The Toronto-area company said the majority of the warranty costs is attributable to united delivered prior to its acquisition of Stuart Energy Systems, another Ontario-based company, in January 2005.

Hydrogenics announced on March 28 that it had uncovered component quality issues that would delay production at its OnSite Generation business unit and reduce near-term revenue expectations.

On Friday, it said it had identified other operational and production quality issues during the second quarter that ``we are addressing through appropriate corrective measures.''

Hydrogenics said that it expects total revenue in the second quarter from its three business units will be $5.4 million US, including $1.6 million from OnSite Generation, $1.0 million from Power Systems and $2.8 million from Test Systems.

The company's stock closed Friday at $2.26 Cdn, down nine cents, prior to the announcement.

That's well below the $7 million to $9 million US anticipated by three analysts polled by Thomson Financial.

"While the operational and quality issues in our OnSite Generation business unit are challenging, we are committed to taking all steps necessary to ensure that we deliver the highest quality products to our customers,'' Hydrogenics president and CEO Pierre Rivard said in a statement.