Quantum Technologies Reports Fiscal 2008 Fourth Quarter and Fiscal Year Financial Results

IRVINE, Calif., June 30 -- Quantum Fuel Systems Technologies Worldwide, Inc. , a leader in the development and production of advanced propulsion systems, energy storage technologies, and alternative fuel vehicles and applications including hydrogen fuel cell, hybrid, plug-in hybrid, and alternative fuel vehicles, today reported results for the fourth quarter and fiscal year ended April 30, 2008. Conference call information is provided below.

Fiscal 2008 Fourth Quarter Results

Total revenue in the fourth quarter of fiscal 2008 was $9.7 million compared to $3.1 million in the fourth quarter of fiscal 2007, a net increase of 213%. The increase in total revenue was mainly due to increased hydrogen-based hybrid and fuel cell hybrid vehicle product sales and higher contract revenue. The Company's consolidated operating loss decreased from $5.3 million in the fourth quarter of fiscal 2007 to $4.6 million in the fourth quarter of fiscal 2008. The decline was primarily due to the expanded revenue base and higher gross profits on product sales and development programs.

The Quantum Fuel Systems operating segment loss decreased $1.5 million, or 58%, from $2.6 million in the fourth quarter of fiscal 2007 to $1.1 million in the fourth quarter of fiscal 2008. Corporate segment expenses increased $0.9 million, or 33%, from $2.7 million in the fourth quarter of fiscal 2007 to $3.6 million in the fourth quarter of fiscal 2008. The shared-based compensation expense related to FAS 123R was $0.7 million and depreciation and amortization expense was $1.0 million during the fourth quarter of fiscal 2008. Cash used from operations during the fourth quarter of fiscal 2008 was $0.8 million.

Product sales for the Quantum Fuel Systems segment increased $3.0 million, or 188%, from $1.6 million in the fourth quarter of fiscal 2007 to $4.6 million in the fourth quarter of fiscal 2008. Product sales during the fourth quarter of fiscal 2008 primarily consisted of hydrogen fuel storage systems for General Motors' Equinox fuel cell hybrid vehicle program and sales of hydrogen-fueled hybrid vehicles. Contract revenue for the Quantum Fuel Systems segment increased $3.5 million, or 233%, from $1.5 million in the fourth quarter of fiscal 2007 to $5.0 million in the fourth quarter of fiscal 2008. The increase was primarily due to higher development program revenues to support the Fisker Karma plug-in hybrid development program and advanced vehicle development programs for General Motors.

The Tecstar Automotive Group business segment ceased operations on January 16, 2008 upon transfer of substantially all of its assets to an affiliate of our lender. Accordingly, the activities of the Tecstar Automotive Group reporting segment are reported as discontinued operations for the fourth quarter and twelve month period ending April 30th for both fiscal 2007 and 2008. The loss from discontinued operations in the fourth quarter of fiscal 2007 was $10.7 million.

The Company's net loss from continuing operations decreased from $5.5 million, or $0.09 a share, in the fourth quarter of fiscal 2007 to $4.7 million, or $0.06 a share, in the fourth quarter of fiscal 2008. The Company's net loss decreased from $16.2 million, or $0.25 a share, in the fourth quarter of fiscal 2007 to $4.7 million, or $0.06 a share, in the fourth quarter of fiscal 2008.

Fiscal Year 2008 Results

For fiscal 2008, the Company had consolidated revenues of $26.5 million compared to fiscal 2007 revenues of $17.7 million, a net increase of 50%. The increase in revenues was primarily a result of higher development program revenues. The Company's consolidated operating loss decreased $4.6 million, or 20%, from $23.4 million in fiscal 2007 to $18.8 million in fiscal 2008.

Quantum Fuel System segment contract revenue increased $7.6 million, or 109%, from $7.0 million in fiscal 2007 to $14.6 million in fiscal 2008. The increase was due primarily to an increased level of system development and application engineering of our hybrid propulsion systems under funded automotive OEM contracts, and other funded contract work with the United States military and other government agencies. During fiscal 2008, we completed concept development services for a production intent hybrid-electric vehicle for our affiliate, Fisker Automotive and initiated a vehicle development contract with Fisker Automotive that runs though April 2009. The operating loss for the Quantum Fuel Systems segment decreased $5.1 million, or 41%, from $12.4 million in fiscal 2007 to $7.3 million in fiscal 2008. This improvement mainly relates to higher margins earned on product shipments and customer development programs due to the shift in product mix and technology focus over the last year.

Corporate segment expenses increased by $0.4 million, or 4%, from $11.0 million in fiscal 2007 to $11.4 million in fiscal 2008. Corporate expenses reported for this segment reflect the general and administrative expenses that indirectly support our ongoing Quantum Fuel Systems operating segment and our anticipated future operating segments. Corporate expenses consist primarily of personnel costs, share-based compensation costs, and related general and administrative costs for executive, finance, legal, human resources, investor relations and our board of directors. The historic proportional corporate expenses that indirectly supported the operations of the Tecstar Automotive Group are not included in the Corporate reporting segment and have been classified as part of discontinued operations on the accompanying condensed consolidated statements of operations. Included in Corporate expenses are $3.0 million and $2.6 million of share-based compensation for fiscal 2007 and 2008, respectively.

The discontinued operations of the Tecstar Automotive Group business segment generated losses, net of tax effects, of $117.9 million in fiscal 2007 compared to a loss, net of tax effects, of $66.1 million in fiscal 2008. The disposal of Tecstar resulted in a gain of $8.6 million which was recognized during the third quarter of fiscal 2008 and recorded in discontinued operations.

The Company's net loss from continuing operations decreased from $22.6 million, or $0.37 a share, in fiscal 2007 to $19.0 million, or $0.25 a share, in fiscal 2008. The Company's net loss decreased from $140.5 million, or $2.28 a share, in fiscal 2007 to $85.0 million, or $1.11 a share, in fiscal 2008.

Recent Financing and Capital Resources

On May 30, 2008, the Company received $7.5 million in proceeds under a new term note structure and secured a $10.0 million commitment letter from its lender. The Company's principal sources of liquidity amount to $23.5 million, consisting of $6.0 million of cash and cash equivalents at April 30, 2008, $7.5 million of proceeds received on the new term note and $10.0 million of available committed funding. Based on current projections and estimates, the Company believes that its working capital and principal sources of liquidity are sufficient to fund its operating activities and obligations for at least the next twelve months.

Alan P. Niedzwiecki, President and CEO, stated, "This has been an exciting year for Quantum -- strategic investments in solar, the formation of Fisker Automotive, and improved financial results. Quantum Fuel Systems reported a significant increase in revenue in fiscal 2008, driven by strong hybrid and hydrogen vehicle product sales and the initiation of several new development programs and production-intent hydrogen, hybrid and alternative fuel vehicle programs. We plan to use the alliances established in fiscal 2008 as well as the substantial strides made in our proprietary technologies this past year as a catalyst as we begin preparation to reach production volumes on hybrid vehicle programs.

Niedzwiecki continued, "Our strategy going forward is three-pronged: First, we plan to continue to develop and refine our packaged fuel and propulsion systems to capture new customers in a growing hydrogen and alternative fuel vehicle market. Second, we plan to leverage our technologies and systems integration capabilities in the hybrid and plug-in hybrid OEM vehicle markets to support the launch of the Fisker Karma and to expand our customer base. Finally, we plan to expand our involvement in solar businesses and alliances by assembling solar modules in the United States and assess strategic opportunities in thin film modulization as well as opportunities in solar panel distribution and integration."

Niedzwiecki continued on the Company's solar initiatives, "In terms of solar expansion, we are excited about Asola's expansion to 45 MWs in Germany and we continue to target additional partnerships and expansion opportunities in Europe outside of Germany. Additionally, we plan to establish a 45MW solar modulization plant in California during fiscal 2009, which we are expecting will lead to tremendous upside potential in the U.S. market."

Niedzwiecki concluded, "The Fisker Karma vehicle program remains on target with production expected to begin in the 4th quarter of calendar 2009. Fisker Automotive expects to produce 7,500 Karmas in calendar 2010, for which Quantum will be providing the complete plug-in hybrid propulsion system based on lithium ion battery and control system technology."