ZEUSPAUL: I never heard of Galtech before this, and, while the name of its subsidiary is the same as the public's ERC, they have nothing to do with each other. You would think that Galtech would change the name of the division, since there is a public company by that same name, but I don't think it is illegal to have it, since they are obviously in two different businesses and I can't imagine potential customers being confused.
There are some strings attached to the public ERC's R&D money, but not that much. Everyone who gets money from the government gives the government the right to use the results of the research. Those utilities who have given money get the right to get some early commercial units at a bit of a discount. And all donors expect ERC to make minimal profits on the R&D income.
The main thing is that all of the partners, for a variety of reasons, want to jumpstart fuel cells as a viable commercial technology. So if ERC is churning out many megawatts of fuel cells starting in about 3 years, that will make them happy.
From ERC's point of view, it has now spent several hundred million dollars developing its technology without spending a nickel of its shareholders money. ERC at this price is selling for pennies on the dollar of that R&D money.
Other people's money is why ERC had about 4 million shares when it went public in 1992, and it still has about 4 million shares, even though its technologies (you must add in batteries now) are vastly more advanced than they were five years ago. There is production capacity now in place to turn out a respectable sales level of fuel cells without the company needing any significant financing.
If sales start to take off at some point the company will need more money, but presumably the stock price will be a lot higher then and it should be able to do so without excessive dilution. With so few shares, and both fuel cells and batteries representing huge markets, the EPS potential is staggering. |
