RNS Number:7290J
Prometheus Energy Co
29 September 2006
FOR IMMEDIATE RELEASE
Prometheus Energy Company
("Prometheus")
Unaudited Interim Financial Statements for the Six Months Ended 30 June 2006
29 September 2006
Prometheus, the alternative and renewable energy company, which was successfully
admitted to AIM on 14 September 2006, today reports interim results for the six
months ended 30 June 2006
* Turnover $142,000
* Installation in progress of the world's first commercial scale production
system to convert waste gas to LNG at the Bowerman Landfill site in
Orange County, California
* Commercial production at Bowerman expected to start in final quarter
of 2006
* Current trading and prospects in line with the Directors expectations
Kirt Montague, Chairman and Chief Executive Officer, commented:
"We are delighted to have successfully completed our IPO in London. There are
substantial opportunities for us in Europe, where the combination of clean air
regulation and rich methane resources offer a potentially large market. We are
already recognising the increased visibility gained from our AIM admission which
will provide significant marketing and business development opportunities in the
future. Current trading and prospects for the company continue to meet the
Directors expectations."
For further information contact:
Prometheus Energy Company +1 206 267 0800
Kirt Montague (Chief Executive Officer)
Cary Wasden (President and acting Chief Financial Officer)
Cubitt Consulting +44 20 7367 5100
Simon Brocklebank- Fowler/ Michael Henman / Allison Reid
CHAIRMAN'S STATEMENT
On behalf of the Board of Prometheus Energy Company ("Prometheus"), I am pleased
to present the interim results for the six months ended 30 June 2006.
Prometheus is an early-stage alternative and renewable fuel company specialising
in the production, sale and distribution of liquid natural gas (LNG) primarily
sourced from low-cost waste and stranded gas reserves. Traditionally, LNG
production has been highly capital-intensive and has involved large-scale
liquefaction in a few centralised locations, of high-quality and expensive
pipeline gas. In comparison, Prometheus uses a small-scale and transportable
proprietary system to purify and liquefy raw gas at its source, such as a
landfill site, mine or well, from where it can be transported to end-users
either on-site or a short distance away. The Company's on-site process
significantly lowers the price at which it sources gas, substantially cuts
distribution and transport costs, and allows the Company to offer customers a
low cost, contracted fixed price for fuel. The Directors believe that these
advantages will enable Prometheus to produce and distribute LNG at a price that
is lower than other existing distributors of LNG.
Financial Summary
Turnover for the period ending 30 June 2006 was $142,000 compared with $222,000
for the same period in 2005. The operating loss of $2,898,000 is in line with
expectations given the company's investment in business development, technology
research and development. As at 30 June 2006, the Group had approximately $9.6m
in cash, cash equivalents and short term investments.
Dividend
As stated in the admission document, a dividend is not proposed at this stage as
the Company will initially retain its earnings to finance growth and expansion.
Post Period Events
The Company completed a private funding round in August 2006, including an
investment by Libra Natural Resources plc (AIM:LNR), totalling $20.5m to support
its growth strategy
On 14 September 2006, the company was successfully admitted to AIM.
Prometheus is looking forward to the completion of the final stages of the
Bowerman landfill site, in Orange County, California, in what is the world's
first commercial scale production system to convert waste gas to LNG. Commercial
production is expected to start in the final quarter of 2006.
Together with three other projects, two in California and one in Poland, the
company is working on developments with an estimated capacity of 65,000 gallons
of LNG per day
Strategy and Outlook
While there are a significant number of potential opportunities for the
Company's LNG production and supply capabilities, both in the U.S. and
internationally, our principal target markets will continue to be the
alternative transportation fuel market and industrial demand for LNG in Poland
and other parts of the European Union.
The current trading and prospects for the Company's business continue to meet
the Board's expectations for long term growth and success.
Kirt Montague
Chairman
29 September 2006
Statements of Operations
30 June 2006 30 June 2005 31 Dec 2005
Unaudited Unaudited Audited
$'000 $'000 $'000
Revenues 142 222 241
Direct cost of revenues 25 70 76
117 152 165
Indirect operating expenses
Engineering 305 294 561
Production and operations 246 102 310
Business development 253 56 173
804 452 1,044
General and administrative expenses
Salaries and benefits (including
share based compensation expense
of $602,000 (six months ended 30
June 2005 $nil; year ended 31
December 2005 $453,094 ) 1,160 406 1,496
Rent and facilities 197 264 498
Information technology 58 54 159
Professional services 352 19 79
Insurance 128 5 67
Other 286 6 22
2,211 754 2,321
Operating loss (2,898) (1,054) (3,200)
Other income (expense)
Interest income 64 4 11
Interest expense (64) (104) (285)
Other (110) (1) (3)
(110) (101) (277)
Income tax provision - - -
Net loss (3,008) (1,155) (3,477)
Basic loss per share (cents) 9.0 6.7 19.0
The Company had no recognized gains or losses other than the loss for the
period.
All of the amounts above relate to continuing activities.
BALANCE SHEETS
30 June 2006 30 June 2005 31 Dec 2005
Unaudited Unaudited Audited
$'000 $'000 $'000
Current assets
Cash and cash equivalents 9,586 640 796
Accounts receivable 1,163 46 11
Receivables from joint ventures 806 - 109
Inventories 53 - -
Pre-paids and other current assets 81 129 206
Total current assets 11,689 815 1,122
Goodwill 460 - -
Facilities and Equipment, net 750 26 139
Construction in progress and
assets held for sale 6,823 7,039 3,925
Investment in Apollo Energy III,
LLC (joint venture) 1,413 - 1,175
Intangible assets, net 2,371 604 2,454
Other assets 19 - 62
23,525 8,484 8,878
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable 439 49 159
Accrued liabilities 1,031 36 372
Accrued interest 209 110 213
Deferred revenue from Apollo III,
Energy LLC (joint venture) 2,755 - 1,847
Notes payable 6,000 6,497 4,877
Capital lease obligations 209 - 80
Total current liabilities 10,643 6,692 7,548
Stockholders' Equity
Preferred stock, Series A convertible
$0.001 par value, 20,000,000 Series A
convertible preferred stock designated
2,200,000 shares; shares authorised;
issued and outstanding 1,320,526 1 1 1
Preferred stock, Series B convertible
$0.001 par value, 20,000,000 Series B
convertible preferred stock designated
10,000,000 shares; shares authorised;
issued and outstanding 4,353,890 (June
30,2005 and December 31, 2005 nil) 4 - -
Common stock, 80,000,000 shares
authorised; issued and outstanding
2,468,762 shares (June 30, 2005
1,968,095 shares; December 31,
2005 2,468,095 shares) 2 1 2
Additional paid capital 19,647 3,835 5,113
Accumulated deficit (6,772) (2,045) (4,366)
Stock to be issued (stock
subscription receivable) - - 580
12,882 1,792 1,330
Total liabilities and
stockholders' equity 23,525 8,484 8,878
STATEMENT OF CASH FLOWS
30 June 2006 30 June 2005 31 Dec 2005
Unaudited Unaudited Audited
$'000 $'000 $'000
Cash flow from operating activities
Net loss (3,008) (1,155) (3,477)
Adjustments to reconcile net loss to
net cash from operating activities:
Stock based compensation 602 - 453
Depreciation and amortisation 165 42 42
Amortisation of prepaid rent - - 260
Changes in assets and liabilities:
Accounts receivable (1,152) 19 55
Receivables from joint ventures (697) - (110)
Prepaids and other current assets 125 130 54
Inventories (53) - -
Other assets 44 - (62)
Accounts payable 276 33 144
Accrued liabilities and accrued interest 599 (128) 400
Net cash used in operating activities (3,099) (1,059) (2,240)
Cash flows from investing activities
Purchase of equipment and
construction costs (3,508) (6,786) (4,317)
Licenses acquired from related party - - (1,000)
Patents acquired (82) - (19)
Investment in joint venture (238) - (1,175)
Acquisition of subsidiary (400) - -
Deferred revenue from Apollo
Energy III, LLC (joint venture) 908 - (1,847)
Net cash used in investing activities (3,320) (6,786) (4,663)
Cash flows from financing activities
Net proceeds from issuance of
Series A preferred stock - 766 2,316
Net proceeds from issuance of
Series B preferred stock 13,958
Proceeds from issuance of common stock - - -
Proceeds from sale of equipment
acquired from equity investor - - 4,905
Proceeds from borrowings on
promissory notes 1,123 6,497 1,800
Payments on promissory notes - - (1,764)
Borrowings on capital lease
obligations 129 - 110
Payments on capital lease obligations - - (29)
Financed portion of insurance policy - - 140
Net cash provided by financing activities 15,210 7,263 7,477
Net change in cash and cash equivalents 8,791 (582) 574
Cash and cash equivalents
Beginning of period 795 1,222 222
End of period 9,586 640 796
Supplemental information
Cash paid for interest 64 4 72
Non cash investing and financing
activities
Note payable in exchange for
equipment from equity investor - - 4,736
Issuance of stock in exchange for - - -
services
Issuance of stock in exchange for rent - - 29
Issuance of stock in exchange for
licensing rights - - 815
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Loss for the period (3,008) (1,155) (3,477)
Preferred stock - series A issued - - -
Preferred stock - series B issued 4 - -
Preferred stock - series B to be issued (580) - 580
Preferred stock
subscription receivable - 1,000 1,000
Common stock issued - - 1
Additional paid in capital 14,534 754 1,580
Stock based compensation 602 - 453
Opening shareholders' funds 1,330 1,193 1,193
---------- ---------- -----------
Closing shareholders' funds 12,882 1,792 1,330
---------- ---------- -----------
1. Description of Business
The Company is a Washington corporation located in Seattle, Washington. The
Company was formed on May 27, 2003 to design, build, install, operate and
maintain distributed-scale, integrated purification and liquefaction systems
that convert low-cost methane-bearing gas streams into high value liquid natural
gas ("LNG"). The Company plans to capture significant market share in the
growing LNG and liquid compressed natural gas ("LCNG") market through a
combination of product manufacturing, fuel supply management services, LNG and
LCNG project development and direct fuel sales to wholesale and retail
customers.
The Company also operates within joint-venture partnerships under strategic
relationships to secure gas rights and distribution contracts. The Company will
contribute cash, equipment and services into the joint-ventures in return for
their equity interest.
On 4 April 2006 the Company acquired Clean Fuels LLC a company that provides
natural gas distribution systems and services to natural gas utilities in the
Western United States.
2. Basis of preparation and significant accounting policies
The financial information has been prepared under the historical cost
convention, and in accordance with generally accepted accounting principles in
the United States (US GAAP). The accounting policies are consistent with those
disclosed in the Company's AIM Admission Document and which will be adopted in
the Company's annual financial statements.
The Company continues to generate operating losses due to its efforts in
business development and technology research and development. In order to
successfully complete the equipment construction and fulfill its obligations
under the joint venture and equipment sales agreements, the Company will need to
raise additional capital or incur additional debt. Future operations and
benefits expected to be realized from the Company's investments in joint
ventures are dependant upon the successful installation and operation of the
liquefaction systems into gas producing activities.
Consolidation
Subsidiaries are those entities in which the Company, directly or indirectly,
controls the composition of the board of directors, controls more than half the
voting power or holds more than half the issued equity.
Subsidiaries are consolidated from the date on which control is transferred to
the Company. Inter-company transactions and balances between group companies are
eliminated on consolidation.
Goodwill
Goodwill arising on the consolidation of subsidiaries is measured at the
acquisition date as the excess of the cost of acquisition over the Company's
interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities acquired.
Goodwill is stated at cost less accumulated impairment losses. The Company tests
for impairment annually, or more frequently if events or circumstances indicate
that it might be impaired.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
Cash and Cash Equivalents
The Company considers any highly liquid instrument with maturity of three months
or less at acquisition to be cash equivalent.
Receivables from Joint Ventures
Receivables from joint ventures represent expenses incurred by the Company that
will be billed to its joint ventures. Joint venture receivables are stated at
the amount management expects to collect from balances outstanding at each
period end.
Facilities and Equipment
Facilities and equipment are stated at cost. The Company provides for
depreciation on the cost of its facilities and equipment using the straight-line
method over estimated useful lives ranging from five to ten years. Maintenance
and repairs are charged against expense as incurred.
Construction in Progress
The Company designs and constructs liquefaction units intended to be sold or
contributed to joint ventures. Costs incurred are capitalized and the units will
either be sold under purchase agreements or contributed to joint ventures in the
form of equity contributions. Capitalized costs include design, permitting,
construction and equipment costs and capitalized direct labor. The Company
receives progress payments during construction, which are deferred and
recognized upon the completion of the project along with all related costs.
Long-Lived Assets
The Company reviews the carrying values of its long-lived assets for possible
impairment whenever an event or change in circumstances indicates that the
carrying value of these assets may not be recoverable and recognizes a loss when
it is probable that the estimated undiscounted future cash flows will be less
than the carrying value of the asset. As of June 30, 2006, no such impairments
have been recorded.
License and Patent Costs
Internal patent costs and patents purchased are capitalized and amortized over
the life of the patent. The carrying values of the patents, which are intangible
assets, are periodically reviewed. Impairments, if any, are recognized when the
expected future benefit to be derived from an intangible asset is less than its
carrying value. As of June 30, 2006, no such impairments have been recorded.
Investment in Joint Ventures
The Company enters into joint ventures that are formed to produce and distribute
LNG and LCNG. Generally, the Company intends to enter into joint- ventures with
strategic partners that hold rights to gas sources and/or distribution
infrastructure and facilities. The Company may contribute cash, liquefaction
units, technology and/or services in return for an equity share of the joint
ventures. Upon formation of the joint ventures, the Company expects to contract
with the entities to install, operate and maintain the liquefaction units and
related production operations. Income from the joint ventures is distributed in
accordance with the related joint venture agreements and gas produced is sold at
a price to be determined by the joint venture manager. All joint ventures are
recorded on the equity method of accounting and contributions of equipment and
services are recorded at cost as of June 30, 2006. Future investments may be
accounted for under the equity method or consolidated based upon the Company's
ownership interest or implied beneficial interest.
Income Taxes
Income taxes are accounted for using an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the financial statement
and tax basis of assets and liabilities at the applicable enacted tax rates. A
valuation allowance is established when necessary to reduce deferred tax assets
to the amount expected to be realized.
Revenue Recognition
The Company recognises service revenues as the services are performed and
revenue is earned.
Revenues from equipment and liquefaction unit production and sales are
recognized under the completed contract method upon delivery of the unit,
installation and customer acceptance, if applicable. Deposits and progress
payments received prior to final delivery are recorded as deferred revenues and
recognized upon completion.
Deferred revenues as of June 30, 2006 amounts to $908,000 (June 30, 2005 and
December 31, 2005 $nil and $1,847,000 respectively) and will be recognised
during future periods along with related cost of goods sold upon completion and
delivery.
Anticipated losses on fixed price equipment construction and installation
contracts are accrued during the period identified.
Research and Development Costs
Costs incurred in the research, design and development of new products, as well
as enhancements to existing products' technology applications are charged to
expense as incurred.
Stock-based Compensation
At June 30, 2006, the Company has a stock-based employee compensation plan,
which the Company accounts for under the recognition and measurement principles
of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. Stock-based employee compensation costs of $602,000 are
reflected in net loss for the period ended June 30, 2006 ($nil and $453,094 for
the six months ended June 30, 2005 and the year ended December 31, 2005
respectively), as certain options granted under the plan had an exercise price
less than the market value of the underlying common stock on the date of
the grant.
The Company's fair value calculations on stock-based awards under the
stock-based employee compensation plan were made using the minimum value
convention of the Black-Scholes option pricing model with the following average
assumptions on the date of grant: 0% dividend yield, volatility and forfeitures
per year, risk free-interest rate of 3.9% to 4.6%, and an expected life of seven
years. Use of the minimum value convention means that the volatility estimate is
zero percent; use of a different volatility estimate would increase the fair
value estimate of option awards.
3. Taxation
The Group has net deferred tax assets primarily resulting from net operating
loss carryforwards for federal tax purposes and research and development
credits. At 30 June 2006, the Group has net operating loss carryforwards of
approximately $5,700,000 which will begin to expire in 2025. The future
utilization of net operating loss carryforwards may be limited due to changes in
ownership. Management has recorded a valuation allowance for all of the net
deferred tax assets at June 30, 2006.
4. Loss per share
Basic loss per share has been calculated on the basis of the losses attributable
to shareholders of $3,008,000 (six months ended June 30, 2005 $1,155,000; year
ended December 31, 2005 $3,477,000) divided by the weighted average number of
33,290,144 Common Shares outstanding during the six months ended June 30, 2006
(as adjusted for the conversion of each outstanding Series A and Series B share
into one Common Share and subsequent subdivision into 6 Common Shares
immediately prior to Admission to AIM in September 2006) (six months ended June
30, 2005 17,162,329 Common Shares; year ended December 31, 2005 18,296,120
Common Shares). Diluted loss per share amounts have not been presented, as the
potential impact arising from the exercise of outstanding stock options is to
decrease the loss per share amounts in each period.
5. Post balance sheet events
On September 14, 2006 the Company's issued share capital was admitted to AIM.
6. Nature of financial information
The interim financial information set out above is not audited and does not
represent statutory financial statements for the Company for the period ended
June 30, 2006.
The Board approved the interim financial information for the period ended June
30, 2006 on September 28, 2006.
These interim results will be available on the Company's website
www.prometheus-energy.com. Further copies can be obtained from the office at
Jeffries International at Bracken House, One Friday Street, London, and EC4M
9JA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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