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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
Technology
(HGS-TSXV)
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
CEOCFOinterviews.com
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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