– Business and technical advances, milestones for Mobion(R) product development –
Mechanical Technology, Incorporated (“MTI”) (NASDAQ: MKTY), a company primarily engaged in the development and commercialization of Mobion(R) off-the-grid portable power solutions through its subsidiary MTI MicroFuel Cells Inc. (“MTI Micro”) and in the design, manufacture and sale of test and measurement instruments and systems through its subsidiary MTI Instruments, Inc. (“MTI Instruments”), today announced its financial results for the quarter ended March 31, 2008.
Today, MTI also announced that its subsidiary MTI Micro delivered a Mobion(R) power source prototype to a global Japanese consumer electronics company under a development agreement entered into earlier this month.
“We have made significant progress since the start of the year,” said Peng Lim, CEO of MTI. “At MTI Micro, we launched a developmental pilot production line for Mobion(R), signed an agreement with a global Japanese consumer electronics company and developed and demonstrated three different Mobion(R) prototypes at global conferences and meetings – an external charging device, a power accessory attached to a digital camera and an embedded fuel cell-powered GPS device – all to help prepare for the planned launch of an initial Mobion(R) product in 2009. At MTI Instruments, we achieved a 16 percent increase in revenue.”
Financial Highlights: First Quarter 2008 -- Product revenue increased 16.4 percent to $2.0 million (2007 Q1: $1.7 million) -- Funded research and development (R&D) revenue decreased 71.9 percent to $173,000 (2007 Q1: $615,000) -- Net loss was $3.2 million, consistent with 2007 Q1 -- Capital resources (cash and marketable securities) totaled $8.1 million (2007 Q1: $18.1 million) -- Cash used in operations decreased 35.2 percent to $3.0 million Recent Developments -- May 12, 2008 - MTI Micro announced that the U.S. Department of Energy ("DOE") authorized the release of an additional $325,000 under its cost-shared program with MTI Micro. The program is designed to support the development of manufacturing techniques and the optimization of the Mobion(R) technology platform. -- May 7, 2008 - MTI Micro announced that it had entered into an agreement with a global Japanese consumer electronics company that develops products utilizing advanced optical and digital technologies, including digital cameras, to evaluate the feasibility, development and production of Mobion(R) products. -- May 2, 2008 - MTI Micro unveiled a new embedded Mobion(R) micro fuel cell prototype design for handheld global positioning system ("GPS") devices at the tenth Annual International Small Fuel Cells Conference in Atlanta, Georgia. The new Mobion(R) powered GPS prototype provides three times as much energy as GPS devices powered by four disposable AA batteries and, on a model with a large, full-color screen, generates up to 60 hours of continuous power. The prototype can be instantly recharged by refilling it with methanol and includes a USB interface, allowing it to be used as an independent energy source for recharging mobile phones, digital cameras, portable media players and other handheld electronic devices. -- April 30, 2008 - MTI announced that the U.S. Department of Transportation issued a final ruling that will permit passengers and crew to carry methanol fuel cell cartridges and fuel cell systems designed for portable electronic devices on board airplanes in carry-on baggage. The effective date of the ruling is October 1, 2008, although voluntary compliance with the ruling may commence as of May 30, 2008. -- April 2, 2008 - MTI Instruments unveiled the PV1000, a thickness measurement system for the solar cell production industry, at the Photovoltaic Technology Show in Munich, Germany. The PV1000 was created out of the platform for EVE, MTI Instruments' advanced data acquisition and analysis system. The PV1000, designed to be incorporated into solar cell production lines to quickly determine quality control issues, addresses a critical need for solar cell manufacturers around the world who are experiencing a growth in demand and need to manufacture high volumes of solar cells for mass consumption. Company Milestones Milestones for the first half of 2008 include: -- Implementation of an operational developmental pilot line, which was achieved in January -- Signing of an OEM for the consumer market, which was fulfilled by the agreement with the global Japanese consumer electronics company Milestones for the second half of 2008 include: -- Demonstration of a next generation power source prototype with a removable cartridge -- Delivery of product intent prototypes to OEMs for evaluation -- Selection of manufacturing partners
First Quarter Financial Results
Revenue for the three months ended March 31, 2008 increased 7.0 percent to $2.2 million compared to revenue of $2.3 million for the same period in 2007. First quarter revenue included $2.0 million in product revenue from MTI Instruments and $173,000 in funded Research and Development (“R&D”) revenue from MTI Micro. During the first quarter of 2008, product revenue increased $279,000, or 16.4 percent, reflecting sales increases in MTI Instruments’ aviation product line – in particular commercial aviation sales – coupled with smaller sales increases in semiconductor and general dimensional gauging products. Funded R&D revenue decreased $442,000, or 71.9 percent, with $418,000 of the decrease attributable to the completion of the SAFT contract during the first quarter of 2007. Revenue from MTI Micro’s contract with the DOE increased by $170,000 but was offset by a revenue decrease of $194,000 attributable to the conclusion of a strategic alliance agreement in July 2007.
Net loss for the three months ended March 31, 2008 of $3.2 million, or $0.08 per diluted share, was consistent with the net loss for the three months ended March 31, 2007. Net loss for the first quarter of 2008 compared to 2007 includes the effects of positive and negative revenue and expense changes. These changes include increases in gross margins on product sales, decreases in funded R&D revenue, cost savings in R&D spending, an increase in Selling, General and Administrative expenses, a decrease in gain on derivatives and a decrease in the income effects of minority interest shareholders. The R&D cost savings were primarily the result of savings derived from the first quarter 2007 decision to suspend efforts on MTI Micro’s high power program. Gross margin percentages on product sales for the three months ended March 31, 2008, remained consistent with the comparable period in 2007.
Cash flows: For the three months ended March 31, 2008, cash used in operations decreased by 35.2 percent to $3.0 million compared to $4.6 million in 2007, while cash used for capital expenditures increased to $102,000 from $50,000 in 2007.
See the attached financial highlights for the Company’s first quarter ended March 31, 2008.
Conference Call: First Quarter Results
MTI will host a conference call and webcast today at 10:30 a.m. EDT. The dial-in phone number for the conference call is (866) 277-1184 or (617) 597-5360 for international callers, and the pass code is 23267958. There will be a simultaneous webcast that can be heard by logging onto MTI’s Web site at www.mechtech.com. A replay of the conference call will be available within 24 hours on the Web site and will also be available via phone by dialing (888) 286-8010, or (617) 801-6888 for international callers, and when prompted, entering pass code 86043495.
MTI is primarily engaged in the development and commercialization of Mobion(R) off-the-grid portable power solutions through its subsidiary MTI MicroFuel Cells Inc. (“MTI Micro”). MTI Micro has a team of entrepreneurial business executives, researchers and scientists; a proprietary direct methanol micro fuel cell power system and a number of system prototypes demonstrating size reductions and performance improvements; and related intellectual property. MTI Micro has received government funding and developed strategic partnerships to facilitate efforts to achieve commercialization. MTI is also engaged in the design, manufacture, and sale of test and measurement instruments and systems through its subsidiary MTI Instruments, Inc. For more information about the Company please visit www.mechtech.com.
Statements in this press release which are not historical fact, including statements regarding management’s intentions, hopes, goals, beliefs, expectations, projections, plans, anticipation, outlook or predictions of the future, are forward looking statements. Such statements include, among others, MTI’s need to raise additional funding; MTI’s history of recurring net losses and the risk of continued net losses; MTI’s independent auditors raising substantial concern about its ability to continue as a going concern; the potential delisting of MTI’s common stock from The Nasdaq Global Market, the dependence of MTI Instruments on a small number of customers and potential loss of government funding; risks related to developing Mobion(R) direct methanol fuel cells and whether MTI Micro will ever successfully develop reliable and commercially viable Mobion(R) fuel cell solutions; MTI Micro’s plans under development agreements with its Korean partner and the global Japanese consumer electronics company; MTI’s, MTI Micro’s and MTI Instruments’ future business prospects, technology and performance; the market potential for MTI Micro’s Mobion(R) fuel cells; the significance of any contracts or grants that MTI Micro received or may receive including future funding from the DOE; the importance of and benefits from a developmental pilot production line; the ability of MTI Micro or its business representatives to develop key relationships with OEM decision makers, foster business development, or sell and support fuel cell systems to customers; the importance of any demonstrations of Mobion(R) powered sensors and the evaluation of and potential submission of proposals for military programs; MTI Micro’s and MTI Instruments’ ability to meet their respective stated milestones on time, if at all; and MTI’s, MTI Micro’s and MTI Instruments’ ability to increase or maintain sales in commercial, military and other governmental markets. All forward-looking statements are made as of today, and MTI disclaims any duty to update such statements. It is important to note that MTI’s actual results could differ materially from those projected in forward-looking statements. Factors that could cause the anticipated results not to occur include, among others, risks related to financing; uncertainties in development, manufacturing, competition and consumer demand for Mobion(R) power sources; Duracell’s ability to terminate its agreements with MTI Micro prior to commercialization of Mobion(R) power sources; and the risk factors listed from time to time in the Company’s SEC reports, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Balance Sheet Data: (Dollars in Thousands) December 31, March 31, 2007 2008 (Audited) (Unaudited) ---------------------- Assets Current Assets: Cash and cash equivalents $ 7,650 $ 4,560 Securities available for sale 4,492 3,537 Accounts receivable 1,369 1,382 Inventories, net 1,373 1,460 Prepaid expenses and other current assets 329 865 ---------------------- Total Current Assets 15,213 11,804 Long Term Assets: Property, plant and equipment, net 2,159 2,040 Deferred income taxes 1,344 968 ---------------------- Total Assets $18,716 $14,812 ====================== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 273 $ 518 Accrued liabilities 2,121 2,615 Deferred revenue 117 56 Income taxes payable 11 13 Deferred income taxes 1,344 968 ---------------------- Total Current Liabilities 3,866 4,170 Long-Term Liabilities: Uncertain tax position liability 208 209 Derivative liability 696 363 ---------------------- Total Liabilities 4,770 4,742 ---------------------- Minority interests 143 25 ---------------------- Stockholders' Equity 13,803 10,045 ---------------------- Total Liabilities and Stockholders' Equity $18,716 $14,812 ======================
Statements of Operations Data: (Dollars in Thousands, Except per Share Data) Three Months Ended March 31, March 31, 2007 2008 (Unaudited) (Unaudited) ----------------------- Revenues: Product revenue $ 1,701 $ 1,980 Funded research and development revenue 615 173 ----------------------- Total revenues 2,316 2,153 Operating costs and expenses: Cost of product revenue 738 840 Research and product development expenses: Funded research and product development 224 356 Unfunded research and product development 3,398 2,017 ----------------------- Total research and product development expenses 3,622 2,373 Selling, general and administrative expenses 2,456 2,618 ----------------------- Operating loss (4,500) (3,678) Gain on derivatives 969 333 Other income, net 141 42 ----------------------- Loss before income taxes and minority interests (3,390) (3,303) Income tax (expense) (11) (8) Minority interests in losses of consolidated subsidiary 245 124 ----------------------- Net loss $(3,156) $(3,187) ======================= Loss per Share (Basic and Diluted): Loss per share $ (0.08) $ (0.08) =======================
Statements of Cash Flows Data: (Dollars in Thousands) Three Months Ended March 31, March 31, 2007 2008 (Unaudited) (Unaudited) ----------------------- Net cash used by operating activities $(4,610) $(2,988) Purchases of property, plant and equipment (50) (102) Net cash (used) provided by investing activities (50) (102) Decrease in cash and cash equivalents (4,660) (3,090) Cash and cash equivalents - beginning of period 14,545 7,650 Cash and cash equivalents - end of period 9,885 4,560 As of December 31, March 31, Other Information: 2007 2008 ----------------------- Plug Power shares held 1,137,166 1,137,166
Source: Mechanical Technology, Incorporated
Released May 12, 2008