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EXHIBIT (1)
5
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FOR IMMEDIATE RELEASE
HYDROGENICS REPORTS THIRD QUARTER RESULTS
TORONTO, NOVEMBER 29, 2000 - HYDROGENICS CORPORATION (TSE: HYG AND NASDAQ:
HYGS), a designer and manufacturer of proton exchange membrane (PEM) fuel cell
technology, today announced the highlights of its corporate activity and
financial results for the third quarter ended September 30, 2000.
FINANCIAL RESULTS
Hydrogenics recorded third quarter 2000 revenues of US$2.6 million, representing
a gain of US$2 million or a 350% increase over the corresponding US$0.6 million
in revenue recorded in the third quarter of 1999. Cost of revenue decreased to
72% in the quarter from 82% for the same period in 1999. Operating expenses
(excluding research and development) increased to US$0.5 million for the quarter
from US$0.2 million for the same period in 1999. Net loss for the period was
US$0.1 million or US$0.00 per share compared to a net loss of US$0.2 million or
(US$0.01) per share for the third quarter ended September 30, 1999.
For the nine months ended September 30, 2000, revenues were US$7 million, a 420%
increase from revenues of US$1.3 million for the same period in 1999. Cost of
revenue decreased to 68% compared to 78% for the same period in 1999. Operating
expenses (excluding research and development) increased to US$1.2 million in the
nine months ended September 30, 2000 from US$0.4 million for the same period in
1999. Net earnings for the nine months was US$.03 million or US$0.00 per share
compared with a net loss of US$.4 million or (US$0.02) per share for the same
period in 1999.
"We are delighted to report significant growth and progress in all facets of our
business during the first three quarters of 2000," said Pierre Rivard, President
and CEO. "These results reflect our commitment to be a leader in the development
and implementation of fuel cell technology. The fact that our business is
sustainable today sets us apart from our competitors, and we are proud of that."
CORPORATE ACTIVITIES
Activities in the third quarter focussed in large part on growing the Company's
control and test (FCATS(TM)) business and advancing its fuel cell technology.
Business highlights of the Third Quarter 2000 Include:
- Increased revenue by 350% in the quarter compared to the same period
last year
- Established Asia-Pacific sales office in Tokyo
- Achieved first Asian market sale
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- Delivered novel AC Impedance measuring device, capable of measuring the
internal resistance of fuel cell stacks non-intrusively and in
real-time. Hydrogenics is experiencing a strong market demand for this
product based on potential applications in embedded automotive systems.
- Delivered first 85kw PEM fuel cell system development station, targeted
at automotive and bus markets. Unit underwent functional testing and
commissioning in the latter part of the quarter, and is now fully
operational at a major client's site.
Fuel Cell Technology Advancements include:
- 3rd generation PEM fuel cell stack with large active area, targeted for
the Company's multi-kW power generator, was manufactured and tested in
the third quarter. It achieved over 300 hours of continuous operation
over the quarter and continues to undergo endurance testing.
Significant advances in power density, durability, and
manufacturability were achieved.
- 2nd generation regenerative electrolyser/fuel cell was assembled and
operated for about 700 hours in the electrolyser mode, experiencing
negligible degradation. Improvements of over 50% in electrolysis
efficiency were achieved through improved stack design, advanced
materials, and special proprietary coating, sealing and assembly
techniques. Performance, durability and scale-up activities are
ongoing.
- Compact PEM fuel cell stack, ambient pressure, targeted for HyTEF(TM)
(remote) applications, achieved over 500 hours of continuous operation,
and will be integrated with a controller for demonstration in the next
two quarters.
"One of our primary goals for 2000 was the development of our proprietary line
of FCATS(TM) systems," said Mr. Rivard. "Our third quarter results indicate that
we are achieving this goal with significant growth in revenue, the successful
introduction of new and innovative products and a broadening of our customer
base. The continued development of our FCATS(TM) product line is significant to
us as we believe that this technology will comprise an important component of
the fuel cell applications of tomorrow. We remain convinced that our expertise
in designing and manufacturing fuel cell control and test systems will provide
us both near and long term opportunities to penetrate the broad automotive,
stationary and portable power markets."
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SUBSEQUENT EVENTS
In November, Hydrogenics successfully raised US$84 million (before costs)
through its initial public offering in Canada and the United States. In addition
to general corporate purposes, the funds raised will be used toward R&D
resources, strategic acquisitions to acquire compatible and supportive
technologies and the purchase of equipment and leasehold improvements to
increase production capacity.
In the month of October, Hydrogenics added Delphi Automotive to its premier
customer base with initial sales of its proprietary FCATS(TM) product. This
achievement represents the first sales of this product to a major automotive
supplier and this is viewed as a positive indicator for the progress of the
technology in the automotive sector.
Also in October, the Company commenced its move to a new facility, increasing
floor space from 14000 ft(2) to 95000 ft(2). The added production, engineering
and administrative areas support current needs and will accommodate future
requirements.
OUTLOOK
"We are excited about what we have achieved and believe that Hydrogenics is well
positioned for continued growth on all fronts - revenue, technology, and
infrastructure," said Mr. Rivard. "Fuel cell technology is visibly gathering
momentum and Hydrogenics is confident in the role we will play as fuel cell
technology moves resolutely from the laboratory to daily use."
About Hydrogenics:
Hydrogenics develops PEM fuel cell systems for commercialization, including
related peripheral products and associated diagnostic and control equipment.
Hydrogenics has gained recognition from key customers for its solid hands-on
competency in fuel cell operating systems while establishing a sustainable
commercial business as a leading provider of systems for control and testing of
PEM fuel cells and stacks. The knowledge base that Hydrogenics has dedicated to
these fully automated, state-of-the-art fuel cell systems is being applied to
the development of fuel cell power generation with broad commercial
applications. Hydrogenics' strategy is to exploit energy markets across the
transportation, stationary and portable spectrum. Hydrogenics' head office is
located in Mississauga, Ontario.
Statements have been made in this press release which constitute
"forward-looking statements". These statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as
"will", "expects", "intends", "plans", "believes" or "potential", or the
negative of these terms or other comparable terminology. Hydrogenics undertakes
no obligations to revise or update any forward-looking statements in order to
reflect events or circumstances that may arise after the date of this release.
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BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
$ $
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 453,380 1,307,023
Accounts receivable and unbilled revenues 992,930 2,667,432
Grants receivable 142,530 116,275
Inventories of raw materials 117,210 902,084
Prepaid expenses 8,067 270,959
--------- ---------
1,714,117 5,263,773
DEFERRED COSTS -- 635,863
CAPITAL ASSETS 249,755 828,056
--------- ---------
1,963,872 6,727,692
--------- ---------
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 952,849 1,612,391
Income taxes payable 8,869 266,305
Dividends payable on preferred shares 51,964 208,990
Customer deposits -- 44,693
--------- ---------
1,013,682 2,132,379
LOAN PAYABLE -- 92,701
PREFERRED SHARES 912,423 4,005,179
--------- ---------
1,926,105 6,230,259
--------- ---------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 145,273 591,513
DEFICIT (107,506) (78,077)
CURRENCY TRANSLATION ADJUSTMENT -- (16,003)
--------- ---------
37,767 497,433
--------- ---------
1,963,872 6,727,692
--------- ---------
</TABLE>
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STATEMENTS OF OPERATIONS AND DEFICIT
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
---------------------- -----------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1999 2000 1999 2000
$ $ $ $
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES 567,884 2,568,773 1,342,125 7,027,859
COST OF REVENUES 466,463 1,858,358 1,044,289 4,780,826
------- --------- --------- ---------
101,421 710,415 297,836 2,247,033
------- --------- --------- ---------
OPERATING EXPENSES
Selling, general and administration 145,853 431,462 411,828 1,182,529
Research and development 176,937 268,734 369,934 678,196
Research and development grants (44,033) (35,400) (175,477) (140,842)
Depreciation of capital assets 5,049 33,436 10,216 56,025
------- --------- --------- ---------
283,806 698,232 616,501 1,775,908
------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS (182,385) 12,183 (318,665) 471,125
------- --------- --------- ---------
OTHER (INCOME) EXPENSES
Accrued dividends and amortization of discount on
preferred shares 18,295 81,894 54,887 230,665
Other interest and bank charges (7,025) (16,087) (16,973) (57,367)
------- --------- --------- ---------
11,270 65,807 37,914 173,298
------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (193,655) (53,624) (356,579) 297,827
------- --------- --------- ---------
INCOME TAX EXPENSE (BENEFIT)
Current -- -- (5,751) 268,398
Future -- -- (9,353) --
------- --------- --------- ---------
-- -- (15,104) 268,398
------- --------- --------- ---------
NET INCOME (LOSS) FOR THE PERIOD (193,655) (53,624) (341,475) 29,429
RETAINED EARNINGS (DEFICIT) - BEGINNING OF PERIOD (46,592) (24,453) 101,228 (107,506)
------- --------- --------- ---------
DEFICIT - END OF PERIOD (240,247) (78,077) (240,247) (78,077)
------- --------- --------- ---------
EARNINGS (LOSS) PER SHARE (0.01) 0.00 (0.02) 0.00
</TABLE>
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STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
-------------------------------
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 2000
$ $
(Unaudited)
<S> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income (loss) for the period (341,475) 29,429
Items not affecting cash
Depreciation of capital assets 10,216 56,025
Amortization of discount on preferred shares 15,914 67,769
Future income taxes (9,353) --
Net change in non-cash working capital (60,766) (1,689,537)
-------- ----------
(385,464) (1,536,314)
-------- ----------
INVESTING ACTIVITIES
Purchase of capital assets (215,568) (644,883)
-------- ----------
FINANCING ACTIVITIES
Preferred shares issued - net of issuance costs -- 3,623,348
Common shares issued -- 4,052
Increase in loan payable -- 94,405
Increase in deferred costs -- (635,863)
-------- ----------
-- 3,085,942
-------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE PERIOD (601,032) 904,745
EFFECT OF EXCHANGE RATE ADJUSTMENTS -- (51,102)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 818,617 453,380
-------- ----------
CASH AND CASH EQUIVALENTS - END OF PERIOD 217,585 1,307,023
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</TABLE>
Contact:
Hydrogenics, Mississauga, Canada
Mr. Robert Edwards
Vice President Finance
905/361/3633
-or-
Mr. Grant McArthur
Finance
905/361/3631
