16th Aug 2005 17:51
Enova Systems, Inc.16 August 2005 Enova Systems, Inc15 August 2005 ENOVA SYSTEMS, INC.INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 TORRANCE, CA, August 15, 2005 - Enova Systems, Inc. (OTCBB: ENOV and AIM: ENVand ENVS), today announced interim results for the six months ended June 30,2005. Financial Summary Table (Unaudited) (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 ------ ------ ------ ------ Net revenues $1,322 $718 $2,014 $1,826Gross profit 298 199 420 649Operating loss (528) (602) (1,340) (763) ------ ------ ------ ------ Net loss (528) (602) (1,340) (763) ====== ====== ====== ====== Basic and diluted net loss percommon share (0.01) (0.01) (0.01) (0.01) ====== ====== ====== ====== Basic and diluted weightedaverage common shares outstanding 9,263 8,519 9,263 8,519 ====== ====== ====== ====== Edwin Riddell, the Company's President and CEO said, "Revenues increased in thesecond quarter from the first quarter of 2005 as we continued to deliver ourHybridPower drive systems to our growing customer base. With the addition ofthe capital funding and our listing on the London Stock Exchange's AIM, webelieve Enova is poised to accelerate its market capture strategy in medium andheavy-duty hybrid vehicle drive components and power management systems." Mr. Riddell continued "we believe the AIM listing and interest from UKinstitutional investors demonstrate a strong vote of confidence for Enova'stechnology and potential. This latest milestone should raise our profileinternationally and allow us to market our leading edge hybrid drive systems anddigital power management solutions much more actively to our growing globalcustomer base as well as assist us in maintaining a competitive technologicaledge." This is the first set of results since our successful IPO on AIM raising $20million on 26 July 2005. Net revenues for the three and six month periods ending June 30, 2005 were$1,322,000 and $2,014,000, respectively, as compared with $718,000 and$1,826,000 for the corresponding periods in 2004, an increase of 84% and 10%respectively. Net production revenues for the quarter ended June 30, 2005increased to $817,000 from $456,000 for the same period in 2004. Net researchand development revenues for the quarter ended June 30, 2005 increased to$505,000 from $262,000 for the quarter ended June 30, 2004. The increase inproduction revenues is primarily the result of delivery of drive systems to ourcustomers as forecasted in prior quarters. Our sources of revenue for thesecond quarter of 2005 came predominantly from product sales rather thandevelopment contracts. Product sales as a percentage of total revenues were 62%for the three months ended June 30, 2005, and 65% of total revenues for the sixmonths ended therein, with sales of our HybridPower 120kW drive systemsaccounting for a majority of our product sales. We believe this trend willcontinue to accelerate for the foreseeable future as more current andprospective customers purchase additional drive systems for their productionvehicles. We will continue to seek out and contract for new developmentprograms with both our current partners such as WrightBus, Eneco, EcoPowerTechnology, First Auto Works, Tomoe, Hyundai Motor Company (HMC) and our otherU.S., Asian and European alliance partners, as well as with new alliances withother vehicle manufacturers and energy companies to enhance our technology andour product offerings. Research and development revenues for the second quarterof 2005 are a result of development programs and engineering services for theTomoe LTA train, the HMC fuel cell bus and various Hawaii Center for AdvancedTransportation Technology programs (HCATT). Cost of revenues consists of component and material costs, direct labor costs,integration costs and overhead related to manufacturing our products. Productdevelopment costs incurred in the performance of engineering developmentcontracts for the U.S. Government and private companies are charged to cost ofsales for this contract revenue. Cost of revenues for the quarter ended June30, 2005 increased $505,000 to $1,024,000 from $519,000 for the same period in2004. For the six months ending June 30, 2005, there was an increase in cost ofrevenues from $1,177,000 to $1,594,000 for the same six-month period in 2004.These increases are primarily attributable to the increase in sales for thethree and six months, as well as additional support costs for some of our newproduct lines. We anticipate there may be additional increases in cost of salesfor products in 2005 due to foreign exchange rate fluctuations of the U.S.dollar versus those currencies of our primary manufacturer. We anticipate thisto be offset by a reduction in costs associated with manufacturing theseproducts due to increasing purchases, thereby improving our gross margins. Internal research, development and engineering expenses remained constant forthe three months ended June 30, 2005 at $178,000 as compared with $181,000 inthe same period in 2004. For the six months ended June 30, 2005, such expensesincreased to $395,000 from $309,000 in 2004. As the market for heavy-dutyhybrid vehicles continues to evolve and grow, we have increased allocatingengineering resources to the development and enhancement of our new parallelhybrid drive systems, our series hybrid system, upgrading proprietary controlsoftware, higher power DC-DC converters and advancing our digital inverters andother power management firmware. Selling, general and administrative expenses increased from $453,000 to$550,000, or 21%, for the three months ended June 30, 2005 from the previousyear's comparable period. For the six months ended June 30, 2005, the increasewas from $935,000 to $1,158,000 or a 24% increase. The increases areattributable to additional marketing, engineering and technical staff employedin the first half of 2005 as well as increased expense due to stricterregulatory oversight in conjunction with the Sarbanes-Oxley Act of 2002 and ourefforts to attract additional capital funding. Management continues toimplement cost reduction strategies in 2005 in its efforts to achieveprofitability. Net interest and other income/expense remained relatively constant atapproximately $72,000 for the second quarter of 2005, down slightly from thesame period in 2004. For the six months ended June 30, 2005, net interest andother income/expense was $141,000 compared to $124,000 for the same period in2004. We incurred a loss from continuing operations of $528,000 in the second quarterof 2005 compared to a loss of $602,000 in the second quarter of 2004, whichrepresents a 5% reduction in loss. For the six months ending June 30, 2005, theloss increased from $763,000 to $1,340,000 or a 75% increase. The increase wasattributable to several factors including higher comparative costs of revenuedue to the type of products sold in the first half of 2005 as compared to 2004,higher support costs in the second quarter of 2005, increased internaldevelopment efforts and higher general operating costs due to factors notedabove. The previous table, description and the condensed financial statements should beread in conjunction with the Risk Factors and other information contained in theCompany's Forms 10-Q for the periods ended March 31, and June 30, 2005 and the2004 Annual Report on Form 10-K, as amended. CURRENT TRADING Since June 30, 2005, we continue to progress in our production and developmentprograms for FAW China, Wright Bus and Eneco of the United Kingdom, EcoPowerTechnology (EPT) of Italy, Tsinghua University of China, MTrans of Malaysia,Tomoe Electro-Mechanical Engineering and Manufacturing, Inc. of Japan andseveral other domestic and international vehicle and bus manufacturers. We arecompleting or continuing negotiations for heavy-duty hybrid drive systemdevelopment for several major North American truck and engine manufacturers, aswell as new development, integration and evaluation programs for the U.S. AirForce, the State of Hawaii and HCATT, and New York Sanitation. We anticipatethese programs to commence in the third or fourth quarter of 2005, however, atthis time, there are no assurances that such additional contracts will beconsummated. STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT Except for the historical information contained herein, the matters discussed inthis press release could include forward-looking statements or information. Allstatements, other than statements of historical fact, including, withoutlimitation, those with respect to the Company's objectives, plans and strategiesset forth herein and those preceded by or that include the words "believes,""expects," "targets," "intends," "anticipates," "plans," or similar expressions,are forward-looking statements. Although the Company believes that suchforward-looking statements are reasonable, it can give no assurance that theCompany's expectations are, or will be, correct. These forward-lookingstatements involve risks and uncertainties and are based on current management'sexpectations and we are not obligated to update this information. Many factorscould cause actual results and events to differ significantly from the resultsanticipated by us and described in these forward looking statements including,but not limited to, those risks noted above and other risks detailed from timeto time in the Company's Annual Reports on Form 10-K, Quarterly Reports on Form10-Q and in its other SEC reports and statements. The financial data set forth below should be read in conjunction with theFinancial Statements and other disclosures contained in the Company's 2004Annual Report on Form 10-K, as amended and Forms 10-Q for the periods endedMarch 31, and June 30, 2005. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 -------- -------- ------- -------- Net revenues $1,322 $718 $2,014 $1,826Cost of revenues 1,024 519 1,594 1,177 -------- -------- ------- --------Gross profit 298 199 420 649 Operating Expenses:Research and development 178 181 395 309Selling, general andadministrative 550 453 1,158 935Interest and other income(expense), net 72 79 141 124Equity in losses 26 88 66 44 -------- -------- -------- --------Total operating expenses 826 801 1,760 1,412 -------- -------- -------- --------Operating loss (528) (602) (1,340) (763) -------- -------- -------- --------Net loss before income taxes (528) (602) (1,340) (763)Income taxes - - - - -------- -------- -------- --------Net loss (528) (602) (1,340) (763) ======== ======== ======== ========Basic and diluted net loss percommon share (0.01) (0.01) (0.01) (0.01) ======== ======== ======== ======== Basic and diluted weightedaverage common shares outstanding 9,263 8,519 9,263 8,519 ======== ======== ======== ======== CONDENSED BALANCE SHEETS (in thousands) June 30, December 31, June 30, 2005 2004 2004 -------- -------- -------- (Unaudited) (Audited) (Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents $624 $1,575 $2,676Accounts receivable, net 726 522 638Inventory and supplies, net 889 1,036 1,320Prepaid expenses and other current assets 445 304 94 -------- -------- -------Total current assets 2,684 3,437 4,728PROPERTY AND EQUIPMENT, NET 346 387 489EQUITY METHOD INVESTMENT 1,702 1,768 872OTHER ASSETS 242 296 350 -------- -------- ------- TOTAL ASSETS 4,974 5,888 6,439 ======== ======== =======LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable 317 66 151Deferred revenues 84 392 -Line of credit - 229 233Other current liabilities 218 207 248Current portion of notes/lease payables 169 172 190 -------- -------- -------Total current liabilities 788 1,066 822 -------- -------- -------Accrued interest payable 1,528 1,378 1,246Long term liabilities 3,332 3,341 3,340 -------- -------- -------Total liabilities 5,648 5,785 5,408 -------- -------- ------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (674) 103 1,031 -------- -------- -------LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 4,974 5,888 6,439 ======== ======== ======= STATEMENT OF CASH FLOWS (Unaudited, in thousands) June 30 June 30 2004 2005 -------- -------- Cash flows from operating activities Net loss $(1,340) $(763) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 146 175 Equity in losses of equity method investee 66 88 Issuance of common stock for services 63 37 (Increase) decrease in Accounts receivable (204) 165 Inventory and supplies 147 286 Prepaid expenses and other current assets (141) (8) Increase (decrease) in Accounts payable 252 (618) Accrued expenses 11 30 Deferred revenues 308 - Accrued interest payable 150 124 ------- -------Net cash used by operating activities (1,158) (484) ------- -------Cash flows from investing activities Purchases of property and equipment (51) (129) ------- -------Net cash used in investing activities (51) (129) ------- ------- Cash flows from financing activities Borrowings (repayments) on line of credit (229) 113 Proceeds (repayment) on notes payable and capital lease obligations (13) 24 Proceeds from sale of common stock 500 2,622 ------ ------- Net cash provided by (used in) financing activities 258 2,759 ------ ------- Net increase (decrease) in cash and (951) 2,146 cash equivalents Cash and cash equivalents, beginning of year 1,575 530 ------ ------- Cash and cash equivalents, end of year 624 2,676 ====== ======= Supplemental disclosure of cashflow information Interest paid 4 4 ======= ======= Income taxes paid - - ======= ======= Supplemental schedule of non- cashinvesting and financing activities Conversion of preferred stock to common stock 13 64 ======= ======= For Financial / Investor Relations information, please contact:Larry Lombard, CFO; phone: 310-527-3847; email:[email protected] - END - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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