Clean Diesel Technologies Reports Third Quarter
24 November 1999
Clean Diesel Technologies Reports Third Quarter, Nine-Month Results
STAMFORD, Conn.--Nov. 24, 1999--Clean Diesel Technologies Inc. (EBB:CDTI), a development stage company, Wednesday reported results for the third quarter and nine months ended Sept. 30, 1999.For the third quarter, CDT reported a net loss attributable to common stockholders of $2,429,000, or $0.94 per share, compared with a net loss of $945,000, or $0.38 per share for the same year-earlier period. For the nine months ended Sept. 30, 1999, CDT reported a net loss attributable to common stockholders of $3,797,000, or $1.48 per share, compared with a net loss of $2,202,000, or $0.87 per share during the prior year's nine-month period.
Included in the third quarter and nine-month results was a one-time imputed non-cash preferred dividend of $1,750,000, or $0.68 per common share. Without the one-time imputed non-cash preferred dividend, CDT's net loss attributable to common stockholders for the three and nine months ended Sept. 30, 1999 would have been $679,000, or $0.26 per common share, and $2,047,000, or $0.80 per common share, respectively.
The one-time imputed non-cash preferred dividend referred to above was the result of the successful completion of the company's $1.75 million preferred stock offering. During the third quarter, the company received commitments from investors for a further issue of its Series A Convertible Preferred Stock at a time when the company's common stock traded below the conversion price of $1.50.
Prior to receiving the proceeds of the offering, however, the price of the company's common stock increased to more than $3.00 per share. Because the increase in the share price preceded the receipt of the offering proceeds, the company is required to recognize this one-time imputed non-cash preferred dividend of $1.75 million, or $0.68 per common share for the three- and nine-month periods ending Sept. 30, 1999.
CDT President and CEO Jeremy D. Peter-Hoblyn commented, "I am pleased to report that the company is making the transition from research and development to commercialization of both its patented ARIS(TM) 2000 NOx reduction technology and its Platinum Plus(R) bimetallic diesel fuel combustion catalyst.
"So far this year," he said, "the company has sold seven ARIS 2000 advanced reagent injection systems to an engine manufacturer and a catalyst company for durability testing while three systems were installed on engines operating at a major New Jersey refinery and research center. Field performance of 70-90 percent NOx reduction has been achieved using these systems in conjunction with several different SCR catalysts."
Peter-Hoblyn said that inquiries for more than $2 million in quotations have resulted from regulatory developments in Atlanta, California, Houston and the northeastern states "that recognize the contribution of diesel engine emissions to urban smog."
The company's patented return-flow urea injector and pre-packaged pumping and control module provides a low capital cost solution to NOx control for both new and existing stationary, marine and locomotive diesel engines from 200 hp to 4000 hp. Field engineered systems expand the range to 9000 hp. Cost effectiveness is often under $1000/ton of NOx removed which can be less than the cost to control NOx emissions from large power generating utility boilers.
The company recently signed a letter of intent to license Ridgefield, Conn.-based RJM Corp. to manufacture and sell CDT's ARIS 2000 NOx control system for all stationary, marine and locomotive applications in North, Central and South America.
The company will receive a one-time payment of $1 million payable in two installments and a running royalty on sales of ARIS 2000 systems. A formal agreement is expected to be signed by January 2000 subject to due diligence by RJM.
Commenting on the agreement with RJM, Peter-Hoblyn stated that "RJM is a well respected supplier of NOx control technologies to utilities and industry and is already a licensed supplier of the NOxOUT urea based SNCR Process for power boilers. They selected the ARIS 2000 as the best technology for control of NOx from diesel engines and this is a logical extension to their product line."
He added, "RJM possesses the engineering, project management and technical services skills necessary to support the growth of the ARIS 2000 business.
Under the agreement, the company will transfer its stationary NOx business and inventory along with two technical staff to RJM. If the RJM license and transfer of staff are completed as planned, the company expects to have adequate cash to finance operations through early 2001, even if, contrary to expectations, there are no royalty receipts or commercial sales.
In response to several recent requests to demonstrate the ARIS technology on mobile sources, the company and RJM have agreed to cooperate on project and program engineering tasks to support potential mobile demonstration programs. The company has retained all rights to on-highway and off-road mobile applications.
Several heavy-duty trucks have already been fitted with prototypes of the company's mobile ARIS 2000 system and engine dynamometer tests have confirmed more than 80 percent NOx reduction on both transient and steady state testing.
One engine test of a combination of an advanced SCR catalyst with the ARIS injection system and a particulate filter achieved more than 85 percent NOx reduction and 90 percent particulate reduction. The company intends to offer the mobile ARIS system for license to engine, catalyst or tier 1 component suppliers.
Peter-Hoblyn also reported that the Platinum Plus diesel fuel combustion catalyst had recently been confirmed to improve average fleet fuel economy by 6 percent in two separate 60 day commercial field trials involving more than 50 heavy duty trucks. This represents savings of up to eight cents per gallon at a cost of roughly half that amount, he said.
Peter-Hoblyn reported that CDT is in negotiations with several additive marketers and fuel suppliers to establish a co-exclusive nationwide sales and distribution network to market the performance benefits of Platinum Plus to fleet and heavy duty equipment owners. "Our plan is to launch the bimetallic product in early 2000 as a blended product for fleets and as a component of a super premium diesel fuel offered by fuel suppliers," he said.
Markets for the bimetallic fuel additive are also developing in Europe, Asia and North America for use with diesel particulate filters that use additives to assist with oxidation of the soot collected in the filter (regeneration). The company's bimetallic fuel borne catalyst has been extensively tested with various filters and dramatically lowers the temperature required to oxidize the soot.
The bimetallic product is much more active at soot oxidation than other products such as iron or cerium alone and hence it can be used at much lower levels of metal which causes less ash build up in the filter, thus extending the life of the filter and reducing backpressure on the engine. This can help to eliminate the traditional fuel economy penalty associated with filter systems.
In a recent on-highway demonstration program with a major US diesel engine manufacturer the bimetallic additive and filter system successfully performed over several thousand miles of operation including an extended period of operation at exhaust temperatures of less than 300C and through a rigorous 200 stop-start urban delivery cycle.
Diesel soot normally requires temperatures of 540C to be oxidized to carbon dioxide and water vapor and the filter would have quickly plugged without the catalytic effects of the fuel additive. More than a dozen filter manufacturers are evaluating the additive in engine and field programs and the company is working with several of them to certify the additive/filter system for use in German and Swiss mines and tunnels and for construction equipment.
Additionally, the proposed European regulations for 2005 are designed to force the use of filters on all heavy duty vehicles by 2005. Peugeot recently announced plans to use an on-board reservoir of a cerium combustion catalyst with a filter on a new vehicle in 2000 and several European light duty diesel manufacturers have asked the company to participate in evaluations of different additive filter systems for their next generation of clean diesel vehicles.
The company is seeking a partner from the additive industry to participate in these programs and to provide commercial support if the programs are successful.
Recently published results from an industry consortium also confirmed the benefits of the bimetallic additive in improving the performance of a diesel oxidation catalyst. These results were presented in SAE Paper No. 1999-01-3564 which demonstrated that the bimetallic fuel borne catalyst significantly improved the performance of a diesel oxidation catalyst.
The company expects retrofit markets to develop for the bimetallic additive used with oxidizers or filters based on programs underway in California and NESCAUM as well as London, Paris, Hong Kong and Taipei to control emissions from existing diesel engines.
The company plans to apply for certification of its bimetallic under the EPA's recently announced voluntary diesel retrofit program which gives states credit in their attainment plans for application of certified diesel emissions control technologies. Testing by the company in conjunction with several oxidizer and filter manufacturer companies is scheduled for early 2000 to support such certification.
Research and development expenses decreased to $197,000 in the third quarter of 1999 from $269,000 in the comparable 1998 period. In the first nine months of 1999, research and development expenses decreased to $649,000 from $684,000 in the comparable period in 1998. R&D costs have begun to decrease as the company transitions from research and development to commercialization.
Patent costs also decreased in the third quarter and year to date to $32,000 and $84,000 respectively from $39,000 and $119,000 in 1998. Finally, CDT's general and administrative expenses (G&A) for the third quarter and nine-months were $372,000 and $1,124,000 respectively, which was in line with 1998's $366,000 and $1,121,000 of G&A expenses.
Clean Diesel Technologies Inc. is a development-stage company with patent-protected products that reduce emissions from diesel engines while simultaneously improving fuel economy and power. R&D efforts and products are grouped into two categories: Platinum Plus fuel catalysts and NOx Reduction Systems. Platinum Plus is a registered trademark of Clean Diesel Technologies.
Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known or unknown risks, including those detailed in the company's filings with the Securities and Exchange Commission, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
CLEAN DIESEL TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
Period from
Three Months Ended Nine Months Ended Jan. 1, 1992,
Sept. 30, Sept. 30, through
1999 1998 1999 1998 Sept. 30, 1999
Sales $ 41 $ 30 $ 100 $ 39 $ 345
Costs and expenses:
Cost of sales 19 19 57 24 218
General and
administrative 372 366 1,124 1,121 7,681
Research and
development 197 269 649 684 6,975
Patent filing
and maintenance 32 39 84 119 1,178
Loss from
operations 579 663 1,814 1,909 15,707
Interest income (9) (9) (31) (30) (653)
Interest expense 1 44 2 76 304
Cost of withdrawn
Rights Offering -- 247 -- 247 264
Net loss 571 945 1,785 2,202 15,622
One-time imputed
non-cash preferred
dividend 1,750 -- 1,750 -- 1,750
Preferred Stock
dividend 108 -- 262 -- 262
Net loss attributable
to Common
Stockholders $ 2,429 $ 945 $ 3,797 $ 2,202 $ 17,634
Basic and diluted
loss per
Common Share $ 0.94 $ 0.38 $ 1.48 $ 0.87 N/A
Average number of
Common Shares
outstanding 2,592 2,517 2,574 2,517 N/A