Keep An Eye On Hypersolar (HYSR)

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May 13, 2014 Featured: Home Page, MARKET 7 3589 Views

Hypersolar (HYSR) is a teeny, tiny, company based in Santa Barbara that is working on a technology that allows Hydrogen extraction from naturally recurring and easily obtained water sources such as sea and waste water as impacted by sunlight in a process very much akin to photosynthesis. Importantly, HYSR’s technology does not require purified water or the use of coal, natural gas or oil to aid in extraction, all of which for various reasons can be cost prohibitive and usually involve shipping or pipelining to an end user.

Hypersolar’s technology consists of patented particles and coating which it then submerges in water to add in the splitting of hydrogen and water.

From Hypersolar’s website:

  • Self-contained Photoelectrochemical Nanosystem — Our low cost nano-size particle technology is designed to mimic photosynthesis and contains a solar absorber that generates electrons from sunlight, as well as integrated cathode and anode areas to readily split water and transfer those electrons to the molecular bonds of hydrogen. Unlike solar panels or wind turbines that produce a sizeable number of electrons that will be lost before reaching the hydrogen bonds, our nanoparticles are optimized at the nano-level to ensure maximal electron generation and utilization efficiency. Consequently, our nanoparticle technology uses substantially fewer photovoltaic elements, an expensive material, than conventional solar panels to achieve the same system level efficiency. Thereby significantly lowering the system cost of what is essentially an electrolysis process.

  • Protective Coating — The biggest problem with submerging photovoltaic elements in water for direct electrolysis is corrosion and short circuiting. To address this problem, we have developed a protective coating that encapsulates key elements of the nanoparticle to allow it to function for a long periods of time in a wide range of water conditions without corrosion. This allows the nanoparticles to be submerged or dissolved into virtually any source of water, such as sea water, runoff water, river water, or waste water, instead of purified distilled water.

Why Does This Matter?

The reason this is such a big deal is that without hydrogen companies in the fuel cell (and many other) marketplace, companies like FCEL, BLDP and PLUG, don’t survive. For months in fact this little known company has traded in line with many of these larger companies but since there are other, more mature, markets that require hydrogen, such as the petroleum refinery market and fertilizer markets that are heavy on ammonia production, investors should be aware the market that HYSR is attempting to crack is a $200b market and growing and is not dependent on fuel cells for even 15% of that number. Everything from aerospace to home energy to hydrogen vehicles of all types are part of this market. Companies worldwide are looking for ways to cut hydrogen costs and find cleaner solutions. HYSR has come a long way down the path to doing both with its technology and if it succeeds it may be worth much more than ten times its current value. That may sound like a far fetched statement, particularly when you are talking about a company trading for about .04 but if Hypersolar makes just the smallest of future strides many more investors, big and small, will know their name.

HYSR Milestones:

In early February Hypersolar announced that it had produced 1.2 volts of open circuit voltage to be used in hydrogen production through direct sunlight. Why is this important? The voltage necessary to split water into hydrogen and oxygen is only 1.23 volts. To underscore the speed at which they have progressed, HYSR moved 10% from late 2013 (1.1 volts) to the 1.2 volts reached almost three months ago. Further, at the beginning of 2013 HYSR was only at 0.2 volts. The accepted voltage number for mass production is 1.5 volts.

Recent announcements:

Hypersolar has extended its ongoing research agreement with University of California. Santa Barbra (UCSB) until the end of 2014. We note that Hypersolar and UCSB recently filed a joint patent (HYSR has other IP assets as well) application titled “method of manufacture of multi-junction artificial photosynthetic cells.” It is pretty clear that as Hypersolar approaches groundbreaking voltage numbers UCSB has been eager to continue to play a role in this development. 

Hypersolar announced the addition of a PR firm – in our view to best answer the multitude of questions investors have and let management concentrate on the science and discussions with companies in the market for on-site hydrogen production (and there should be many of those). One thing we like about HYSR is that they appear to be science focused and rarely release PR’s or updates (perhaps a bit too silent in light of interest which is no doubt why they hired someone to handle it for them) just to say hi.

Summing it up:

HYSR is obviously getting quite close to the 1.5 volt territory and we believe they will announce moving past the hydrogen spitting voltage of 1.23 volts upon the next update. At a valuation of $10M we think this is pretty cheap as they move ever closer to 1.5. The stock has traded as high as .13 in the past couple of months and we think the next announcements, if they are at 1.23 volts or better (which we fully expect), may put it well past those recent highs, perhaps as high as .20-.25.

We caution that this is a penny stock in the truest sense of the word and therefore investors should understand that before making an investment. On the other hand it is also evident that this little company is making significant strides in its partnership with a renowned research university in UCSB. We are excited about the days and weeks to come in terms of what Hypersolar will tells us and at the current price we think HYSR is a real value, even if one is only in it for a trade, since we think the next announcement will be very significant and could come at any time.

As always do your own research or consult a trusted financial adviser before investing in this or any other equity.

 

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7 Comments for "Keep An Eye On Hypersolar (HYSR)"


Haris Basit

Posted on Tuesday 13th May, 2014, 3:25pm

Reply

Do we know the financial condition of this company? Are they nearly out of cash or do they have significant runway left?

    edvapatent

    Posted on Tuesday 13th May, 2014, 4:16pm

    Reply

    I’m expecting we will get an update on the cash position in the next Q but suffice it to say that HYSR could have raised money over the last couple of months on infinitely better terms than it has had to previously. CEO Tim Young seems like a pretty smart operator to us and has avoided what could be described as ugly or sleezy deals with people that one would not want to get in bed with. That means a lot when you are a company of this size. Hope that helps.

Gail

Posted on Monday 19th May, 2014, 4:56pm

Reply

I just looked at the 10Q. Over the last 9 months, they are down $12 million more then the prior 9 months. That’s what it looked like to me anyway. That seems fishy. What could they possibly have done with $12 million? All on hiring PR?

    edvapatent

    Posted on Wednesday 21st May, 2014, 1:51am

    Reply

    That is a non-cash loss Gail. Cash flow used in operating activities was $355,535 for the nine months ended March 31, 2014.

Bill Miller

Posted on Thursday 29th May, 2014, 1:05am

Reply

EDVA,

Do you have any comments on the recent SCOTUS case regarding laches and the possible implications as it relates to VRNG. Also, the recent news about patent reform being dropped for the time being?

Thanks

Bill

    edvapatent

    Posted on Monday 2nd June, 2014, 10:53pm

    Reply

    I don’t have a comment on the effect of the SCOTUS case re: laches on VRNG. As for Congress tabling the Goodlatte-Leahy legislation my assumption is that enough reasonable people got to Leahy (in particular) to explain that continuing to chip away at this piecemeal was actually going to cause more rather than less legislation. SCOTUS is weighing in on software patents, likely sometime soon, so perhaps the committee just felt like the time was not ripe and there just wasn’t the support given a scan of the landscape. Unfortunately, I’m not sure the favorable impact of this news on the sector at large is felt in any significant way (certainly not by price appreciation). I think investors (ourselves included) have been cautious given the amount of surprises that have seemed to arise out of a multitude of these cases.

Rodrick Willmore

Posted on Wednesday 26th November, 2014, 3:28pm

Reply

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