Quantum Technologies Reports Fiscal 2009 Second Quarter Financial Results

IRVINE, Calif., December 10, 2008: 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 hybrid, plug-in hybrid, hydrogen, and alternative fuel vehicles, today reported results for the three and six month periods ended October 31, 2008. Conference call information is provided below.

Second Quarter Operating Results

Total revenue in the second quarter of fiscal 2009 was $7.4 million compared to $6.2 million in the second quarter of fiscal 2008, a net increase of 19%. The increase in consolidated net revenue was due to higher development program revenues, partially offset by lower product sales. The Company's consolidated operating loss decreased from $4.6 million in the second quarter of fiscal 2008 to $2.7 million in the second quarter of fiscal 2009. The decrease was primarily due to the higher revenue base and in part to a gain recognized during the second quarter of fiscal 2009 in the Quantum Fuel Systems segment related to an insurance settlement associated with facility damages and costs stemming from a flooding incident occurring in September 2007.

The Quantum Fuel Systems operating segment loss decreased $1.9 million, or 95%, from $2.0 million in the second quarter of fiscal 2008 to $0.1 million in the second quarter of fiscal 2009. Corporate segment expenses increased $0.1 million, from $2.5 million in the second quarter of fiscal 2008 to $2.6 million in the second quarter of fiscal 2009. The shared-based compensation expense related to FAS 123R was $0.5 million and depreciation and amortization expense was $0.9 million during the second quarter of fiscal 2009.

Contract revenue for the Quantum Fuel Systems segment increased $4.1 million, or 141%, from $2.9 million in the second quarter of fiscal 2008 to $7.0 million in the second quarter of fiscal 2009. The increase was primarily due to higher development program revenues related to development of the "Q Drive" powertrain system for the Company's affiliate - Fisker Automotive. Other hybrid and plug-in hybrid development programs, military programs and other advanced propulsion system development programs were comparable for the second quarter of fiscal 2008 and 2009. Product sales for the Quantum Fuel Systems segment decreased $2.9 million, or 88%, from $3.3 million in the second quarter of fiscal 2008 to $0.4 million in the second quarter of fiscal 2009. The decrease was primarily the result of the completion of the GM Equinox program which occurred in the fourth quarter of fiscal 2008.

Asola, Quantum's German solar affiliate, recorded in equity in earnings of affiliates, had revenues of approximately $15.5 million and net income of $0.7 million during the second quarter of fiscal 2009.

Other income during the quarter ended October 31, 2008 related to the recognition of a life insurance claim resulting from the death of Quantum's Chief Operating Officer who had been on medical leave since December 2007.

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 three and six month periods ending October 31, 2007.

The Company's net loss from continuing operations decreased from $4.6 million, or $0.06 a share, in the second quarter of fiscal 2008 to $1.3 million, or $0.01 a share, in the second quarter of fiscal 2009. The Company's net loss decreased from $12.1 million, or $0.15 a share, in the second quarter of fiscal 2008 to $1.3 million, or $0.01 a share, in the second quarter of fiscal 2009.

Six Month Results

For the six month period ended October 31, 2008, the Company reported revenues of $11.1 million compared to revenues of $9.7 million for the six month period ended October 31, 2007. Contract revenues increased $5.5 million, or 110%, from $5.0 million in the first half of fiscal 2008 to $10.5 million in the first half of fiscal 2009. 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. The operating loss for the Quantum Fuel Systems segment decreased $1.5 million, or 31%, from $4.9 million in the first half of fiscal 2008 to $3.4 million in the first half of fiscal 2009.

Corporate segment expenses increased $0.1 million from $5.4 million in the first half of fiscal 2008 to $5.5 million in the first half of fiscal 2009. Corporate segment expenses reflect the general and administrative expenses that indirectly support our ongoing Quantum Fuel Systems operating segment and our anticipated future operating segments. Corporate segment 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. Included in operating expenses are $1.5 million and $1.1 million of share-based compensation for the first half of fiscal 2008 and 2009, respectively.

The Company's consolidated operating loss decreased from $10.3 million in the first half of fiscal 2008 to $8.9 million in the first half of fiscal 2009. During the first half of fiscal 2009, depreciation and amortization expense was $1.8 million. Cash used from operations during the first half of fiscal 2009 was $7.6 million which included $3.8 million in prepayments on a solar cell contract.

The May 2008 replacement of the Company's debt instruments resulted in a total non-cash charge - loss on modification of debt - of $39.8 million which was recorded during the first quarter of fiscal 2009 and is included in loss from continuing operations for the six month period in fiscal 2009. The charge represents the difference between the carrying balance of the notes and the estimated fair values of the notes, as amended, as of the date of such amendment. Since the implied premium totaling $39.8 million is presumed to represent equity in accordance with Accounting Principals Board (APB) 14, "Accounting for Convertible Debt," the implied premium is recorded as additional paid-in-capital under stockholders' equity.

The Company's net loss from continuing operations increased from $10.4 million, or $0.14 a share, in the first half of fiscal 2008 to $48.5 million, or $0.56 a share, in the first half of fiscal 2009. The Company's net loss decreased from $79.0 million, or $1.05 a share, in the first half of fiscal 2008 to $48.5 million, or $0.56 a share, in the first half of fiscal 2009.

Alan P. Niedzwiecki, President and CEO, stated, "The operating results during the second quarter were positively impacted by strong development program activity, primarily related to the Fisker Karma luxury premium hybrid vehicle program and other customer funded hybrid vehicle development programs. While we remain highly focused on the Fisker Karma program, many opportunities are developing that will allow us to leverage our clean-energy technology portfolio, including electric and hybrid propulsion system technology, natural gas systems, and hydrogen hybrid systems. We continue to make strides through integrating our technologies into vehicle refueling, vehicle recharging and renewable energy applications. We were excited to see the recent legislation allowing for up to a $7,500 credit to purchasers of plug-in hybrid vehicles and are expecting additional legislation in 2009 that will support 'green vehicle' and renewable energy technologies."