H/Cell Energy Corporation. Investor Presentation December 2018

Transcription

1 H/Cell Energy Corporation Investor Presentation December 2018

2 Safe Harbor Statement Certain statements in this presentation are forward-looking within the meaning of the Private Securities Litigation Reform Act of These statements may be identified by the use of forward-looking words such as anticipate, believe, forecast, estimate, expect, and intend, among others. These forward-looking statements are based on current expectations and actual results could differ materially. H/Cell Energy Corporation does not undertake an obligation to update or revise any forwardlooking statement. The information set forth herein speaks only asof the date hereof. 2

3 Overview H/Cell Energy Corporation has integrated a hydrogen energy system used to completely power a residence or commercial property with clean energy so that it can run independent of the utility grid or provide energy to the utility grid for monetary credits. Market Data Ticker OTCQB HCCC Price (11/19/2018) $ Week Range $ $3.25 Market Cap $7.6 M Common Shares Outstanding 7.6 M Insider Ownership 82% 3

4 Investment Highlights Global market initiatives underway in hydrogen/fuel cell technology The hydrogen economy is evolving rapidly HCCC is first in North America to install a hydrogen energy system Experienced management team We are pursuing a primary market position in integration services 4

5 Experienced Management Team Andrew Hidalgo CEO Michael Strizki CTO Matthew Hidalgo CFO Over 25 years experience in executive leadership, strategic planning and operations Skilled in finance, acquisitions, assimilations, divestitures and investor relations Managing Partner at Turquino Equity LLC Formerly, Founder, Chairman and CEO of WPCS International Incorporated (WPCS) Grew WPCS to $100 million in profitable annual revenue with a NASDAQ Global Market listing Raised over $40 million of equity financing and acquired 19 companies Previously held operational and business development roles with 3M, Schlumberger and GE Over 30 years of experience in scientific engineering Holds several patents in hydrogen production Developer of the residential hydrogen energy system concept Executive Director of the non-profit Hydrogen House Project focused on education Formerly an engineer with the NJ Department of Transportation (NJOT) Developed two hydrogen fuel cell vehicles for NJOT Helped develop the Peugeot Fuel Cell Fire Engine and the Duffy Fuel Cell Electric Boat Over 10 years of experience in corporate accounting and operations Skilled in SEC filings and accounting pronouncements Skilled in financial reporting, cash management and banking Skilled in acquisitions, assimilations, divestitures and restructuring Managing Partner at Turquino Equity LLC Formerly a Controller and Operations Manager for WPCS Formerly an accountant for Pricewaterhouse Coopers LLP 5

6 Experienced Board of Directors Andrew Hidalgo Chairman Charles F. Benton Independent Director Michael A. Doyle Independent Director Over 20 years of directorship experience with public companies Skilled in corporate governance and SEC compliance matters Skilled in fiduciary responsibilities and representing shareholder interest Skilled in internal controls and audit compliance Experienced in corporate structure, duties and obligations Formerly, directed the supply chain for Ascena Retail Group (Dress Barn, Ann Taylor Stores) Formerly directed finance and operations for Consolidated Rail Corporation (CONRAIL) Over 5 years of directorship experience with a public company Previously served as Chairman for WPCS International Incorporated Chaired an audit committee Retired President for the largest division of the multi-billion dollar Comcast Corporation Formerly responsible for 18,000 employees Inducted into the prestigious Cable Pioneers organization Over 10 years of directorship experience with public companies Served as Chairman of the Management Board for New England Cable News 6

7 Corporate Timeline - February June October 2016 Organic Public Filing - January 2017 Acquisition of The Pride Group Pty Ltd Acquisition of PVBJ Incorporated Successful Pre-IPO Raise - August 2015 HCCC Begins Operations 7

8 Corporate Development Strategy The goal is to be the premier integrator for hydrogen energy solutions We will focus on residential, commercial and government markets Our strategy will focus on growing the business through acquisitions Our acquisitions will be financially successful licensed contractors We will focus on key geographic areas Acquisitions will give us licenses to operate and a customer base to pursue Acquisitions will also give us technicians to train and profitable revenue NASDAQ Up listing planned 8

9 The Hydrogen Economy Hydrogen is the most abundant energy source on the planet Hydrogen can be created from water through electrolysis Hydrogen is clean and safe with no carbon emission Initiatives underway to make hydrogen a primary energy source for the future Hydrogen can be used for electricity and transportation Producing hydrogen is becoming more cost efficient Hydrogen can reduce the battery storage footprint Toyota, Hyundai, Honda, GM and others have committed to hydrogen 9

10 Market Opportunity Growth Drivers: Lessening dependence on fossil fuels Lessening dependence on a vulnerable and aging grid Improved and cost efficient hydrogen/fuel cell technology The use of hydrogen/fuel cell technology for transportation Expanding legislated tax and energy credits Integration services in high demand 10

11 Hydrogen Market Growth Statistical Growth: The hydrogen market has been experiencing steady growth since 2012 It is projected to grow 6.1% CAGR to a $200 billion global market by 2025 Asia Pacific is expected to be the largest market opportunity Currently building infrastructure for hydrogen/fuel cell vehicles (Hydrogen Market: Global Industry Analysis ( ) and Forecast ( ) by Persistence Market Research) 11

12 Hydrogen Market Growth Legislative Growth: The Renewable Portfolio Standards, once legislated, requires that a public utility generate up to 20% of its electricity through clean energy methods. A public utility company s method of compliance is through renewable energy credits. According to the National Conference of State Legislators, 28 states have now signed on to the legislated Renewable Portfolio Standards. This figure is up from just 12 states two years ago. The effort is led by New Jersey, California and Texas. The U.S. Department of Energy recently announced that it is initially allocating $38 million in government grant funding to support innovative hydrogen and fuel cell technology. According to the World Economic Forum, 12 countries have recently established clean energy mandates led by China, Australia, India and the United Kingdom. (Legislative initiatives validates commitment to clean energy and accelerates the return on investment for our systems with tax incentives and energy credits) 12

13 HC-1 System HC-1 System is an innovative self-sustaining clean energy solution It is truly eco-friendly, safe and 100% clean It is comprised of solar, batteries, a fuel cell, hydrogen generator and tank It is custom designed to accommodate the electrical load required It has been tested, certified and proven in operation Can be configured as an off grid or feed grid configuration Systems range from $30,000 to $200,000 depending on the electrical needs 13

14 HC-1 System - How it Works It is a system comprised of solar modules, batteries, a hydrogen generator, a fuel cell and a hydrogen storage tank. When there is solar power, the solar modules produce electricity that charges a bank of batteries. After the batteries are fully charged, the excess electricity powers a hydrogen generator that electrolyzes water and extracts the hydrogen in a gasified state, which is stored in a tank. If the tank is full, excess electricity can be sent from the batteries to the utility grid, which results in energy credits, if applicable, for the system owner. The electricity for the end user is provided by the charged batteries. If there is no solar power to charge the batteries, the system keeps the batteries fully charged by using the hydrogen gas stored in the tank, which processed through a fuel cell, creates the electricity to charge the batteries. As the system is able to produce its own hydrogen gas, which keeps the tank full, it provides a continuous supply of clean energy and sustainability that is independent from the grid. Each HC-1 System is custom designed to accommodate the electrical loads for an end user. The system is completely scalable. The system allows for a smaller battery storage footprint. 14

15 HC-1 System 15

16 Completed Projects De Tiberge Property, Pennington, NJ Installation comprised of 30 kilowatts (kw) of ground mounted solar panels Includes batteries, inverters, fuel cell, hydrogen generator and tank System produces 150 kilowatt hours (kwh) per day on average Owner uses 50 kwh daily on average Owner generates 3,000 kwh or 3 monthly solar renewable energy credits (SREC) Owner receives on average $9,000 per year in energy credits from the utility company Owner has a net zero electricity bill System cost was approximately $100,000 with investment tax credits Strizki Property, Hopewell, NJ Installation comprised of 28 kilowatts (kw) of ground mounted and roof mounted solar panels Includes batteries, inverters, fuel cell, hydrogen generator and multiple tanks System produces 120 kilowatt hours (kwh) per day on average Owner uses 40 kwh daily on average Owner generates 2,400 kwh or 2.4 monthly solar renewable energy credits (SREC) Owner receives on average $8,000 per year in energy credits from the utility company Owner has a net zero electricity bill Initially installed in 2008 at a higher cost which today has dropped considerably 16

17 Acquisition Strategy Acquire profitable revenue producing companies Build a consistent base of earnings for growth initiatives Focus on companies that are not operating to maximum efficiency Identify companies with complementary contracting skills Obtain a technical staff to train and customer base to pursue Obtain state licenses and certifications Target acquisitions in favorable renewable energy markets 17

18 The Pride Group Pty Ltd Acquisition completed in January 2017 Founded in 1998 Leading security systems integrator in Australia Customer base across government and business sectors $5.5 million in profitable annual revenue $2 million of recurring annual maintenance revenue 40 employees, two offices in Queensland Recently launched a clean energy division with projects secured 18

19 PVBJ Incorporated Acquisition completed in February 2018 Founded in 2008 Leading environmental systems integrator in Mid-Atlantic Customer base exists of major corporations and residential $2.5 million in profitable annual revenue 20 employees and headquartered in Pennsylvania Recently launched a clean energy initiative Secured a hydrogen house project from their customer base 19

20 Balance Sheet Highlights (Fiscal year ends 12/31) As of September 30, 2018 As of December 31, 2017 Cash and Cash Equivalents $331,236 $455,700 Accounts Receivable $1,230,621 $808,050 Total Current Assets $1,658,319 $1,329,950 Goodwill $1,373,621 $0 Total Assets $3,548,607 $1,485,196 Accounts Payable and Accrued Expenses $830,708 $631,385 Total Current Liabilities $1,240,981 $909,400 Line of Credit $222,963 $0 Capital Leases $149,590 $0 Equipment and Convertible Notes Payable $132,874 $0 Total Liabilities $1,746,408 $909,400 Total Stockholders Equity $1,802,199 $575,796 Total Liabilities and Stockholders Equity $3,548,607 $1,485,196

21 Income Statement Highlights (Fiscal year ends 12/31) Q3 FY2018 Through 9 Months Revenue $1,839,491 $5,575,640 Gross Profit $391,800 $1,633,900 Operating Expenses $626,625 $1,908,640 Income (Loss) from Operations ($234,822) ($274,761) Net Income (Loss) ($267,328) ($364,342) Non-Cash Charges $69,199 $200,848 Basic and Diluted Earnings Per Share ($0.04) ($0.05) Common Shares Outstanding 7,586,024 In Q3, there were increased capital expenditures in labor and business development for the renewable energy effort and also higher than normal material purchases for revenue to be recognized in Q4.

22 Capitalization Table (as of September 30, 2018) Common Stock Fully Diluted Shares Percent Turquino Equity* 3,540, % Mike Strizki, CTO 750, % James Strizki, EVP 750, % Mullane Family Trust (Pride acquisition) 760, % Benis Holdings (PVBJ acquisition) 444, % Sub total Affiliated 6,244, % Rezaul Karim / Reza Enterprises 726, % Pam Weidel / Weidel Trust 115, % Sub total Larger Shareholders 841, % Total Affiliated & Larger Shareholders 7,086, % Total Number of Shares Issued & Outstanding 7,586, % Total Number of Options Outstanding 955,002 Total Number of FD Convertible Debenture Shares 533,334 Total Number of Fully Diluted Shares (if exercised) 9,074, % * Andy Hidalgo and Matt Hidalgo are the sole Managing Members of Turquino Equity LLC 22

23 Key Takeaways Experienced management team that has delivered results High growth market (statistical and legislative) Increasing demand for clean energy solutions Need for integration services HCCC has installed and proven the technology Technology is becoming more advanced and cost efficient HCCC is established in key markets Subsidiaries are EBITDA profitable Acquisition strategy mitigates risk Assimilation strategy is working NASDAQ up listing planned 23

24 Thank You! For Additional Information Contact: Andrew Hidalgo President and CEO (610) OTCQB : HCCC andy.hidalgo@hcellenergy.com 24