Astris Energi, Inc.
Special Situation
(OTC BB: ASRNF)
Shares Outstanding: 19.2 Mil Astris Energi Inc.
Active Float: 12 Mil 2175-6 Dunwin Drive
Recent Price: $0.52 Mississauga, Ontario L5L 1X2
52 Week Bid Range: $0.33 - $1.11 Bus. Phone: (905) 608-2000
Capitalization: $10 Mil Contact: Anthony Durkacz, V.P. Finance
Website: www.astris.ca Email: questions@astris.ca
BUSINESS SUMMARY:
Astris Energi Inc. (OTC BB: ASRNF) is an emerging growth company in a multi-billion dollar industry and is now recognized as the world’s leading alkaline fuel cell (AFC) technology company. Over the past 20 years, Astris has invested more than $16 million in developing an AFC that is relatively low cost, starts up rapidly, has a long operating life, can operate in sub-zero temperatures and overall is highly competitive with other fuel cells. Although very successful, the Company today continues its R&D with a view to further improve capabilities and reduce costs.
Jiri Nor, Astris’ President and CEO, founded in the Company in 1983. Three years later, the Company acquired the assets of the University of Toronto’s Institute for Hydrogen Systems, including all of its alkaline fuel cell (AFC) intellectual property.
This month, December 2003, Astris launched its new and improved POWERSTACK MC250 AFC and 2.4 kilowatt E8 AFC generator and will begin pilot scale production in early 2004 at its subsidiary in the Czech Republic, pending successful funding arrangements. David Ramm, the influential former CEO of United Technologies’ fuel cell division, (previously called International Fuel Cells) joined Astris in September (2003) as Executive Vice President. His main role is to negotiate strategic partnerships as well as drive marketing and business development leading to pilot scale production and ultimately to commercialization.
A GLOBAL MARKET WITH ENORMOUS GROWTH POTENTIAL
Experts believe that fuel cells will prove to be the next HUGE global growth industry, similar to the exponential growth of personal computers in the 80’s and the Internet explosion in the 90’s. Independent studies forecast that demand for fuel cells will increase steeply to nearly $35 billion annually worldwide by 2011, and $15 billion in North America, from an estimated $739 million and $238 million, respectively, this year (2003). This represents projected compound average annual growth rates of 62% worldwide, and 68% in North America, driven by increasing demand for energy, replacement of conventional energy technology (mainly the internal combustion engine; also batteries), and alternative-conventional technology hybrids.
ASRNF is the only available publicly traded pure investment in alkaline fuel cell technology in North America.
FUEL CELL TECHNOLOGY ADDRESSES
THREE IMPORTANT MARKETS
· Stationary Uses: primarily for uninterruptible off-grid power and grid back-up power for critical & emergency applications such as hospitals, fire stations, airports, and off-grid communities
· Portable Uses: for personal and commercial customers, including small generators for cabins, worksites, etc
· Transportation Uses: for cars, boats, wheel chairs, fork lifts, golf carts, etc.
Growth is anticipated to accelerate around 2007 for stationary and portable power, the two largest markets, which are expected to represent potential size of close to $18 billion each by 2011. Transportation is projected to be a $10 billion market in 2009 and rising exponentially thereafter.
ASTRIS’ SUPERIOR AFC TECHNOLOGY IS NOW
CHALLENGING ITS COMPETITION
There are five basic types of fuel cells. Two currently share the highest profiles – the proton exchange membrane fuel cell (PEMFC) developed and marketed most notably by Ballard Power and Hydrogenics, among others, and the Solid Oxide Fuel Cell (SOFC) developed and marketed by Siemens Westinghouse and Global Thermoelectric (now FuelCell Energy), among others. The AFC and PEMFC are categorized as low temperature fuel cells, while the other types are categorized as high temperature. This means that AFC and PEMFC can be used in similar applications.
The AFC was relegated to a secondary status in the 1970s despite important attributes because of concerns about cost and lifespan for commercial use. However Astris has now resolved these previous concerns, positioning the Company to challenge its competition in a major way.
Astris has replaced pricey platinum with inexpensive materials as the AFC catalyst. All PEMFC’s contain platinum, therefore the Astris AFC has a competitive advantage in the direct material cost of the fuel cell. Astris has made significant advances in its electrode technology and introduced affordable scrubbing technology to minimize CO2 effects, thereby greatly extending the alkaline fuel cell life.
The AFC has long been the alternative energy choice of major space programs in the United States (used by NASA beginning with the Apollo programs), Russia and Europe because of its overall reliability, efficiency, durability and simplicity of design. Validating the strides made in AFC technology, the U.S. Department of Energy recently renewed a R&D roadmap for the AFC after a 30 year hiatus.
HEADING TOWARDS PILOT PRODUCTION EN ROUTE TO SIGNIFICANT GROWTH WITH GLOBAL COMMERCIALIZATION
This month Astris launched its premier POWERSTACK MC250 fuel cell in its 2.4 kilowatt fuel cell generator named E8, representing a major milestone for the Company. These products are viable for a wide range of commercial applications and are potentially very cost competitive with the internal combustion engine when produced in mass volume.
Astris plans to begin pre-commercial production of the MC250 fuel cell in 2004 at its subsidiary in the Czech Republic. It targets an annual pre-production rate of AFC stacks, totaling in excess of 2000 kilowatts (kW). Direct material costs of the POWERSTACK MC250 are less than U.S. $230 per kW and the selling price for the AFC system per kW is estimated to be at U.S. $1,000 based on volume production, versus a U.S. $4,000 per kW piece rate in pilot production.. These significant cost savings will result in exceptional competitive advantages for Astris’ leading-edge technology. The Company has been producing its anodes and cathodes at its low-cost subsidiary in Vlasim, Czech Republic and assembling the fuel cell stacks and generators at its plant in Mississauga, Canada.
MANAGEMENT’S CURRENT FOCUS AND ASTRIS’
FINANCIAL OUTLOOK
Up to now, Astris has funded research and development and other working capital needs primarily through private investors and, to a lesser extent, government tax programs. Management owns approximately 25% of the company. The Company had revenue of $147,000 in 2002, reflecting sales of fuel cells, related products and contract work and a net loss of $660,000. On Dec 01, 2003, Astris announced their unaudited results for the third quarter and nine months ended September 30, 2003. All amounts as follows are in Canadian dollars unless otherwise indicated and the accounting conforms to U.S. generally accepted accounting principles.
Revenue increased to $114,267 for the third quarter of 2003, and $139,579 for the nine months, from $10,244 for the first nine months of 2002, as the Company increased the sale of fuel cells, related products and contract work. Astris' expenses continued to exceed revenue and the Company reported a loss of $189,061 for the third quarter and $630,980 for the nine months, which compares with a loss of $476,034 for the first nine months of 2002.
The Company increased its cash position from $253,938 at December 31, 2002 to $446,512 at September 30, 2003, representing its highest cash position to date. The Company raised $650,000 through the issuance of common shares to private investors during the third quarter, bringing total proceeds from shares issued to $1,070,400 for the first nine months. Shareholders' equity at September 30, 2003 was $564,973.
The Company is prepared to begin pilot production pending successful funding, which is the first step toward commercialization on a massive scale. In the coming years, Astris’ revolutionary, cost-saving, competitive, and in-demand AFC technology is expected to result in explosive revenue growth and substantial net income as these multi-billion dollar markets kick into high gear.
Management’s current focus is to raise funds to finance its comprehensive business plan, and to negotiate strategic partnerships with pre-commercial customers to validate its product and support the ramping up of production capacity to achieve economies of scale.
In June of 2003, Astris engaged First Energy Advisors (FEA) to raise $10 million in stages over 2 years to support its growth strategy. FEA and its associates have already invested in excess of $1 million over the past 15 months.
MARKETING STRATEGIES – MAJOR GROWTH AHEAD!
Astris is pursing an “Intel-inside” type strategy, whereby its modules and R&D capability enable its customers to develop low-cost and reliable power generation systems for end-users. Having developed its AFC to the point that it is reliable, user friendly and potentially cost competitive when produced in volume, Astris is now negotiating with several prospective users, future joint venture partners and strategic partners.
Astris is also in discussion with OEMs who want to co-develop fuel cell systems to replace existing technologies, as well as energy systems, engineering firms that develop market-specific fuel cell systems and single order customers such as research labs and government R&D organizations. Astris’ management clearly recognizes that a strategic partnership with a Fortune 500 company would help drive business, reduce perceived investor risk and increase credibility, and is therefore aggressively exploring this possibility. The Company uses trade infringement protection and will file for patents in time for commercialization, deferring the patenting process in order to protect its market position. Several Astris Board members have substantial experience in patent portfolio protection and processes.
FISCALLY RESPONSIBLE, COMPETENT, AND
EXPERIENCED MANAGEMENT TEAM
The Corporation’s management group consists of an experienced, disciplined, professional, and committed executive team in its key business areas including: engineering, production, finance, corporate development and marketing. The organization operates efficiently with minimum overheads, as each team member is fiscally responsible to the corporation’s business. Management is committed to building substantial shareholder value through commercialization. Keep in mind that this is not a start-up company, but rather a late stage development company with exceptional technology that is about to embark on commercialization with multi-billion dollar market potential.
NUMEROUS FACTORS BODE WELL FOR FUEL CELL GROWTH
Obviously there is increasing demand for reliable, high quality power, which has been particularly accentuated by global power blackouts in recent years. Competition is driving deregulation of power markets. Fuel cells will be an important solution for developing regions that do not have access to power grids and as back-up power for emergency situations. Additionally, environmental and political concerns are omnipresent as world demand for electrical energy continues to increase. Most importantly, governments from the United States, Europe, Japan and Canada have earmarked billions of dollars over the next 5 years to advance fuel cell research, development and commercialization.
ASTRIS IS EXPLORING MANY STRATEGIES TO MAXIMIZE GROWTH
Management is always looking for successful ways to expand Astris’ marketing and distribution channels, such as strategic partnerships, joint ventures, licensing agreements with selected system integrators and potential manufacturers and exclusive agency agreements with hydrogen manufacturers. The Company will take advantage of government tax programs and will consider making synergistic acquisitions. Also, Astris is focused on establishing a strategic partnership with one or more Fortune 500 companies.
SUMMATION:
Astris Energi Inc. (OTC BB: ASRNF) is on the verge of explosive growth as global demand for its reliable, unique, cost-effective AFC technology enters commercialization on a massive scale. Astris is regarded as the world’s leading alkaline fuel cell technology company and the Company will clearly capitalize on the upcoming multi-billion dollar market potential in the dynamic fuel cell industry. Astris is the only available publicly traded pure investment in alkaline fuel cell technology in North America! Trading at under a dollar per share with a current market cap of less than $10 million, we feel ASRNF offers patient investors the opportunity for exceptional appreciation as commercialization leads to substantial growth in revenues, resulting in high cash flow and positive net earnings. When comparing the PEMFC technology market cap in the billions, the potential for Astris should substantially increase as the industry is made aware of the recent advances in technology of the Company’s AFC. Management is totally committed to maximizing shareholder value and guiding Astris to a dominant leading position in fuel cell technology.
v Experienced management team committed to major growth and maximization of shareholder values
v Fuel cell industry has multi-billion dollar potential and is poised for explosive exponential growth in coming years
v World’s leading alkaline fuel cell technology company – North America’s only available publicly traded pure investment in AFC technology
v Superior cost-effective, reliable technology about to enter pilot production en route to global commercialization
v Joint ventures, synergistic acquisitions, strategic partnerships, and licensing agreements will all contribute to significant future growth
v Long term shareholders will be well rewarded as stock price should move substantially higher due to strong growth prospects
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