DCHT info
DCH Technology, Inc.
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CheeseBoy
The StockPage writes up DCHT!
5/3/98 12:15
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NEW STOCK PROFILE
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How much would the Russian Government have paid to avoid the Chernobyl
disaster? $10 million? $100 million? $1 billion? How about $250,000?
That's how much it could have cost had Chernobyl been outfitted with the
Robust Hydrogen Sensor produced by DCH Technology (DCHT - NASDAQ OTC).
How much would you pay to avoid your next blackout? How much would your
electric company pay? DCH sensors can also provide timely warnings for
Hydrogen build ups that cause transformer stations to fail. These are
only two examples of a vast array of uses for DCH products. DCH
Technology has assembled such a powerful and reputable device that DCH
products are being used and tested by a variety of fortune 500 companies
and even being flown in tests on the same NASA space shuttle flight
featuring John Glenn in October.
DCH Technology Inc. specializes in state-of-the-art Hydrogen sensors.
The company's products are produced using chips supplied by Allied
Signal. DCH expects to not only compete in the sensor market but to
expand the market dramatically because of the exceptional abilities of
their products to operate in environments that other more fragile
sensors can not function in.
DCH Technology
Symbol: DCHT (NASDAQ - OTC BB)
Price at May 1: 2.06
Shares outstanding: 9,262,679 (7,800,000 restricted by rule 144)
Public Float: 1,450,000 approximately
Investor Relations - Contact John Thompson at Global Consulting at
310-859-9725 or by e-mail at globeco@deltanet.com
Internet: dch-technology.htm
DCH Product's
Hydrogen is the most common element on the planet. It is odorless,
colorless, combustible and is widely used in industrial, commercial and
medical applications. Hydrogen is explosive when it reaches just 4%
concentration in air or oxygen. Since such a little amount of gas is
needed for combustion to occur, monitoring and measuring the gas is
important. By monitoring the gas,control equipment could be activated or
an alarm sounded in order to avoid a hazardous situation. DCH's main
product, the Robust Hydrogen Sensor is based on technology developed by
Sandia National Laboratories.
The U.S. Department of Defence contracted the U.S. Department of Energy
at Sandia National Laboratories to develop Hydrogen detection technology
that could withstand a radioactive environment. These specs have allowed
the commercial sensor developed by DCH to withstand some extremely harsh
environments. Sandia spent three years and between $3 and $5 million
developing the technology. Once patented the technology was available to
the commercial market for licensing. DCH licensed the technology in
April of 1996 in an agreement that expires January 1, 2015. The license
allows DCH to manufacture and sell products based on the patented
technology. The agreement is for a license fee of $15,000 paid in three
installments (May 1996, April 1998 and April 1999) and for royalty
payments of 2% in 1997, 4.5% in 1998, 1999, 2000 and 3.5% in 2001 and
subsequent years. The agreement is exclusive based on market segments.
DCH has exclusive rights to the technology in the following industries;
petroleum, energy, waste management, environmental and manufacturing.
These industries represent the largest market segments for Hydrogen
sensors. DCH has non-exclusive rights for all other market segments.
These segments include medical, food, universities and government.
Market
The current market in United States alone for Hydrogen is 140 billion
cubic feet per year and represents a value of over $100 billion per
year. Users of Hydrogen are as varied as today's marketplace. Hydrogen
is the key component in the manufacture of many chemicals, especially
for ammonia and methanol. Hydrogen is used in large quantities in
refineries for manufacturing gasoline and heating oil. Hydrogen is also
used to make products including but not limited to fertilizers, glass,
refined metals, vitamins, cosmetics, semiconductor circuits, soaps,
lubricants, cleaners, margarine, peanut butter and rocket fuel.
Total annual worldwide sales for the gas detector market is about $1
billion. According to Department of Commerce surveys, Hydrogen sensors
account for about 10% of this market or $100 million per year. The DCH
Robust Hydrogen Sensor has the capability to operate in harsh
environments and because of this feature DCH is about to dramatically
expand the worldwide market for Hydrogen sensors. There are 3 potential
markets that DCH will be able to explore almost immediately and if they
are successful will propel DCH into a worldwide leader in their field;
1. Nuclear power plant safety monitoring. There are between 275 and 350
nuclear power plants around the world. It would cost about $70,000,000
to retrofit all the plants and an annual investment of $17,500,000 to
maintain the units. This is one area that could be very lucrative for
DCH because the Robust Hydrogen Sensor produced by DCH is the only
Hydrogen sensor currently that can operate in a high radiation
environment. There have been three major nuclear situations that were
caused by Hydrogen. Chernobyl, Three Mile Island and Switzerland. On
March 16, 1998 DCH Technology announced that Westinghouse's Nuclear
Projects Division placed an order for Hydrogen sensors to retrofit the
Leningrad Nuclear Power Plant.
2. Another area where the Robust Hydrogen Sensors are being tested is
Transformer oil monitoring. Power distribution transformers are found on
hydro poles across the country. During operation, Hydrogen is naturally
generated inside the transformer. Using the DCH technology will allow
companies to monitor the transformers and do preventative maintenance
and thus extend the life of the transformer. A Fortune 500 manufacturer
of power distribution transformers has purchased DCH sensors to test in
their units. The sensors were placed in transformer oil and then heated
to 100 C (212F) to reflect a typical internal operating temperature.
This is another area where conventional sensors cannot function but the
DCH technology can.
3. The third area where Robust Hydrogen Sensors are being tested is in
Semiconductor burners. DCH Technology feels this area could potentially
generate sales of $18,000,000 annually.
Company Fundamentals
DCH Technology has recently closed a $1.5 million financing. The company
has virtually no long term debt. With this money DCH has rented a new
production facility. This new location will allow DCH to expand their
production and increase their capacity by almost 500%.
DCH currently has a $500,000 backlog of orders. Their new facility will
allow DCH to begin clearing the backlog quickly. The current projections
by DCH call for revenues of $3,100,000 in 1998, almost $10,000,000 in
1999, and $20,000,000 in 2000. These numbers will have to be upgraded
significantly if DCH receives any new contracts for upgrading more
nuclear plants or for transformer station retrofitting. As well DCH
management has informed us that they are currently working on new
potential revenue sources and new uses for their products. DCH products
produce large gross margins and the company has low overhead expenses.
If management can achieve the targets set out in the business plan then
this would translate into an EPS of $0.07 in 1998, $0.25 in 1999 and
$0.50 in the year 2000. At a common growth stock price earnings multiple
of 40 times this would equate to a price of $10.00 per share based on
next years EPS, and $20 in 1999 based on estimated 2000 earnings.
DCH's competition in the sensor market is made up of many private
companies and smaller divisions of large companies such as Motorolla.
DCH Technology
The Robust Hydrogen Sensor (developed by DCH) consists of an array of
two Hydrogen sensing elements -- palladium-nickel gate CMOS field effect
transistors (FETs) and PdNi resistors. The threshold voltage of the
FETs shifts in response to the concentration of Hydrogen in the
surrounding environment. These structures detect very small amounts of
Hydrogen. (concentrations from about 10 ppm to 1%) The PdNi resistors
also change their resistance in response to the concentration of ambient
Hydrogen. These sensing elements allow sensing from 1% to 100%
concentrations.
On the same chip are micro-thermometers and micro-heaters for
maintaining on-chip temperatures, control and other chip functions. In
addition, the heaters are used to temporarily heat the chip to burn off
Hydrogen molecules which may tend to "stick" to the palladium. This
essentially resets the sensor to sniff again.
DCH's sensors are outperforming other model's for a variety of reasons
including;
- a faster reaction time ( Current detectors can take up to two minutes
to return a reading)
- DCH sensors are Hydrogen specific and therefore not prone to false
readings. This is particularly important to companies and agencies such
as NASA who are working with a variety of gases.
- Long sensor life
- Complete range. The only other device that can detect a full range of
Hydrogen is a mass spectrometer, a device prohibitive by cost.
- The device can operate in hostile surroundings such as a radio active
environment or in a vacuum. DCH's competitors do not have a Hydrogen
sensor that can perform in these environments.
Other DCH Hydrogen related products
DCH Technology has also licensed two other technologies, the Fibre Optic
Hydrogen Sensor and the Thick Film Hydrogen Sensor.
The Thick Film Hydrogen Sensor technology was licensed from Oak Ridge
National Laboratories. DCH will continue to work with the technology to
develop a commercially viable product. The company feels that products
based on this technology are 12 to 18 months from production
The Fiber Optic Sensor was licensed from the National Renewable Energy
Labs. This technology will allow DCH to produce sensors that will
detect a wide range of gases not just Hydrogen. DCH will continue to
work with the technology to develop a commercially viable product. The
company feels that products based on this technology are 12 to 18 months
from production
Range of uses for DCH products in various industries
The petro-chemical industry utilizes Hydrogen sensors in the following
areas:
-chemical manufacturing and processing
-gasoline
-heating oil
-pipe corrosion detection
The energy industry utilizes Hydrogen sensors in the following areas:
-fuel cells (a significantly expanding market)
-Hydrogen gas canisters / storage
-Hydrogen gas transportation
-nuclear power plant safety (a new area which can only be addressed by
the DCH sensor)
-transformer monitoring (power distribution transformers use Hydrogen
sensors in the cooling oil to monitor the health of the transformer)
The waste management industry utilizes Hydrogen sensors in the following
areas:
-landfill gas recovery
-waste containment safety
-municipal solid waste processing
The environmental industry utilizes Hydrogen sensors in the following
areas:
-bio-remediation of soils
-geophysical phenomena measurement
-compost process monitoring
The manufacturing industry utilizes Hydrogen sensors in a myriad of
applications including:
-electric generator cooling
-electronics manufacturing
-fertilizer manufacturing
-fiber optic manufacturing
-glass manufacturing
-metals plating and processing
-semiconductor manufacturing (including Hydrogen burners in
semiconductor plants; only the DCH sensor -can withstand the
temperatures and environment to monitor this equipment)
In the medical industry, Hydrogen sensors are used in the following:
-diagnostic tools (Hydrogen levels in human breath have been proven to
be indications of necrotizing endocolitis, lactose intolerance, cystic
fibrosis and bacterial infection following surgery; the DCH sensor can
be used in breathalyzer equipment to look for such signals)
-device processing (Hydrogen is used in the manufacture of many medical
devices, especially in the electronics areas)
-pharmaceutical industry (Hydrogen is used in the manufacture of many
medicines)
In the food industry, Hydrogen sensors are utilized in the following:
-fat and oil Hydrogenation
-margarine
-peanut butter
-chocolate (Nestles is one of the companies testing the DCH equipment)
In the government, Hydrogen sensors are used in the following:
-military equipment (the original use of the Robust Hydrogen Sensor was
for a classified Department of Defense nuclear weapons program)
-rocket fuel
-ground support equipment for NASA
In universities and research companies, Hydrogen sensors are used in the
following:
-alternative fueled vehicles (Hydrogen and Hydrogen-powered fuel cells
are being investigated at Daimler-Benz, Renault Ford, GM, Chrysler and
other automotive manufacturers)
-electric vehicles (batteries give off Hydrogen as they begin to
deteriorate)
-fuel cell and alternative energy development
History
DCH Technology was originally formed as a partnership by David Haberman
and David Walker in 1994 to sell thermocouples developed by a small
engineering company in California. The company was incorporated in 1995
and by mid-1995 DCH abandoned the thermocouple business to focus its
efforts on the commercialization of Hydrogen gas detection systems. The
Technology was licensed from Sandia National Laboratories in 1996, for
the life of the patent. DCH paid Sandia $15,000 for the rights to the
technology will pay a royalty of between 2.5% to 4.5% of sales over the
life of the contract. In late 1996 the company retained the services of
William Firestone as a consultant and later hired him on full time as
the President.
Management
William Firestone Ph.D., President
Dr. Firestone has enjoyed a distinguished career as a business executive
and engineering professional. In his over 40 years in management he has
served in executive positions with such companies as RCA, General
Instruments, and Motorola. He holds a Ph.D. in Electrical Engineering
from Northwestern University, an MSEE from Institute of Technology, a
BSEE from the University of Colorado and a Certificate in Business
Administration from the University of Chicago.
David Haberman, Vice-President Engineering
David Haberman is responsible for the day-to-day operations, research,
product development and project management at DCH. Prior to joining DCH
Technology, he was responsible for the commercialization of military
flight technologies at Lear Astronics, converting technology from the
F-15, F-16 and F-117 for use by Learjet, Gulfstream and Boeing. His
production experience includes the design of deflection circuits in the
targeting display of the Apache Attack helicopter, the BattleStaff
Console in the USAF ABCCC for the EC-130H and an electronic switching
assembly for the F-5 aircraft. David has a MS in Electrical Engineering
and a BS in Electrical Engineering from the University of Minnesota and
a Certificate in Technical Program Management from Milwaukee School of
Engineering.
David Walker, Vice President Business Operations
David Walker is responsible for the business operations at DCH
Technologies. David has an MS in Organizational Development from Chapman
University and a BS in Business Administration for Cal Baptist,
Riverside. David has extensive experience in management consulting
including quality management and financial systems and organization. Mr.
Walker was employed with Rockwell for 9 years and worked on projects
including the B1-B and the X-31A.
Saul Socoloske, Vice-President Special Projects
Saul Socoloske is responsible for special projects at DCH Technology.
Saul has an MS in Structural Engineering from Lehigh University and BS
in Civil Engineering.
For further information call John Thompson, at Global Consulting at
310-859-9725 or visit the DCH Technology website at
dch-technology.com
e-mail: globeco@deltanet.com |
