Hawaii tech firm
plans IPO worth
$57.5 million

The 4-year-old startup
Hoku Scientific will be
listed on the Nasdaq

Hoku Scientific Inc., a Honolulu-based fuel-cell technology developer, plans to sell stock worth $57.5 million that would make it the first Hawaii company to conduct an initial public offering in six years.

Dustin Shindo GOING PUBLIC Honolulu-based Hoku Scientific Inc. hopes to raise $57.5 million in an initial public offering of stock. Business: Develops fuel-cell membranes that provide more efficient energy to homes, automobiles and portable devices CEO: Dustin Shindo Founded: March 2001 Employees: 20 Fiscal 2005 net loss: $728,000 Fiscal 2005 revenue: $2.9 million Exchange: Nasdaq National Market Ticker: HOKU

The 4-year-old startup, co-founded by Dustin Shindo and Karl Taft, registered yesterday with the Securities and Exchange Commission for an IPO. A company filing said its stock would be listed on the Nasdaq National Market under the ticker symbol HOKU, and the offering would be made "as soon as practicable."

Hoku, which has 20 employees, develops fuel-cell membranes designed to supply cleaner and cheaper energy to homes, generate fewer harmful emissions in automobiles and provide longer life to portable devices such as laptops, cell phones and hand-held digital assistants. The company said in its filing it will use the proceeds from the offering to expand a new facility it is building in Kapolei and continue research and development, among other things.

"I think this is an absolutely fantastic development, and I think it really validates all the effort that has been put into developing a tech sector in Hawaii over the last couple of years," said Rob Robinson, a professor of entrepreneurship at the University of Hawaii. "Hopefully, Hoku is just the first of many successful outcomes for the state and the investors in those companies."

Hoku would be the first Hawaii-founded company to go public since 1999, when Digital Island Inc., a seller of Internet and networking services, and Cheap Tickets Inc., a discount ticket retailer, went public within three months of each other. Digital Island, founded in Honolulu, moved to San Francisco before going public in June 1999, while Honolulu-based Cheap Tickets made its public debut the preceding March. Digital Island was purchased by London-based Cable & Wireless in September 2001, and Cheap Tickets was acquired a month later by travel conglomerate Cendant Corp.

Local stock analyst Randy Havre said Hoku's plan to go public reflects well on the state.

"It shows that we are developing a company that can get to this stage where there is a liquidity event for the founder and the original investors -- people who believed in it in the beginning," Havre said. "It's always an issue when you invest in these companies how you're going to exit, how you're going to make your money."

Hoku, which has lost $6.5 million since its inception in March 2001, lost $728,000 in the fiscal year that ended March 31. But that's considerably down from the previous two years, when it lost $2.9 million in fiscal 2004 and $2.8 million in fiscal 2003. Revenue jumped to $2.9 million in fiscal year 2005 from $55,000 in fiscal 2004 because of the completion of service contracts with Sanyo Electric Co. and Nissan Motor Co.

Nearly all of Hoku's revenue to date has come from testing and engineering-service contracts with Sanyo and Nissan. Hoku also is the prime contractor in a Navy fuel-cell demonstration project.

Hoku, which had nearly 18.7 million shares outstanding at the end of March, is having its IPO underwritten by Piper Jaffray & Co., SG Cowen & Co. and Thomas Weisel Partners LLC.

Shindo, the 31-year-old chairman, president and chief executive of Hoku, said yesterday that he could not comment on the stock offering because the company is in the pre-IPO "quiet period" that is mandated by the SEC.

Robinson, an investor in the company, said Shindo was one of the first presenters at early meetings of the UH Angels, a program run out of the Pacific Asian Center for Entrepreneurship & E-Business at UH.

"We have organized private investors in this group, and they invest their own money in funding startups almost entirely in Hawaii," Robinson said. "Hoku was one of the first ones we invested in. So today's a very happy day for many reasons."

Honolulu-based Hawaii Biotech Inc., which develops drugs and vaccines, is another local company that frequently has been mentioned as an IPO candidate.

"We have high hopes for them," Robinson said. "I think IPOs are rare at any time, and I think we should remember there are other successful outcomes, too. Acquisitions, for example, are much more common. Last week, we saw (Manoa-based mobile phone game developer and publisher) Blue Lava Wireless acquired for $137 million."