Evercel, Inc., Reports Third Quarter Results
9 September 1999
Evercel, Inc., Reports Third Quarter Results
DANBURY, Conn.--September 9, 1999--Taiwanese Electric Scooter Market
Evercel, Inc. , a manufacturer of advanced rechargeable batteries, today reported that its third quarter results continue to reflect the Company's investment in new production required to commercialize its patented, nickel-zinc battery.
"Our Xiamen China manufacturing facility has received its first order for Evercel's patented nickel-zinc rechargeable battery and has begun production," said Robert L. Kanode, president and CEO of Evercel. "In addition to this major step forward, we have established a presence in the Taiwanese electric scooter market. These two accomplishments position us to respond to what we believe will be a rapidly accelerating demand for our patented battery products."
Financial Results
For the three months ended July 31, 1999, Evercel reported a net loss of $1,305,000 or a loss of $0.46 per basic and diluted share, compared with a net loss of $478,000 or a loss of $0.34 per basic and diluted share during the corresponding period in 1998.
Third-quarter results reflect increased spending on sample products for potential customers, increased spending on technical and production staff, and capital and related expenses required to purchase and install the initial manufacturing equipment to prepare for production.
For the nine months ended July 31, 1999, the Company reported a net loss of $3,082,000 or a loss of $1.54 per basic and diluted share compared with a net loss of $1,323,000 or a loss of $0.95 per basic and diluted share during the same period in 1998.
Third Quarter Progress Report
The third quarter was one of steady progress toward commercialization of Evercel's patented nickel-zinc rechargeable battery. Chief among the Company's accomplishments were:
| -- | Production start-up in China. Following full manufacturing qualification by Evercel, the Company's manufacturing facility in Xiamen China has accepted its first production order and has begun production. Xiamen Three Circles-ERC Battery Corp., Ltd., Evercel's joint venture partner in China, has received an order from the Xiamen Bicycle Company. Shipment of nickel-zinc rechargeable batteries began in August. The order will be used to power the first electric bicycles for the Xiamen China Post Office Department. Xiamen Bicycle plans to expand its business into the consumer market using bicycles powered exclusively by Evercel Nickel-Zinc batteries. |
| -- | Establishment of a presence in the Taiwanese electric scooter and bike market. In August, Taiwan Sanyang Industry Co., Ltd., one of the major scooter manufacturers in Taiwan, completed a road test comparing Evercel's nickel-zinc battery to an equivalent size lead-acid battery. The Company's nickel-zinc battery passed with flying colors, demonstrating a total life distance twice that of the lead-acid alternative. The Company believes these outstanding test results have placed Xiamen Three Circles-ERC Battery Corp. Ltd. in a highly competitive position in Taiwan's electric scooter battery market. |
| -- | Advancement of progress toward a semi-automated assembly process. During the quarter Evercel's engineers made significant progress toward completing the design of a semi-automated assembly process. As a result, the Company has completed an important step toward achieving our manufacturing capacity goals of 30,000 scooter packs by the end of 1999 and 90,000 by the end of 2000. |
Future Outlook
The Xiamen China and Taiwanese electric bike and scooter markets are not only growing, but are committed to the use of energy-efficient, environmentally friendly product solutions.
The city of Xiamen plans to integrate the best technologies to improve the quality of transportation, improve air quality and reduce noise pollution. The first order from the Xiamen Bicycle Company reflects the city's confidence in the nickel-zinc battery's superior performance over lead-acid batteries, which are heavier and provide only a limited range and life. As the Company completes this first order, it expects to cement a long-term relationship that will result in ongoing demand from both the government and consumers.
The successful testing of the nickel-zinc battery by Taiwan Sanyang Industry Co., Ltd., positions Evercel for strong growth in a thriving market. The Taiwanese government has passed a regulation stipulating that 2 percent of every custom scooter manufacturer's output in the year 2000 be electrically powered. The government is also offering incentives to scooter manufacturers to convert to longer-performing batteries. By submitting to testing - and achieving excellent results - with one of the country's leading scooter manufacturers, the Company has gained a clear competitive advantage and is well positioned to gain market share.
Evercel, Inc., is a leading manufacturer of high-performance, environmentally safe and cost-effective nickel-zinc rechargeable batteries for a wide range of applications, including bicycles, scooters, electric vehicles, trolling motors for boats, lawn mowers, electric wheelchairs and golf carts. The Company, based in Danbury, Connecticut, operates manufacturing facilities in Danbury and in Xiamen China. In China, the Company operates as Xiamen Three Circles - ERC Battery Corp., Ltd., a joint venture in which Evercel is the majority owner.
This press release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the commercialization of its battery technology. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, the risk that the completion of the Xiamen manufacturing or commercial sales as currently anticipated, the risk that Evercel's nickel-zinc battery will not perform as projected when produced in volume or that the cost of volume manufacturing exceeds Evercel's estimates, general risks associated with doing business in China, product development, manufacturing and introduction, rapid technological change, and competition, unanticipated costs and expenses or other events affecting Evercel's business, as well as other risks set forth in Evercel's filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. Evercel expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in Evercel's expectations or any change in events, conditions or circumstances on which any such statement is based.
RESULTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
THREE MONTHS ENDED JULY 31,
1999 1998
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Revenues -- --
License fee income, net -- 201
(Loss) before income taxes $ (1,305) $ (724)
Net (loss) $ (1,305) $ (478)
Basic and diluted (loss)
per share (a) $ (0.46) $ (0.34)
Basic and diluted
shares outstanding (a) 2,861,045 1,389,000
NINE MONTHS ENDED JULY 31,
1999 1998
----- ----
Revenues -- 2
License fee income, net -- 419
(Loss) before income taxes $ (3,442) $ (2,005)
Net (loss) $ (3,082) $ (1,323)
Basic and diluted (loss)
per share (a) $ (1.54) $ (0.95)
Basic and diluted
shares outstanding (a) 1,998,848 1,389,000
(a) Proforma shares outstanding reflect shares issued in conjunction
with the spin-off from Energy Research Corporation on February
22, 1999 of 1,388,856 shares of common stock as if they were
outstanding as of the beginning of the periods presented.
BALANCE SHEET
(In thousands)
(unaudited)
ASSETS
July 31, October 31,
1999 1998
Current assets $3,765 $ 18
Property, plant & equipment,
Net 1,818 825
Other assets 48 333
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Total assets $5,631 $ 1,176
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LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, October 31,
1999 1998
Current liabilities $ 483 $ 736
Other long-term liabilities -- 17
Shareholders' equity 5,148 423
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Total liabilities and
Shareholders' equity $5,631 $1,176
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