AEC Converts an Internal Combustion Engine Generator to Run on Hydrogen
Monday November 8, 4:01 pm ET
LAS VEGAS--(BUSINESS WIRE)--Nov. 8, 2004--Today, Alternate Energy Corp. (OTCBB:ARGY - News; AEC) announced that it has completed the first phase of its back-up power product initiative by successfully converting an Internal Combustion Engine (ICE) generator to run on hydrogen.
Over the past several months, AEC has been focused on the building of demonstrable ICE and Fuel Cell generator sets, fueled by the Company's low-cost, on-demand hydrogen. These units will demonstrate to investors and potential customers AEC's hydrogen flexibility by efficiently supplying both a fuel cell and ICE.
The ICE test was conducted last week at AEC's head office in Burlington, Ontario, where the re-configured generator ran under load, exclusively on hydrogen.
"As we have powered Astris' alkaline fuel cell in Sept, 2003, we also had a requirement to produce a demonstration unit which fueled an ICE generator set running on our low cost, on-demand hydrogen. This 'proof-of-concept' unit will be used to demonstrate that our hydrogen can fuel IC engines as well - a market that represents a quicker time to revenue than the fuel cell. As a result of this timely conversion, our product demonstration schedule will be stepped up to the first few months of 2005," stated Blaine Froats, Chairman of AEC.
AEC does not intend to enter into the manufacturing of hydrogen-run IC engines, but rather to eventually commission an existing manufacturer to build a unit that meets AEC's technology design specifications. This ICE generator was converted purely for testing and demo purposes.
AEC is also expecting delivery of their first alkaline fuel cell this month from Astris Energi, which will also be converted to run on the Company's affordable hydrogen. This means that AEC will have two demonstration units available early in the new year, moving the Company much closer to fulfilling its previously announced marketing initiative to supply complete power unit sets to the back up power marketplace.
"... and now that we have a demonstrable ICE generator set in the making, we will be off to a great start in 2005." We at AEC have been quiet in making any announcements for the past number of months, as we were diligently putting a number of necessary business pieces in place. Now that much has been accomplished, we will be keeping our shareholders informed of the details of our progress going forward," commented Mr. Froats.
Visit AEC's new website at www.cleanwatts.com for more information.
About Alternate Energy Corporation
Alternate Energy Corporation (AEC) is energizing the hydrogen economy. AEC is the first company to provide a hydrogen device that has mass-deployment economics and provides small-scale, on-demand distributed generation of electricity. AEC's patent pending discovery in metallurgy permits a small-scale unit to generate hydrogen from water through a "green" process at a fraction of the fossil fuel kWh cost of energy. AEC believes its product can have a revolutionary impact on the energy industry. Additional information is also available at the company's website at www.cleanwatts.com
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ARGY - ALTERNATE ENERGY (OTCBB)
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13-Aug-2004
Quarterly Report
ITEM. 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis should be read in conjunction with the financial statements, and the notes thereto included herein. The information contained below includes statements of AEC's or management's beliefs, expectations, hopes, goals and plans that, if not historical, are forward-looking statements subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. For a discussion on forward-looking statements, see the information set forth in the Introductory Note to this annual report under the caption "Forward Looking Statements", which information is incorporated herein by reference.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND NEW ACCOUNTING PRONOUNCEMENTS
Management's discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. At each balance sheet date, management evaluates its estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The estimates and critical accounting policies that are most important in fully understanding and evaluating our financial condition and results of operations include those listed below:
DEFERRED CONSULTING COSTS
Shares have been issued to service providers and consultants over the term of contracts ranging from 1 to 3 years. Shares have been issued at the fair market value price at date of contract signing and the expense will be amortized over the term of the contract.
IMPAIRMENT OF INTANGIBLE ASSETS WITH INDEFINITE LIVES
On May 22, 2003, the Company adopted SFAS No 142, "Goodwill and Other Intangible Assets." Under the new statement, the Company no longer amortizes intangible assets with indefinite lives, but instead tests for impairment on at least an annual basis. In accordance with SFAS No. 142, the Company evaluates
the carrying value of other intangible assets annually as of December 31 and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether the other intangible asset is impaired, the Company compares the fair value of the reporting unit to which the other intangible asset is assigned to its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit to its carrying amount. In calculating the implied fair value of the other intangible assets, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of its intangibles. The initial evaluation of the intangible assets completed as of October 1, 2003 in accordance with SFAS No. 142 resulted in no impairment losses. Additionally, the Company performed its periodic review of its intangible assets for impairment as of December 31, 2003, and did not identify any asset impairment as a result of the review.
STOCK OPTION PLANS
The Company applies the fair value based method of accounting prescribed by SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION in accounting for its stock options granted to both employees and non-employees. As such, compensation expense is recorded on the date of grant based on the fair market value of the stock and expensed in the period which the option was granted.
RESULTS OF OPERATIONS
FOR FISCAL QUARTER ENDED JUNE 30, 2004, COMPARED TO THE FISCAL QUARTER
ENDED JUNE 30, 2003
REVENUES
For the fiscal quarter ended June 30, 2004 and June 30, 2003, AEC had no revenues. AEC continues its efforts to develop its hydrogen production system.
EXPENSES
AEC had total expenses of $3,196,329 and $6,778 in the fiscal quarter ended June 30, 2004 and June 30, 2003, respectively. AEC's expenses for the fiscal quarter ended June 30, 2004 consisted of $237,586 in administrative expenses, $2,914,571 in consulting fees, $24,697 in management fees, and $19,475 in professional fees. During the fiscal quarter ended June 30, 2003, AEC's expenses were substantially lower than in fiscal quarter ended June 30, 2004, mostly due to consulting fees, which were $0 in the 2003 period. Over the next 12 months, AEC anticipates that its expenses will increase over its expenses in fiscal year 2003 as a result of AEC's continuation of the development of its hydrogen production system.
NET LOSS
AEC had a net loss of $3,196,329 for the fiscal quarter ended June 30, 2004, compared with a net loss of $6,778 for the fiscal quarter ended June 30, 2003. The increase of $3,189,551 in the net loss for the 2004 fiscal quarter compared to the 2003 fiscal quarter relates mainly to the increase in consulting fees in the 2004 period. Management believes that, for the fiscal year ending December 31, 2004, AEC will only be able to reduce its net loss if AEC can create and sustain significant revenues from its hydrogen production system.
LIQUIDITY AND CAPITAL RESOURCES
AEC's financial statements have been prepared on a going concern basis that contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. AEC incurred a net loss of $3,196,329 and $6778 for the quarters ended June 30, 2004 and June 30, 2003, respectively, and has an accumulated deficit of $18,457,603 at June 30, 2004. AEC had $1,730,029 in cash on hand as of June 30, 2004. Management may obtain additional capital principally through the sale of equity securities. The realization of assets and satisfaction of liabilities in the normal course of business is dependent upon AEC ultimately obtaining profitable operations. However, no assurances can be given that AEC will be successful in these activities. Should any of these events not occur, the accompanying financial statements will be materially affected.
AEC is at present meeting its current obligations from financing activities. However, due to no cash generated from operations, AEC currently does not internally generated cash sufficient to pay all of its incurred expenses and other liabilities. As a result, AEC is dependent on investor capital and loans to meet its expenses and obligations. Although investor funds have allowed AEC to meet its obligations in the recent past, there can be no assurances that AEC's present methods of generating cash flow will be sufficient to meet future obligations. Historically, AEC has, from time to time, been able to raise additional capital, but there can be no assurances that AEC will be able to raise additional capital in this manner.
Net cash used in operating activities was $603,821 for the three month period ended June 30, 2004.
Net cash obtained from financing activities was $36,103 for the three month period ended June 30, 2004, compared with $0 for the three month period ended June 30, 2003. In the 2004 period, the Company issued shares of common stock for $294,546.
In January 2004, AEC entered into a Securities Purchase Agreement with Palisades Master Fund LP, Crescent International Ltd., Alpha Capital AG, Bristol Investment Fund, Ltd., Ellis International Limited, Inc., Vertical Ventures, LLC, Platinum Partners, Abraham Schwartz, Colbart Birnet, Chana Braun, Ronald Nash, Marketwise Trading, West End Convertible Fund, and a trust account pursuant to which AEC sold a total of 5,500,000 shares of common stock at a price of $0.50 per share and warrants to purchase a total of 2,750,000 shares of common stock at an exercise price of $0.85 per share. The warrants have a three year term. AEC received gross proceeds of $2,750,000 from this transaction.
In December 2003, AEC entered into a Securities Purchase Agreement with LRG Holdings Inc., Professional Traders Fund LLC, Generation Capital Associates, First Mirage Inc., Truk Opportunity Fund LLC, pursuant to which AEC sold a total of 1,060,000 shares of common stock at a price of $0.50 per share and warrants to purchase a total of 471,112 shares of common stock and an exercise price of $1.20 per share. The warrants have a three year term. AEC received gross proceeds of $530,000 from this transaction.
May 22, 2003, AEC issued 104,870,715 shares of common stock to AEC1, Inc. in exchange for technology, products and licenses.
AEC expects to have sufficient cash to meet its short-term capital requirements. However, there are no assurances that AEC will be able to raise sufficient funds to meet long-term capital needs. AEC may also seek alternative sources of financing, including from more conventional sources such as bank loans and credit lines. Again, no assurances can be given that AEC will be able to meet its needs through the sale of securities or otherwise. Further, the availability of any future financing may not be on terms that are satisfactory to AEC.
From time to time, AEC may evaluate potential acquisitions involving complementary businesses, content, products or technologies. AEC has no present agreements or understanding with respect to any such acquisition. AEC's future capital requirements will depend on many factors, including growth of AEC's business, the success of its operations, economic conditions and other factors including the results of future operations.
PLAN OF OPERATION
AEC is currently building and testing prototype units for the hydrogen production system that is one of the key elements to producing a viable fuel cell, which we intend to be used in both residential and commercial applications. The prototype units are being built at AEC's facility with certain components being provided by outside contractors.
The prototype units are being tested in our newly built lab in order that the design will allow for the production of hydrogen in a safe and cost effective manner. The technology will need to go through extensive safety testing and will have to meet various standards prior to placement in homes and businesses.
In order to accomplish these steps management estimates that the Company we will require several million dollars. As the Company does not have any current revenue, such funds will come from loans from officers and private placements of the Company's common stock.
Concurrently, AEC is meeting with potential strategic partners that can help provide the company with technical assistance to mass produce the product and associated technology and provide a national and international marketing presence. It is envisioned that these partners will help the company with the hydrogen production system technology, placing it with various residential and commercial customers. Additionally, the technology will need to go through extensive safety testing and will have to meet various government safety standards for placement in businesses. It is anticipated that the safety testing and the other steps outlined above is expected to be accomplished in the next 12 months.
In order to accomplish these steps management estimates that the Company will require additional funding in the next 12 months. As the Company does not have any current revenue, such funds will come from loans from officers and private placements of the Company's common stock.
The Company, formerly known as COI Solutions, was incorporated in Nevada on August 1, 1997. The Company purchased technology, licenses and patents from AEC I, Inc (formerly Alternate Energy Corporation) on May 22, 2003 for 104,870,715 restricted shares of the Company. The issuance of the shares of the corporation from treasury made AEC,I the majority shareholder. However, AEC,I will not be merged or consolidated with Alternate Energy Corp.
AEC's technology and partner relationships also have application in the small business and residential markets. AEC will pursue future opportunities to generate cost efficient and environmentally friendly power in these markets.
AEC currently has 8 full time employees. In conjunction with the production of our units as well as increased administrative activity it is anticipated that the Company will have a total of 12 full time employees at the end of 12 months.
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AEC is The Lead Investor in Funding of Astris Pilot Production Facility
Thursday August 12, 9:15 am ET
Alliance to Expedite the Deployment of an Economical Hydrogen Power Solution
LAS VEGAS--(BUSINESS WIRE)--Aug. 12, 2004-- Alternate Energy Corporation (OTCBB:ARGY - News) announced today that it has participated in a private placement in Astris Energi Inc. of Mississauga, Ontario (OTCBB:ASRNF - News), a world leader in alkaline fuel cell (AFC) technology.
The details of this financing include a $300,000 USD investment by AEC (out of over $500,000 USD in total raised capital) in Astris, with common stock purchased at US$.30, 1 warrant attached to each share, exercisable at a price of US$.50 and expiring December 31, 2005. The financing will immediately be used to assist Astris in the purchasing and assembly of the equipment necessary to begin phase one production of the MC250 POWERSTACK(TM) fuel cell module.
Under the terms of the agreement, AEC will benefit by being guaranteed the first POWERSTACK(TM) MC250 Astris fuel cells 'off the line', to be installed in a 2.4 kW Model E8 affordable AFC generator. Upon delivery of the alkaline fuel cell generator, the unit will then be interfaced to operate using AEC's hydrogen production technology. This completed 'powerpack' will be used as a combined demonstration unit, to jointly and independently, attract and secure commercial, utility and government customers interested in renewable on-site energy.
"This financing demonstrates the confidence investors have in the future success of Astris Energi," said Jiri Nor, Astris' President and CEO. "The funds will enable Astris to move the POWERSTACK(TM) MC250 fuel cell module to the pre-commercial stage of development. As well as generating revenue, this pre-commercial phase is crucial to our plans for developing strategic partnerships, such as the one with AEC as a value added reseller of our products."
Blaine Froats, Chairman of AEC stated "Astris will be the first to market with an inexpensive, fully tested alkaline fuel cell, with AEC producing the affordable hydrogen to run it. By combining our two competitively-priced technologies, we soon expect to be able to offer a fully-integrated and economical power unit - a solution the hydrogen economy has been eagerly awaiting."
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