Raser Technologies Provides Update and Announces Third Quarter Financial Results
PROVO, Utah--Raser Technologies, Inc. , an energy technology company, today announced an update on its progress and financial results for the third quarter ended September 30, 2009.
Company Update:
- Thermo No. 1 Capacity Ramp-up: Raser continues to make progress in ramping up production of Thermo No. 1 to full capacity. The pump for the recently completed 5th production well is now in place and will run continually for the next several weeks as the water temperature heats up to production level temperatures at which point it will be connected to the plant. Until then, flow is being directed back into the ground through an existing injection well. Additionally, casing work on three other production wells has begun, which, when complete, is expected to result in higher average water temperatures.
- Thermo No. 1 Financing Amendments: Raser is negotiating an agreement with the tax-equity partner and debt holder for the Thermo No. 1 project. The purpose of this agreement is to consolidate ownership under Raser allowing the Thermo No. 1 project to take full advantage of the 30 percent federal grant for renewable energy projects under the American Recovery and Reinvestment Act of 2009 and to seek an extension on the deadline for “Final Completion” of the Thermo No. 1 project.
- Line of Credit: On October 20, 2009, Raser Technologies entered into a transaction with three of its line of credit lenders to facilitate Raser’s repayment of loan principal and accrued interest totaling $5.4 million. Raser’s fourth major lender, Kraig Higginson, Raser’s Chairman, was precluded from participating in this offering due to regulatory restrictions related to his position as an officer of Raser. Raser intends to explore alternative structures for satisfying its obligations to Kraig Higginson under the line of credit at a later date.
- SCPPA Update: Raser continues to progress in negotiations with SCPPA with respect to a previously announced term sheet pre-paid power purchase agreement. The expected structure of the agreement anticipates that Raser would build 110MW of capacity over a three to four year period at its Thermo, Utah site in a multi-phase development that would be financed, in part, under a pre-paid arrangement.
- Other Financing: Raser continues to pursue several alternatives for financing its development plans. In addition to pursuing pre-paid power purchase agreements, government grants and loan guarantees, and traditional forms of project financing, the company is in dialogue with EPC contractors to furnish full engineering, procurement and construction (“EPC”) “wraps” with financing for the construction phase of the plants. Raser is also currently working with potential strategic investors to finance the preconstruction phase of the plants, including exploration work and permitting, well field development, transmission and interconnection.
During the three months ended September 30, 2009, Raser reported revenue of approximately $845,000 compared to approximately $30,000 in the three months ended September 30, 2008. During the second quarter of 2009, Raser began selling electricity generated from its Thermo No. 1 plant to the City of Anaheim, California. During the third quarter, Raser sold approximately 9,800 MW hours of electricity.
Cost of sales for the three months ended September 30, 2009 was $2.9 million compared to $0 in the three months ended September 30, 2008. The increase in cost of sales for 2009 was primarily due to sales of electricity from the Thermo No. 1 power plant during the third quarter of 2009 and also to annual property tax assessments that had not been accrued previously. Gross margin was approximately $(2.0) million for the three months ended September 30, 2009 compared to gross margin of approximately $30,000 during the same period in 2008. Although the gross margin was negative for the quarter ended September 30, 2009, we anticipate that as the well field average temperature increases and Thermo No. 1 plant reaches full capacity, the plant will become more efficient and report a positive gross margin.
Total operating expenses decreased $2.7 million from $4.0 million for the third quarter of 2009 compared to $6.7 million for the third quarter of 2008. Included in the operating expenses were:
- General and administrative expenses remained flat at approximately $2.4 million for the third quarters of both 2009 and 2008. Equity-based non-cash employee and service provider compensation expense increased slightly by $0.1 million in the third quarter of 2009 compared to the same period in 2008. Other employment related costs also increased slightly by $0.1 million in the third quarter of 2009 compared to the third quarter of 2008, reflecting constant average salaries and employment levels.
- Power project development expenses during the three months ended September 30, 2009 totaled $1.2 million as compared to $3.2 million for the three months ended September 30, 2008. During the third quarter of 2009, professional services decreased by approximately $2.0 million due to costs incurred during the third quarter of 2008 relating to geological engineering consulting, transmission line capacity studies and legal fees associated with debt and tax equity financing structures contemplated by geothermal financing commitments that were not incurred during the third quarter of 2009. These fees were higher during the 2008 period due to the negotiation of the commitment letter we obtained from our debt and tax equity provider and the financing we obtained for the Thermo No. 1 plant. Employment related and other operating costs remained relatively flat as compared to the third quarter of 2008. Equity-based non-cash employee and contractor compensation for the three months ended September 30, 2009 also remained relatively flat as compared to the third quarter of 2008.
- Research and Development expense decreased from $971,000 in the three months ended September 30, 2008 to $365,000 for the three months ended September 30, 2009. Equity-based non-cash employee and contractor compensation for the third quarter of 2009 was relatively flat over the third quarter of 2008 primarily due to offsetting factors relating to decreasing headcount from the prior year while issuing stock grants to employees as part of their severance agreements during the current year resulting from the decision to reduce the cash requirements at Raser’s design center. Payroll costs also decreased by approximately $0.3 million due to the decrease in headcount. During the three months ended September 30, 2009, professional services decreased by approximately $0.2 million compared to the third quarter of 2008 primarily due to completing the majority of the consulting work relating to the PHEV project during the first quarter of 2009.
- Non-controlling interest for the third quarter of 2009 included the portion of the net loss allocated to a third party that owns a non-controlling interest in Raser’s Thermo subsidiary totaling $(249,000). Non-controlling interest during the third quarter of 2008 totaled $(1.2) million. Non-controlling interest increased during the third quarter of 2009 due to accruing liquidation preferences in accordance with the Thermo No. 1 plant financing agreements totaling $1.0 million. Previously, this line item was presented in Raser’s financial statements as minority interest.
- In aggregate, non-cash, equity-based expenses and equity-based compensation totaled $1.0 million during the third quarter of 2009 compared to $0.7 million in the third quarter of 2008.
Raser’s net loss applicable to common stockholders for the three months ended September 30, 2009 was $3.8 million, or $(0.05) per basic and diluted share (based on 74.9 million shares outstanding) compared to a net loss of $8.8 million, or $(0.15) per basic and diluted share (based on 57.8 million shares outstanding) for the three months ended September 30, 2008.
For the nine months ended September 30, 2009, Raser reported revenue of approximately $1.3 million compared to approximately $166,000 for the nine months ended September 30, 2008. Cost of sales for the nine months ended September 30, 2009 were approximately $4.7 million compared to approximately $74,000 for the nine months ended September 30, 2008. Gross margin was approximately $(3.5) million for the nine months ended September 30, 2009 compared to gross margin of approximately $92,000 during the same period in 2008. Total operating expenses for the nine months ended September 30, 2009 were $15.7 million down from $18.7 million during the same period in 2008.
Raser’s net loss applicable to common stockholders for the nine months ended September 30, 2009, was $14.2 million, or $(0.21) per basic and diluted share (based on 68.3 million shares outstanding) compared to a net loss of $21.7 million, or $(0.38) per basic and diluted share (based on 56.6 million shares outstanding) for the nine months ended September 30, 2008.
Conference Call with Investors
Management will host a conference call at 5 p.m. Eastern Time on Monday, November 9, 2009 to discuss Raser’s results with the investment community. Anyone interested in participating should call 877-407-0784, if calling within the United States, or 201-689-8560, if calling internationally. A replay will be available until November 16, 2009, which can be accessed by dialing 877-660-6853, if calling within the United States, or 201-612-7415, if calling internationally. Please enter account #3055 and conference ID #336145 to access the replay. The call will also be accompanied by a live webcast over the Internet and will be accessible at http://www.talkpoint.com/viewer/starthere.asp?Pres=128475 or www.rasertech.com.
About Raser Technologies
Raser Technologies is an environmentally focused technology licensing and development company operating in two business segments. Raser’s Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology and Raser’s Symetron™ technology developed internally by its Transportation and Industrial Technology segment. Raser’s Transportation and Industrial Technology segment focuses on extended-range plug-in-hybrid vehicle solutions and using Raser’s award-winning Symetron™ technology to improve the torque density and efficiency of the electric motors and drive systems used in electric and hybrid-electric vehicle powertrains and industrial applications. Further information on Raser may be found at: www.rasertech.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, our beliefs about preliminary drilling results; our beliefs about the potential for geothermal power generation on our leased properties and its qualification for certain federal tax credits; our beliefs about our ability to exploit the available geothermal resources; our beliefs about the expected timing relating to the completion of our geothermal power projects; our beliefs about our ability to increase production at our Thermo No. 1 plant to full capacity; our beliefs about our ability to obtain adequate development funding; our beliefs about our ability to restructure our financing arrangements with the tax-equity partner and debt holder for the Thermo No. 1 project; our beliefs about our ability to satisfy our remaining obligations under our line of credit; our beliefs about the progress of our negotiations with SCPPA with respect to potential pre-paid power purchase agreements; our beliefs about our ability to utilize available technologies to produce electric power from the available resources; our beliefs about the geothermal market in general; our beliefs about the performance and market applicability of our products; our beliefs about the status and enforceability of Raser’s intellectual property; our beliefs about the strength of our existing and potential business relations in the motor industry; our beliefs about the strength and enforceability of our agreements, our beliefs about the performance capabilities of our technology; our beliefs about the capabilities, expertise and intentions of our partners; our ability to hire, train and retain key personnel, including our ability to replace our Chief Executive Officer; and our ability to successfully complete field testing of Symetron™ technologies. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ, including, without limitation, the competitive environment and our ability to compete in the industry; our ability to adapt our technology for geothermal applications; our ability to secure necessary permits; the strength of our intellectual property; and such other risks as identified in our quarterly report on Form 10-Q for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission, and all subsequent filings.
All forward-looking statements in this press release are based on information available to us as of the date hereof, and we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.
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RASER TECHNOLOGIES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) |
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| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Revenue | $ | 845,265 | $ | 30,000 | $ | 1,252,506 | $ | 166,423 | ||||||||
| Cost of revenue | ||||||||||||||||
| Direct costs | 2,150,652 | — | 3,283,296 | 74,112 | ||||||||||||
| Depreciation and amortization | 735,126 | — | 1,445,900 | — | ||||||||||||
| Gross margin | (2,040,513 | ) | 30,000 | (3,471,690 | ) | 92,311 | ||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 2,352,612 | 2,447,878 | 7,633,943 | 7,562,902 | ||||||||||||
| Power project development | 1,245,849 | 3,232,729 | 6,509,230 | 8,012,210 | ||||||||||||
| Research and development | 364,557 | 970,925 | 1,592,124 | 3,134,138 | ||||||||||||
| Total operating expenses | 3,963,018 | 6,651,532 | 15,735,297 | 18,709,250 | ||||||||||||
| Operating loss | (6,003,531 | ) | (6,621,532 | ) | (19,211,987 | ) | (18,616,939 | ) | ||||||||
| Interest income | 33,538 | 94,030 | 122,342 | 265,306 | ||||||||||||
| Interest expense | (3,481,165 | ) | (1,077,695 | ) | (8,714,110 | ) | (2,180,976 | ) | ||||||||
| Gain on derivative instruments | 5,918,100 | — | 12,917,454 | — | ||||||||||||
| Other | — | — | (131,442 | ) | 75,775 | |||||||||||
| Loss before income taxes | (3,533,058 | ) | (7,605,197 | ) | (15,017,743 | ) | (20,456,834 | ) | ||||||||
| Tax benefit (expense) | — | — | — | — | ||||||||||||
| Net loss | $ | (3,533,058 | ) | $ | (7,605,197 | ) | $ | (15,017,743 | ) | $ | (20,456,834 | ) | ||||
| Non-controlling interest in the Thermo No. 1 subsidiary | (248,513 | ) | (1,226,070 | ) | 806,458 | (1,226,070 | ) | |||||||||
| Net loss applicable to common stockholders | $ | (3,761,571 | ) | $ | (8,831,267 | ) | $ | (14,211,285 | ) | $ | (21,682,904 | ) | ||||
| Loss per common share-basic and diluted | $ | (0.05 | ) | $ | (0.13 | ) | $ | (0.21 | ) | $ | (0.38 | ) | ||||
| Weighted average common shares-basic and diluted | 74,881,000 | 57,785,000 | 68,321,000 | 56,646,000 | ||||||||||||
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RASER TECHNOLOGIES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) |
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September 30, 2009 |
December 31, 2008 |
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| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,817,632 | $ | 1,534,820 | ||||
| Restricted cash | 76,921 | 75,704 | ||||||
| Notes receivable, net | — | 144,525 | ||||||
| Accounts receivable, net | 274,871 | — | ||||||
| Restricted marketable securities (held to maturity) | 4,382,258 | 6,521,347 | ||||||
| Other current assets | 1,421,559 | 1,147,562 | ||||||
| Total current assets | 9,973,241 | 9,423,958 | ||||||
| Restricted cash | 12,387,611 | 20,900,135 | ||||||
| Land | 1,811,063 | 1,811,063 | ||||||
| Geothermal property, plant and equipment, net | 107,708,919 | — | ||||||
| Power project leases and prepaid delay rentals | 6,730,136 | 8,630,643 | ||||||
| Geothermal well field development-in-progress | 857,234 | 31,388,628 | ||||||
| Power project construction-in-progress | 8,036,019 | 74,072,394 | ||||||
| Power project equipment, net | — | 19,727,500 | ||||||
| Equipment, net | 679,585 | 608,886 | ||||||
| Intangible assets, net | 1,543,323 | 1,587,310 | ||||||
| Deferred financing costs, net | 6,812,908 | 7,670,382 | ||||||
| Power project development deposits | — | 4,196,550 | ||||||
| Other assets | 1,618,608 | 4,006,999 | ||||||
| Total assets | $ | 158,158,647 | $ | 184,024,448 | ||||
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Liabilities and Stockholders’ Equity |
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| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 15,536,392 | $ | 64,471,336 | ||||
| Unsecured line of credit, net of discount of $462,403 | 10,211,449 | — | ||||||
| Short-term portion of long-term notes | 3,001,754 | 1,831,147 | ||||||
| Note payable | — | 945,833 | ||||||
| Deferred revenue | 200,000 | 200,000 | ||||||
| Total current liabilities | 28,949,595 | 67,448,316 | ||||||
| Asset retirement obligation | 2,695,217 | 2,152,230 | ||||||
| Long-term 7.00% senior secured note (non-recourse), net of discount of $4,575,832 and $4,898,833, respectively | 24,946,381 | 25,120,464 | ||||||
| Long-term 8.00% convertible senior notes | 55,000,000 | 55,000,000 | ||||||
| Warrants | 14,254,259 | — | ||||||
| Total liabilities | 125,845,452 | 149,721,010 | ||||||
| Contingencies and commitments, (see Notes A,D,E,G) | ||||||||
| Non-controlling interest in Thermo No. 1 subsidiary | 27,850,256 | 28,025,116 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
| Common stock, $.01 par value, 250,000,000 shares authorized, 76,020,619 and 63,519,455 shares issued and outstanding, respectively | 760,206 | 635,195 | ||||||
| Additional paid in capital | 107,419,484 | 102,350,814 | ||||||
| Accumulated deficit | (103,716,751 | ) | (96,707,687 | ) | ||||
| Total stockholders’ equity | 4,462,939 | 6,278,322 | ||||||
| Total liabilities and stockholders’ equity | $ | 158,158,647 | $ | 184,024,448 | ||||