Proton Energy Systems, Inc. Announces Fourth Quarter, Year-End Results

Revenues down over previous years quarter, but company reports major goals achieved for year 2000.

Published: 06-Mar-2001

ROCKY HILL, Conn., March 5 /PRNewswire/ -- Proton Energy Systems, Inc. (Nasdaq: PRTN), a leader in practical applications of Proton Exchange Membrane (PEM) electrochemical technology, announced today results for its fourth quarter and year ended December 31, 2000.

    Year 2000 Highlights

    -- Completed initial public offering raising $125.8 million.
    -- Delivered 15 late-stage development HOGEN(R) 40 series hydrogen
       generators, for which revenue is being deferred until warranty
       obligations can be estimated.
    -- Received four patents on technology; 35 patent applications on file.
    -- Increased people from 27 to 50, primarily in engineering capacity.
    -- Joined California Fuel Cell Partnership as Associate Member.
    -- Achieved ISO9001 registration.

For the year ended December 31, 2000 revenues were $700,000, compared to revenues of $934,000 for the prior year. Net loss for 2000 was $3,490,000, compared to a net loss of $3,290,000 in 1999.

Revenues for the fourth quarter 2000 were $163,000 compared to revenues of $854,000 for the same period last year. Revenues for the previous year related to the Department of Energy and Electric Power Research Institute contracts. This revenue was deferred until the fourth quarter of 1999, when specified obligations were met. Net loss for the fourth quarter 2000 was $522,000 compared to a net loss of $1,044,000 for the same quarter last year.

Walter (Chip) Schroeder, President and Chief Executive Officer of Proton Energy Systems said, "Proton Energy Systems achieved important progress on many fronts during the year 2000. The most visible success was our initial public offering, which puts a solid financial foundation under our company. Perhaps less visible, but no less important, is progress on advancing our technology into commercial applications. We delivered 15 late-stage development models of our HOGEN(R) PEM hydrogen generators into a variety of markets. These units are performing to our expectations. Additionally, we achieved ISO9001 registration in July 2000. This achievement underscores our commitment to being a commercial product manufacturer."

Mr. Schroeder went on to state, "In 2000, we strengthened our long-term competitive position with accelerated research and development efforts that have resulted in 35 patent applications and, to date, four granted patents.

"We have been successful in attracting senior-level people to bolster our manufacturing, business development, and research capabilities. As a 'development stage' company, we have much more work to do. Looking to the future, however, we believe that our vision for harnessing PEM technology presents promising opportunities for our company and for our shareholders.

"One of our core competencies is using PEM technology to produce hydrogen fuel from excess electricity. This capability has excellent commercial application in today's industrial gas marketplace, and positions us to be able to store electrical energy to meet surging demand for high quality power in a wide variety of settings.

"Also today, public attention is being focused on the shortcomings of our electricity marketplace. We believe that our technology offers the promise of making more efficient use of our existing electricity grid in the near-term and enabling more meaningful contributions from renewable power in the longer term.

"Our products complement those of other companies developing fuel cell products; our pragmatic approach to hydrogen generation enables higher value and nearer-term opportunities for fuel cells to begin delivering clean, highly efficient power to distributed electricity markets. We believe the fact that we complement rather than compete with other fuel cell companies is an important aspect of our business and will attract the attention of major companies interested in our business plan.

"Against this background, our milestones for 2001 are clear. Research and development will continue to focus on lowering the cost and enhancing the performance of hydrogen generator products to enlarge their commercial reach. Achievements in these areas will also directly contribute to products that meet the hydrogen supply needs of other fuel cell products. Our goal is to deliver at least 50 more HOGEN(R) 40 series hydrogen generators. At the same time, we plan to continue building relationships with potential partners with a goal of entering into at least one major strategic alliance by the end of this year. Finally, our cash position is strong at nearly $175 million and we believe our net cash outflows for the year will be approximately $15 to $18 million.

"All of us at PROTON are committed to these milestones and share a vision in which our company becomes a major player in tomorrow's energy marketplace."

Conference Call

Proton Energy Systems will conduct a conference call tomorrow, Tuesday March 6, 2001 at 11:00 a.m. EST to discuss fourth quarter year-end results and other matters of interest to investors and analysts. Individuals can access the live call and replay via the Web at . The call can also be accessed by dialing 800-491-3697. A replay of the call will be available through March 13, 2001 by dialing 800-696-1588. The pass code is 906516.

Proton Energy Systems, Inc. ( ) designs, develops and manufactures proton exchange membrane, or PEM, electrochemical products. Proton's HOGEN(R) hydrogen generators produce hydrogen from electricity and water in a clean and efficient process using its proprietary PEM technology. Proton is currently manufacturing and delivering late stage development models of its hydrogen generators to customers for use in commercial applications. Proton's UNIGEN(R) regenerative fuel cell systems, which it is currently developing, will combine Proton's hydrogen generation technology with a fuel cell power generator to create an energy device that is able to produce and store the hydrogen fuel it can later use to generate electricity.

                         Proton Energy Systems, Inc.
                              Financial Results

    Income Statement             Year Ended               Quarter Ended
     Data:                      December 31,               December 31,
                               2000         1999         2000         1999

    Net revenues            $700,000      $934,000     $163,000    $854,000
    Net costs of
     sales                   644,000       509,000      188,000     190,000
    Research and
     development           3,227,000     2,182,000    1,150,000   1,345,000
    General and
     administrative        4,392,000     1,705,000    2,010,000     406,000
    Loss from
     operations           (7,563,000)   (3,462,000)  (3,185,000) (1,088,000)
    Interest income        4,199,000       172,000    2,789,000      44,000
    Taxes                    126,000            --      126,000          --
    Net loss              (3,490,000)   (3,290,000)    (522,000) (1,044,000)
    Deemed preferred
     dividends and
     accretion          ($52,691,000)    ($899,000)          --    (247,000)
    Net loss
     attributable to
     shareholders       ($56,181,000)  ($4,189,000)   ($522,000) (1,291,000)

    Loss per share,
     basic and diluted        ($5.92)       ($2.20)      ($0.02)     $(0.68)
    Weighted average
     shares outstanding    9,483,738         1,900   32,044,577   1,900,000

    Balance Sheet Data:                                 December 31,
                                                    2000            1999

    Cash and marketable securities              $174,749,000    $ 3,131,000
    Total assets                                 180,752,000      5,000,000
    Total current liabilities                      2,445,000        921,000
    Mandatory redeemable conv. preferred stock             0     13,136,000
    Total stockholders' equity (deficit)         178,307,000     (9,057,000)
    Total liabilities and
    stockholders' equity                         180,752,000      5,000,000

This press release contains forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. Without limiting the foregoing, words such as "anticipates," "believes," "could," "estimate," "expect," "intend," "may," "might," "should," "will," and "would" and other forms of these words or similar words are intended to identify forward-looking information. You should read these statements carefully, because Proton's actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors. Proton disclaims any obligation to update these forward-looking statements. Factors that could cause results to differ materially from those contained in Proton's forward-looking statements include, but are not limited to, our failure to complete development of our products, failure of our products to achieve commercial acceptance, our inability to expand our production facilities, manufacture our products at commercially acceptable costs or establish distribution relationships, the impact of competitive products and other factors detailed in our Form 10-Q filed with the SEC on November 13, 2000.

SOURCE Proton Energy Systems, Inc.

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