com:20090506:RnsF7348R
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RNS Number : 7348R
PolyFuel Inc.
06 May 2009
06 May 2009
POLYFUEL, INC.
SURPASSES LITHIUM ION BATTERIES IN RUNTIME VERSUS SIZE AND WEIGHT
AND ANNOUNCES PRELIMINARY RESULTS FOR
12 MONTHS ENDED 31 DECEMBER 2008
PolyFuel, Inc. (AIM: PYF) ("PolyFuel" or the "Company"), a world leader in fuel
cell membrane products and related technologies, today announces the achievement
of a key milestone in its Non-Stop Power reference design programme, a Direct
Methanol Fuel Cell (DMFC) system which surpasses a lithium ion equivalent
battery, a major industry technological achievement. The Company also announces
its preliminary results for the year ended 31 December 2008.
During the year, PolyFuel continued to develop its third generation DM3 membrane
and novel Membrane Electrode Assembly (MEA), which together enable a significant
simplification in customers' fuel cell system designs and the delivery of
non-stop power for end users. PolyFuel resolved several key technical
challenges and has now achieved the 5th of 5 key milestones, in its cost-shared
DOE programme, defined as completing a working demonstration prototype of a fuel
cell power supply that achieves the small consumer-acceptable form factor
necessary to integrate with a notebook PC and surpasses the performance of
today's lithium-ion batteries in terms of runtime versus size and weight.
Specifically, PolyFuel achieved this milestone by increasing the power output of
the fuel cell, improving the thermal management of the system, improving the
capacity of the fuel cartridge, and fine tuning the properties of the MEA to
achieve the correct amount of water recycling. The industry-defined performance
target for the fuel cell power supply was 10 hours of runtime at 15 watts
average power in a 500cc integrated package, equating to an energy density of
300 watt-hours per liter. PolyFuel's unit was able to easily surpass this,
delivering 313 watt-hours per liter, at a 30% weight saving compared to any of
today's equivalent lithium-ion battery packs.
2008 Financial Highlights:
* Generated revenue of US$2.0 million, an increase of US$0.6 million over
2007 revenue of
US$1.4 million, the majority of which was from the Company's ATP program,
DOE program,
and the US Army CERDEC program;
* Net loss for the year was US$(7.6) million, an improvement of US$0.9
million from a US$(8.5)
million loss in 2007;
* Reduced overall expenditure levels to significantly lower the Company's
cash burn rate (2009
cash burn rate is currently expected to average in the US$425,000 to
US$450,000 per month
range, down from an average of approximately US$600,000 per month in 2008);
and
* Finished 2008 with US$6.6 million in cash and cash equivalents.
Jim Balcom, Chief Executive Officer commented:
"2008 was a challenging year for fuel cell technology in general, for the
application of fuel cell technology to portable electronics in particular, and
for PolyFuel. The development of portable fuel cell systems technology did not
progress as quickly as we had expected. However, despite the slow progress on
the commercialization front, the demand on behalf of consumers for longer
runtime power supplies continues to grow. Major consumer electronics companies
and battery manufacturers continue to invest in portable fuel cell technology
development, and particularly in direct methanol fuel cell technology. PolyFuel
continues to be recognized as a world leader in this field.
PolyFuel has continued to advance the state of the art in DMFC with the
announcement today that its prototype has surpassed lithium-ion batteries in
terms of runtime versus size and weight. We were also encouraged by the DOE's
announcement two weeks ago that PolyFuel was awarded a grant of $2.5 million to
further miniaturize the Company's Non-Stop Power reference design technology and
to extend its durability and reduce its cost for broader commercial application.
On the customer front we have signed Memoranda of Understanding with two large
consumer electronics manufacturers for use of our Non-Stop Power technology and
are working to progress those to joint development agreements for the
introduction of fuel cell powered consumer products.
We continue to seek additional capital to extend the Company's runway, which
will be necessary to achieve the Company's objectives. "
PolyFuel anticipates receiving an unqualified opinion from its auditors,
PriceWaterhouseCoopers, regarding the Company's 2008 financial statements. The
PWC opinion, which will appear in PolyFuel's 2008 Annual Report, is also
expected to include an explanatory paragraph with regard to the Company's
ability to continue as a going concern.
For further information, please contact:
PolyFuel, Inc. Tel: +1 650 429 4646
Jim Balcom, Chief Executive Officer
Hogarth Partnership Limited Tel: +44 (0)20 7357 9477
Nick Denton / Ian Payne
KBC Peel Hunt (Nominated Adviser and Broker) Tel: +44 (0)20 7418 8900
Jonathan Marren / David Anderson
About PolyFuel
PolyFuel (www.polyfuel.com) is a world leader in fuel cell technology,
particularly engineered membranes that provide significantly improved
performance in both direct methanol and hydrogen fuel cells, especially for
portable electronic and automotive applications. The state of the art of fuel
cells is closely tied to the membrane, and PolyFuel's best in class,
hydrocarbon-based membranes, enable a new generation of fuel cells that for the
first time can deliver on the long-awaited promise of clean, long-running, and
cost-effective portable power. PolyFuel was spun out of SRI International
(formerly the Stanford Research Institute) in 1999, after 14 years of applied
membrane research. The company is based in Mountain View, California, and is
publicly listed on the AIM stock exchange in London.
Chairman and Chief Executive's Review
2008 was a challenging year for fuel cell technology in general, for the
application of fuel cell technology to portable electronics in particular, and
for PolyFuel.
The development of portable fuel cell systems technology did not progress as
quickly as PolyFuel had expected. However, during the year PolyFuel continued
to develop its third generation DM3 membrane and novel membrane electrode
assembly (MEA), which together will enable a significant simplification in
customers' fuel cell system designs and the delivery of non-stop power for end
users. These breakthroughs have been developed with the assistance of a $3
million grant from the US Department of Energy. PolyFuel solved several key
challenges along the way to successfully reaching the 5th of five milestones in
the program, defined as completing a working demonstration prototype of a fuel
cell power supply that achieves the small consumer-acceptable form factor
necessary to integrate with a notebook PC.
Specifically, the achievement of this milestone included increasing the power
output of the fuel cell, improving the thermal management of the system,
improving the capacity of the fuel cartridge, and fine tuning the properties of
the MEA to achieve the correct amount of water recycling. The specific
performance target for the fuel cell power supply was 10 hours of runtime at 15
watts average power in a 500cc integrated package, equating to an energy density
of 300 watt-hours per liter. The Company's prototype system was able to easily
surpass this, delivering an energy density of 313 watt-hours per liter, at a 30%
weight saving compared to any of today's lithium-ion battery packs.
PolyFuel is in discussions with several major notebook PC and Lithium ion
battery manufacturers to secure one or more agreements for joint development of
preproduction prototype systems for consumer electronic applications. These
agreements, which are expected to include a license to PolyFuel's non-membrane
DM3 technology and long term supply agreement for PolyFuel's DM3 membrane,
should accelerate commercialization of the partners' fuel cell powered
products. Two of the targeted partners have signed MOUs confirming their
intentions to complete negotiations with PolyFuel on the joint development
agreements.
In 2008, PolyFuel was awarded a continuation of its funded program with the US
Army's Communications, Electronics Research and Development and Engineering
Command (CERDEC). The program is conducted in partnership with the University
of North Florida and is expected to contribute approximately $450,000 in funding
to PolyFuel during 2009. The program goal is to ruggedize the Company's
demonstration prototype system based on its breakthrough DM3 membrane and MEA
technology.
In April 2009, the Company received news from the US Department of Energy that
it had been awarded a US$2.5 million grant under the American Recovery and
Reinvestment Act. The objectives of the program are to advance the Company's
Non-Stop Power technology to achieve the durability targets required for
commercialization, to further decrease the size of its demonstration prototype
system, and to conduct design for manufacturability and assembly analyses along
with its consumer electronics partners to achieve commercial cost targets.
PolyFuel encountered difficulty with the commercial introduction of its second
generation DM2 membrane. The new DM2 membrane introduced in 2008 is designed to
be a drop-in replacement for DuPont's more long-established Nafion membrane for
customers that had already designed their prototype systems to accommodate the
Nafion material. During the development effort, customers had expressed a clear
preference for the properties of PolyFuel's DM2 membrane compared to Nafion.
However, the introduction of PolyFuel's DM2 membrane was delayed due to
integration problems during customer qualification trials. The Company invested
significant time and effort in 2008 and early 2009 to identify and correct the
cause of these problems and qualification trials of the DM2 membrane have
recently been resumed with selected customers.
During 2008 and into 2009 the Company implemented a number of cost saving
measures. Its monthly cash burn rate is currently expected to average
approximately US$425,000-$450,000 in 2009, down from an average of approximately
US$600,000 in 2008.
PolyFuel finished 2008 with US$6.6 million in cash and cash equivalents. The
Company has begun an aggressive program to secure additional sources of capital
to help fund the completion of the Company's technology and product development
and achieve commercial introduction, a process which is continuing in 2009.
Fuel cell technology remains a challenging field, characterized by deep
multidisciplinary science, significant technical hurdles, and a need for
regulatory and infrastructure changes. 2008 saw a further key step in the
worldwide implementation of new transportation regulations enabling portable
fuel cells to be carried on board and operated on commercial aircraft and all
other forms of commercial transportation. The implementation of such
regulations has been progressing strongly since before 2004, and all necessary
directives related to the transport of direct methanol fuel cells and methanol
fuel cartridges are now in place, enabling fuel cell powered portable electronic
devices to become a commercial reality.
Despite the slow progress on the commercialization front, the demand on behalf
of consumers for longer runtime power supplies continues to grow. Major
consumer electronics companies and battery manufacturers continue to invest in
portable fuel cell technology development, and particularly in direct methanol
fuel cell technology. PolyFuel continues to be recognized as one of the world
leaders in this field.
PolyFuel, Inc.
(A development stage enterprise)
UNAUDITED Consolidated Statements of Operations
Period from
27 January 1999
(Inception) to
Year Ended 31 December 31 December
2008 2007 2006 2008
U.S.$ U.S.$ U.S.$ U.S.$
Revenues 2,012,402 1,391,247 184,600 5,473,457
Costs and operating expenses
Research and development 5,431,751 5,665,354 5,582,924 40,731,751
General and administrative 4,457,005 5,099,380 5,433,608 34,266,612
Total expenses 9,888,756 10,764,734 11,016,532 74,998,363
Loss from operations (7,876,354) (9,373,487) (10,831,932) (69,524,906)
Other income (expense), net (26,933) (4,688) (12,865) (61,048)
Interest income 292,771 921,176 1,230,979 3,405,066
Interest expense (586) (635) (59,863) (1,591,912)
Net loss (7,611,102) (8,457,634) (9,673,681) (67,772,800)
Net loss attributable to common stockholders (7,611,102) (8,457,634) (9,673,681) (55,557,688)
Net loss per share
Basic (0.13) (0.15) (0.17)
(0.13) (0.15) (0.17)
Weighted average number of shares used
in net loss per share calculations
Basic 57,811,388 57,368,049 56,154,107
Diluted 57,811,388 57,368,049 56,154,107
PolyFuel, Inc.
(A development stage enterprise)
UNAUDITED Consolidated Balance Sheets
31 December
2008 2007 2006
U.S.$ U.S.$ U.S.$
Assets
Current assets
Cash and cash equivalents 6,574,138 7,126,685 15,177,509
Short-term investments -- 6,576,170 6,654,886
Accounts receivable 197,782 134,511 35,434
Inventories 15,021 114,192 88,806
Prepaid expenses and other current assets 486,104 330,392 357,435
Total current assets 7,273,045 14,281,950 22,314,070
Property and equipment, net 366,977 337,039 460,405
Other assets 23,556 195,300 195,300
Total assets 7,663,578 14,814,289 22,969,775
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses 813,690 922,629 1,162,994
Deferred revenue -- 1,336 115,475
Total current liabilities 813,690 923,965 1,278,469
Total liabilities 813,690 923,965 1,278,469
Stockholders' equity
Common stock: US$0.001 par value; 100,000,000,
100,000,000 and 70,000,000 shares authorised at
31 December 2008, 2007 and 2006, respectively; 57,886,388,
57,436,388,and 57,282,839 shares issued and outstanding at
31 December 2008, 2007 and 200, respectively 57,886 57,436 57,283
Additional paid-in capital 59,844,118 59,272,722 58,616,546
Accumulated other comprehensive income -- 1,180 857
Deficit accumulated during development stage (53,052,116) (45,441,014) (36,983,380)
Total stockholders' equity 6,849,888 13,890,324 21,691,306
Total liabilities and stockholders' equity 7,663,578 14,814,289 22,969,775
PolyFuel, Inc.
(A development stage enterprise)
UNAUDITED Consolidated Statements of
stockholders'EQUITY (deficit)
Deficit
Notes Accumulated Accumulated Total
Additional Receivable Other During the Stockholders
Paid-in from Comprehensive Development Equity
Common Stock Capital Stockholders Income Stage (Deficit)
Shares U.S.$ U.S.$ U.S.$ U.S.$ U.S.$ U.S.$
Issuance of common stock for cash at US$25 per share
in January 1999 4 -- 100 -- -- -- 100
Net loss -- -- -- -- -- (59,926) (59,926)
Balances at 31 December 1999 4 -- 100 -- -- (59,926) (59,826)
Issuance of common stock for in-process research and
development and notes payable in October 2000 9,120 9 205,191 -- -- -- 205,200
Net loss -- -- -- -- -- (4,316,346) (4,316,346)
Balances at 31 December 2000 9,124 9 205,291 -- -- (4,376,272) (4,170,972)
Issuance of warrants with credit line and lease line
in May and July 2001 -- -- 93,986 -- -- -- 93,986
Exercise of common stock options at US$22.50 per share
for cash and notes receivable in May and December 2001 5,707 6 128,394 (127,116) -- -- 1,284
Stock based compensation expense -- -- 5,954 -- -- -- 5,954
Interest accrued on notes receivable -- -- -- (4,907) -- -- (4,907)
Net loss -- -- -- -- -- (4,839,193) (4,839,193)
Balances at 31 December 2001 14,831 15 433,625 (132,023) -- (9,215,465) (8,913,848)
Issuance of warrants with lease line in June 2002 -- -- 45,175 -- -- -- 45,175
Exercise of common stock options at US$22.50 per share for cash 64 -- 1,438 -- -- -- 1,438
Stock based compensation expense -- -- 23,207 -- -- -- 23,207
Cancellation of notes receivable -- -- -- 44,438 -- -- 44,438
Interest accrued on notes receivable -- -- -- (3,131) -- -- (3,131)
Repurchase of common stock at US$4.50 per share
for notes receivable (2,224) (2) (10,008) 10,010 -- -- --
Net loss -- -- -- -- -- (7,017,090) (7,017,090)
Balances at 31 December 2002 12,671 13 493,437 (80,706) -- (16,232,555) (15,819,811)
Issuance of warrants with consulting agreement
in August and December 2003 -- -- 44,571 -- -- -- 44,571
Issuance of warrants with finance facility in September -- -- 44,944 -- -- -- 44,944
2003
Exercise of common stock options at US$22.50 and
US$4.50 per share for cash 1,467 1 7,733 -- -- -- 7,734
Cancellation of notes receivable -- -- -- 34,469 -- -- 34,469
Interest accrued on notes receivable -- -- -- (6,384) -- -- (6,384)
Repurchase of common stock at US$4.50 per share
for notes receivable (1,067) (1) (4,799) 4,800 -- -- --
Net loss -- -- -- -- -- (8,887,814) (8,887,814)
Balances at 31 December 2003 13,071 13 585,886 (47,821) -- (25,120,369) (24,582,291)
Conversion of Series A1, A2 and B redeemable convertible
preferred stock in common stock and Series AA redeemable
convertible preferred stock upon recapitalisation 83,988 84 6,022,301 -- -- 14,720,684 20,743,069
Repurchase of common stock at US$22.50 per share
for notes receivable (1,891) (2) (186) 47,821 -- -- 47,633
Issuance of warrants with finance facility in May 2004 -- -- 174,150 -- -- -- 174,150
Issuance of warrants with bridge loans in February and -- -- 533,957 -- -- -- 533,957
April 2004
Exercise of common stock options at US$0.10 per share for 2,833 3 280 -- -- -- 283
cash
Net loss -- -- -- -- -- (8,966,989) (8,966,989)
Balances at 31 December 2004 98,001 98 7,316,388 -- -- (19,366,674) (12,050,188)
Issuance of warrants with consulting agreement in May -- -- 69,618 -- -- -- 69,618
2005
Conversion of Series AA and BB redeemable convertible
preferred stock into common stock upon admission to AIM 28,655,645 28,656 22,608,911 -- -- -- 22,637,567
Issuance of common stock and Series A Warrants for cash
at US$0.90 per unit in connection with initial public
offering
in July 2005, net of issuance costs of US$2,767,027 15,686,276 15,686 11,217,287 -- -- -- 11,232,973
Issuance of common stock options to financial advisor
in connection with AIM Listing -- -- 242,568 -- -- -- 242,568
Stock-based compensation expense -- -- 16,726 -- -- -- 16,726
Exercise of common stock options at US$0.90 and
US$0.10 per share for cash 110,171 110 11,740 -- -- -- 11,850
Net loss -- -- -- -- (7,943,025) (7,943,025)
Balances at 31 December 2005 44,550,093 44,550 41,483,238 -- -- (27,309,699) 14,218,089
Issuance of common stock for cash at US$1.4052 per
share in connection with follow-on offering in January
2006, net of issuance costs of US$816,653 12,500,000 12,500 16,736,850 -- -- -- 16,749,350
Stock-based compensation expense -- -- 373,417 -- -- -- 373,417
Comprehensive income - change in unrealised gain on
available-for-sale investments -- -- -- -- 857 -- 857
Exercise of common stock options at US$0.10 per share 232,746 233 23,041 -- -- -- 23,274
for cash
Net loss -- -- -- -- (9,673,681) (9,673,681)
Balances at 31 December 2006 57,282,839 57,283 58,616,546 -- 857 (36,983,380) 21,691,306
Stock-based compensation expense -- -- 640,975 -- -- -- 640,975
Comprehensive income - change in unrealised gain on
available-for-sale investments -- -- -- -- 323 -- 323
Exercise of common stock options at US$0.10 per share 153,549 153 15,201 -- -- -- 15,354
for cash
Net loss -- -- -- -- (8,457,634) (8,457,634)
Balances at 31 December 2007 57,436,388 57,436 59,272,722 - 1,180 (45,441,014) 13,890,324
Stock-based compensation expense -- -- 526,846 -- -- -- 526,846
Comprehensive income - change in unrealised loss on
available-for-sale investments -- -- -- -- (1,180) -- (1,180)
Exercise of common stock options at US$0.10 per share 450,000 450 44,550 -- -- -- 45,000
for cash
Net loss -- -- -- -- (7,611,102) (7,611,102)
Balances at 31 December 2008 57,886,388 57,886 59,844,118 - -- (53,052,116) 6,849,888
PolyFuel, Inc.
(A development stage enterprise)
UNAUDITED Consolidated Statements of Cash Flows
Period from
27 January 1999
(Inception) to
Year Ended 31 December 31 December
2008 2007 2006 2008
U.S.$ U.S.$ U.S.$ U.S.$
Cash flows from operating activities
Net loss (7,611,102) (8,457,634) (9,673,681) (67,772,800)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortisation 186,596 221,863 338,217 3,345,190
Purchased research and development -- -- -- 3,825,984
Stock-based expense - non-employees -- -- -- 45,887
Stock-based employee compensation expense 526,846 640,975 373,417 1,541,238
Realized gain on sale of investments (9,907) -- -- (9,907)
Provision for excess and obsolete inventory 2,313 -- -- 2,313
Loss (Gain) on sale of equipment 6,990 4,058 -- (105,677)
Non-cash expense related to notes receivable
from stockholders -- -- -- 112,118
Non-cash expense related to issuance of warrants -- -- -- 1,006,401
Non-cash interest expense related to bridge loans -- -- -- 34,980
Changes in assets and liabilities:
Accounts receivable (63,271) (99,077) (4,634) (197,782)
Inventories 96,858 (25,384) (88,806) (17,334)
Prepaid expenses and other current assets 19,288 27,043 1,215 (311,104)
Other assets (3,257) -- (112,701) (198,557)
Accounts payable and accrued expenses (108,939) (240,366) 317,623 1,036,722
Deferred revenue (1,336) (114,139) 115,475 --
Net cash used in operating activities (6,958,921) (8,042,661) (8,733,875) (57,662,328)
Cash flows from investing activities
Purchases of available for sale investments (3,701,253) (6,083,465) (8,620,502) (26,923,926)
Maturities and sales of available for sale investments 10,286,151 6,162,503 3,064,404 26,933,833
Proceeds from sale of property and equipment 12,651 255 -- 153,631
Purchase of property and equipment (236,175) (102,810) (182,858) (3,760,121)
Net cash provided by (used in) investing activities 6,361,374 (23,517) (5,738,956) (3,596,583)
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