Ballard Power Systems (Nasdaq: BLDP), maker of mobile and stationary proton membrane exchange fuel cells, announced its third-quarter results this morning. The Vancouver, Canada company reported revenues from operations of $13.6 million Canadian ($8.9 million U.S. at the current exchange rate of $1.53 Canadian to each U.S. dollar), an 88% increase over the year-ago quarter and 220% ahead of the previous quarter.

Those numbers don't mean much for Ballard, of course, for several reasons. First, its revenue stream is very erratic. Despite the big year-over-year and sequential gains this quarter, revenue for the first nine months of the year came in at $21.9 million, only 20% above the first nine months of 1999.

Second, Ballard hasn't been in a big hurry to collect its sales. Accounts receivable at the end of the second quarter were $12.4 million. At the end of the third quarter, they were $24.6 million. Add this quarter's revenue to last quarter's receivables and you get $26 million -- a $1.4 million difference. That means that Ballard not only didn't bother to collect substantially any of its receivables from Q2, but it also collected virtually none of the revenue they booked this quarter.

But third (and this is the main point) current revenue doesn't matter much to Ballard. This is a company that has an $8.9 billion market cap -- and that's in U.S. dollars -- meaning that Ballard trades at about 270 times trailing 12-month sales. Current income doesn't matter either. Ballard's operating loss for the quarter totaled $19.2 million, or $0.22 per share. After factoring in one-time gains, Ballard lost $5.7 million, or $0.06 per share.

Ballard is all about the future. It's counting on its Mark 900 power module to drive big gains in 2003-2004, as auto companies begin rolling out their zero-emission fuel cell vehicles. At least, Ballard hopes they'll be rolling them out. The California Air Resources Board has recently reaffirmed its mandate that 10% of new cars and light trucks delivered for sale be zero emission or near zero emission by 2003.

Many of those cars will be powered by Ballard's Mark 900, which will receive ZEV or partial ZEV credit, depending on the fuel. DaimlerChrysler (NYSE: DCX) and Ford Motor Co. (NYSE: F) have partnered with Ballard in its XCELLSIS venture to make engines for their fuel-cell vehicles. In September, Honda (NYSE: HMC) introduced its fuel-cell vehicle prototype, the FCX-V3. Honda will join Ballard, Ford, and Daimler in the California Fuel Cell Partnership in November.

In the stationary fuel-cell business, Ballard Generation Systems delivered its third 250-kilowatt generator this quarter. Elektra Birseck Muenchenstein, one of Switzerland's largest power suppliers, will field test the unit. Stationary generators should appear on the market in 2002-2003, first in 250-kilowatt size, followed by a one-kilowatt residential unit.

If its plans for the mobile and stationary fuel cell market go through, Ballard will be sitting pretty. It has over $800 million in cash and marketable securities to fund operations until those revenue channels open up. At its current cash burn rate, Ballard shouldn't need to raise further capital anytime soon. All it has to do now is make an affordable unit that works and convince people to buy it.

That's a big enough challenge.