result in an increase in productivity.

Increased productivity will be achieved with reduced emissions, extended engine life, increased torque/horsepower and fuel savings, all of which, provide you with an engine that will run more efficiently, with improved cycle times and less carbon build-up.

Based on testing trials to date, the HGS has shown performance enhancements on a wide variety of internal combustion engines, depending on the engine type, including:

  • 9% to 30% fuel savings;
  • 2% to 6% horsepower improvement;
  • up to 98% reduction of carbon monoxide;
  • up to 45% reduction of nitrous oxide; and
  • up to 98% reduction of particulate matter.

The initial application of Hy-Drive’s technologies is its proprietary "on-board" hydrogen and oxygen gas generation and injection system for internal combustion engines, the "Hydrogen Generating System" or "HGS". The initial target markets for Hy-Drive are the existing commercial diesel-powered trucks and buses in the "after-market".

CEOCFO: Mr. Brown, what was your vision when you came to Hy-Drive Technologies in 2002 and where are you today?
Mr. Brown: “What my initial vision was is that I knew that the injection of hydrogen into the internal combustion engine would do wonderful things. First, it would reduce fuel consumption and secondly would reduce emissions. Therefore, the object when I got involved in 2002 was basically to get a commercial product that could make an impact both environmentally and for energy conservation around the world and it took us until February of this year (2006), to get there.”

CEOCFO: Tell us about your product and where it is being used.
Mr. Brown: “We have a Hydrogen Generating System (HGS), which through electrolysis the electrical current from the battery or alternator turns distilled water into hydrogen oxygen. It is an add-on aftermarket product and we are targeting the trucking industry. When you inject hydrogen into an internal combustion engine, what happens is that you are maximizing the efficiency of the diesel fuel, which provides fuel reduction. In addition, because you are maximizing the use of the fuel, you are also getting less emission; you are burning up most of the carbon in the cylinder. The customer will also notice more power in the peddle of a truck and finally because it is clean burning, the cylinders start to clean out, you will also get less maintenance, oil changes and service. Therefore, it basically has an application for every internal combustion vehicle using any type of fossil fuel around the world.”

CEOCFO: Is using hydrogen in this manner something new, or is it your process for doing it that sets you apart?
Mr. Brown: “Everyone today is talking about hydrogen and hybrid vehicles; they are talking about the injection of hydrogen, whether it is fuel cell technology or our technology. Our process is the reverse of a fuel cell; we take electrical current off of the battery and alternator of a vehicle and create hydrogen. The fuel cells use stored hydrogen and create electricity. The way of the future is to conserve energy and one of those ways is to reduce the consumption of fossil fuels, so we think that with our unit, we can accomplish that.”

CEOCFO: You mentioned the trucking industry; is there a particular focus or market that you are targeting and how are you getting people to pay attention?
Mr. Brown: “We just launched our commercial product on February 7th of this year (2006), and sell our product through a company called, IntraLink Associates Ltd., which is a senior technical, direct sales force throughout North America, the majority of whom are in the United States. They have put us in touch with numerous trucking fleets, because they have relationships built up in the trucking industry. Hence, their client contacts are customers that tested our previous version before we went commercial and they are the people who are going to be purchasing our product. We have now started a PR, marketing campaign, brand awareness to let the media and general public know that our product is a market ready product for today and that it will get you significant emissions reductions, as well as significant fuel savings.”

CEOCFO: What is the competitive landscape like for similar products?
Mr. Brown: “I think everybody is trying to reduce emissions, which is mainly the driver for most of our competitors, but in some instances when you reduce emissions and you concentrate on that, you will lose efficiencies in power in the vehicle and fuel savings. However, ours is a solution that doesn’t cure one ill and effect two other ones. We get the benefits in all 4 areas, torque, emissions, fuel consumption and less maintenance, but there are other companies out there that are trying to do things with diesel fuel, engines and with fuel cells. We’ve adopted the philosophy of using today’s infrastructure, which is the internal combustion engine and today’s fueling stations which are the Chevrons (Chevron Corporation - NYSE: CVX ) of the world and the service centers, without having to create a new infrastructure such as hydrogen filling stations and electric vehicles.”

CEOCFO: So you are making it easier for people to use this technology.
Mr. Brown: “Absolutely!”

CEOCFO: How big a factor is cost and where can customers begin to see a return on their investment?
Mr. Brown: “The cost savings are the benefits in fuel reduction, for example, if a trucker normally uses $5,000.00 per month in fuel, which is on the low end of commercial trucking firm’s fuel costs, we get can get them a 10% savings of fuel savings. Sometimes, we can even get savings of as high as 30%, but if we can get them a 10% savings on $5,000.00; that would be $500.00 per month. In the United States, we could lease our product to them for about $340.00 per month, so the trucker would immediately put $160.00 per month in his pocket and get the benefits in emissions reduction, torque and maintenance all wrapped into one. If he were to buy the unit for cash, then it is probably about a year payback and it is less than a year if he uses a lot more fuel than $5,000.00 per month, or if he gets a greater percentage of fuel cost savings than 10%.”

CEOCFO: Given the way the price of fuel is going, $5,000.00 per month, may not be the low end.
Mr. Brown: “The price of fuel is going up every day, so what we are really selling is the benefits of the utilization of our product.”

CEOCFO: Are you targeting fleets or the individual owners?
Mr. Brown: “Our direct sales force, the Intralink team, has their relationship with fleets. Because fleets all have their own maintenance capabilities, our service and install staff can go to a fleet that has 1,000 trucks for example, and we can teach their maintenance people how to put the first units on and from then on it will only take their own personnel about an hour to install on each truck. After that, they can install the units themselves on their own trucks as they come in for service. In terms of the independent market, we don’t have the infrastructure to be able to target independents throughout North America, however we were at the Mid America Truck Show, in Louisville, Kentucky and we installed several units on independent truckers trucks at the show. We will eventually try to set-up install centers that will try to look after the independents, which will be widely scattered, across the United States and we will do what it takes to help them get a product as well.”

CEOCFO: Tell us about the financial picture of Hy-Drive today.
Mr. Brown: “This company has been in existence since 1996, and we’ve spent about $15 million Canadian getting to this stage, where we have a reliable product that can be easily manufactured. With that, we have 27 different patents worldwide on the processes within our technology and although it may seem to be very simple technology; to be able to create hydrogen onboard, on demand and make it effective for the engine, is very complex and complicated. Furthermore, it has taken 9 years to get to this stage.”

CEOCFO: What do you see happening over the next 2 to 4 years?
Mr. Brown: “Where we are going is that we are initially targeting the trucking industry; they are the high end user of fuel. We just signed an agreement with Mining Technologies International Inc., which has a huge implication for underground mining vehicles, because we significantly reduced the particular matter, the smoke coming out of the stack in underground mines. This is a critical component and therefore, the driver in the mining industry is emissions reduction and we can do that. The next step would be transit vehicles; we will need to reconfigure our unit a little bit, but that would be for vehicles such as city transit busses. Their requirement is to have less maintenance and emissions reduction. There is also a market for school busses and highway coaches. The automotive sector right now is being addressed by our automotive partner, Martinrea, here in Canada; they are a tier one supplier to the automotive sector.   Together, we are developing a prototype, which will be introduced to the automotive companies and it will be a smaller component, an application that will help the big companies with their SUVs and pick-ups, where the focus is reducing emissions and fuel consumption. There are also other applications such as railway, marine, stationary generators and our vision is that not only will we attack other verticals, but we will also do that internationally as well. We have started to make inroads through one of our agents in Australia, whereby they are starting to receive our product in Australia, which will be tested on about 25 different trucking fleets.”

CEOCFO: Do you have you manufacturing facilities or a plan in place for that?
Mr. Brown: “We do have a manufacturing facility in our building here in Mississauga, Ontario. It is limited in capacity, so we have started the process of looking for quotes from outsourced manufacturers who can manufacture them by the thousands rather than by the hundreds. That process is happening concurrent to us building the initial units.”

CEOCFO: Address potential investors; why should they be interested and what do they need to know about the company?
Mr. Brown: “I think really, the two areas that are of the utmost concern world wide are A) emissions, as you can understand with the EPA emission standards and California Air Resources Board and B) energy conservation, because at some point, not only is the fuel cost going to keep escalating, but at some point in the future, the amount of fuel is going to be constricted. Therefore, the demand is going to outstrip the supply and if we can be a part of conserving some of that fuel, we will have done our job in an environmentally friendly way. That is what I think investors are looking at as a solution for our fuel consumption and pricing and the environment today; I don’t think that there are any two sectors that you could be better positioned to be in than what we are in.”

CEOCFO: What do you see as the biggest challenges in getting your product out and how are you prepared?
Mr. Brown: “We’ve been working with these trucking firms for the last two years and we are prepared. We’ve got inventory that is being shipped out on a regular basis that are meeting our initial targets and we just need to be able to fill what I perceive in the future to be the pent up demand for this product, because of the concerns that it addresses such as environment, emissions and fuel savings. Therefore, meeting that demand is our next challenge and we’ve already started to address that.”

CEOCFO: Do you envision a time when your HGS System will be a standard on all trucks and then all vehicles?
Mr. Brown: “I would see that at some point that this hydrogen technology would be on every type of vehicle and I’m talking about cars, trucks, busses and railway locomotives and boats, because it does significant things. Therefore, at some point you will not be able to afford not to have one when you get the kind of results w have been getting.”

CEOCFO: Any final thoughts?
Mr. Brown: “I think that we are in a very exciting economic climate and with fuel prices rising the way they have, I think that certainly, it hasn’t hurt the positioning of our company. However, most importantly we have a solution today that really does things that can aid and assist in both the trucking industry becoming more profitable and eventually when it gets introduced into the automobile, it will help control emissions lower fuel costs there as well. Those are the things that are a concern around the world today, and we are ready to meet those concerns with our product.”


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“I think that we are in a very exciting economic climate and with fuel prices rising the way they have, I think that certainly, it hasn’t hurt the positioning of our company. However, most importantly we have a solution today that really does things that can aid and assist in both the trucking industry becoming more profitable and eventually when it gets introduced into the automobile, it will help control emissions lower fuel costs there as well. Those are the things that are a concern around the world today, and we are ready to meet those concerns with our product.” - Tom Brown does not purchase or make
recommendation on stocks based on the interviews published.