The company has whacked its staff to three. It has stopped developing products, and is focusing instead on selling engineering services to other companies.

Anuvu has put $13 million from investors and sales revenue into the company since it was founded in 1994, said co-founder Lyn Cowgill. It owes millions of dollars to a single creditor, a group of individuals who backed the company with cash and a promissory note.

Anuvu has been negotiating with the creditor and hopes for a settlement that would give the creditor more of the rights to Anuvu's fuel-cell technology, Cowgill added. Removing the debt would benefit both sides, he said.

Anuvu had developed fuel cells that it sold under the name Power-X and incorporated into prototype cars and boats. Said Cowgill, "we were involved in some very large projects over the last couple years."
The $100,000 Nissan never rolled

In 2003 the company tried to sell Nissan Frontier pickup trucks equipped with fuel cells for $99,995. About a dozen state and municipal agencies and universities said they wanted to buy the trucks, but the company never made them.

Fuel cells make electricity from hydrogen and oxygen. Cowgill said the lack of uniform industry codes for hydrogen fueling stations, the absence of standards for crash tests, and other regulatory issues meant the company could not predict the cost of producing the vehicles.

Last year Anuvu reached a deal to sell its fuel cells to Zap (PCX: ZP), a Santa Clara alternative-energy vehicle company. Anuvu expected to receive $11 million for orders of 100 fuel cells in 2005 and 1,000 in 2006, but so far Zap has only ordered one prototype system, Cowgill said.

Zap planned to incorporate the fuel cells into DaimlerChrysler AG's fuel-efficient Smart Cars, but the German automaker has not started selling Smart Cars in the United States.

Anuvu's founder and president, Rex Hodge, stepped down from his post about a year ago. The creditors, who served on the board of directors, chose one of their own, Tom Scrima, to take Hodge's place. The creditors resigned from the board, and Scrima left Anuvu in April.

Cowgill would not disclose the company's 2005 revenue. The company had more than a dozen employees a year ago. He projects $1 million to $3 million from engineering services this year.

"Historically, over the last couple years, they have been one of the best-funded renewable-energy companies in the region," said Oleg Kaganovich, chief executive officer of the Sacramento Area Regional Technology Alliance. "Everything certainly looked fairly positive."

Anuvu's current work includes building fuel cells for educational use by two foreign companies, and working with a Canadian company to integrate a fuel cell with that company's water and air pumps.

The fuel-cell industry saw a proliferation of small firms in the late 1990s and early 2000s, said Robert Wichert, technical director of the U.S. Fuel Cell Council, an industry group that promotes fuel-cell commercialization.

Larger publicly traded firms bought a few of the firms. Some fizzled out after finding that fuel-cell technology is more difficult than they had thought, he added.

Anuvu is not a member of the council, and Wichert said he knew very little about the company and its technology.

"In a pre-commercial market, it's very difficult for any fuel-cell manufacturer or developer of hydrogen technology to market it financially," said Catherine Rips, managing director of the California Hydrogen Business Council, which advocates for government support and tax incentives for fuel-cell companies.

"Without economies of scale, it's almost impossible to compete with existing technologies -- regardless of the efficiency gains and significant environmental advantages," she said.

"The industry needs support until fuel cells and hydrogen technologies can compete on their own through mass production," Rips added. "There is no quick fix to transitioning off oil."

A global survey of 20 public fuel-cell companies issued by PricewaterhouseCoopers in October found that net losses in the fuel-cell sector grew from $387 million in 2003 to $465 million in 2004.

Annual revenue for the public firms dropped 4 percent, but exceeded research and development costs.

Ballard Power Systems Inc. (Nasdaq: BLDP) of Burnaby, British Columbia, which dominated the field in 2004, cut research and development expenses 12 percent in 2004.