Raser Technologies Provides Update and Announces Third Quarter Financial Results

http://www.businesswire.com/news/home/20091109006502/en

PROVO, Utah--(Business Wire)--
Raser Technologies, Inc. (NYSE: RZ), an energy technology company, today
announced an update on its progress and financial results for the third quarter
ended September 30, 2009.

Company Update:

* Thermo No. 1 Capacity Ramp-up: Raser continues to make progress in ramping up
production of Thermo No. 1 to full capacity. The pump for the recently completed
5th production well is now in place and will run continually for the next
several weeks as the water temperature heats up to production level temperatures
at which point it will be connected to the plant. Until then, flow is being
directed back into the ground through an existing injection well. Additionally,
casing work on three other production wells has begun, which, when complete, is
expected to result in higher average water temperatures.
* Thermo No. 1 Financing Amendments: Raser is negotiating an agreement with the
tax-equity partner and debt holder for the Thermo No. 1 project. The purpose of
this agreement is to consolidate ownership under Raser allowing the Thermo No. 1
project to take full advantage of the 30 percent federal grant for renewable
energy projects under the American Recovery and Reinvestment Act of 2009 and to
seek an extension on the deadline for "Final Completion" of the Thermo No. 1
project.
* Line of Credit: On October 20, 2009, Raser Technologies entered into a
transaction with three of its line of credit lenders to facilitate Raser`s
repayment of loan principal and accrued interest totaling $5.4 million. Raser`s
fourth major lender, Kraig Higginson, Raser`s Chairman, was precluded from
participating in this offering due to regulatory restrictions related to his
position as an officer of Raser. Raser intends to explore alternative structures
for satisfying its obligations to Kraig Higginson under the line of credit at a
later date.
* SCPPA Update: Raser continues to progress in negotiations with SCPPA with
respect to a previously announced term sheet pre-paid power purchase agreement.
The expected structure of the agreement anticipates that Raser would build 110MW
of capacity over a three to four year period at its Thermo, Utah site in a
multi-phase development that would be financed, in part, under a pre-paid
arrangement.
* Other Financing: Raser continues to pursue several alternatives for financing
its development plans. In addition to pursuing pre-paid power purchase
agreements, government grants and loan guarantees, and traditional forms of
project financing, the company is in dialogue with EPC contractors to furnish
full engineering, procurement and construction ("EPC") "wraps" with financing
for the construction phase of the plants. Raser is also currently working with
potential strategic investors to finance the preconstruction phase of the
plants, including exploration work and permitting, well field development,
transmission and interconnection.

During the three months ended September 30, 2009, Raser reported revenue of
approximately $845,000 compared to approximately $30,000 in the three months
ended September 30, 2008. During the second quarter of 2009, Raser began selling
electricity generated from its Thermo No. 1 plant to the City of Anaheim,
California. During the third quarter, Raser sold approximately 9,800 MW hours of
electricity.

Cost of sales for the three months ended September 30, 2009 was $2.9 million
compared to $0 in the three months ended September 30, 2008. The increase in
cost of sales for 2009 was primarily due to sales of electricity from the Thermo
No. 1 power plant during the third quarter of 2009 and also to annual property
tax assessments that had not been accrued previously. Gross margin was
approximately $(2.0) million for the three months ended September 30, 2009
compared to gross margin of approximately $30,000 during the same period in
2008. Although the gross margin was negative for the quarter ended September 30,
2009, we anticipate that as the well field average temperature increases and
Thermo No. 1 plant reaches full capacity, the plant will become more efficient
and report a positive gross margin.

Total operating expenses decreased $2.7 million from $4.0 million for the third
quarter of 2009 compared to $6.7 million for the third quarter of 2008. Included
in the operating expenses were:

* General and administrative expenses remained flat at approximately $2.4
million for the third quarters of both 2009 and 2008. Equity-based non-cash
employee and service provider compensation expense increased slightly by $0.1
million in the third quarter of 2009 compared to the same period in 2008. Other
employment related costs also increased slightly by $0.1 million in the third
quarter of 2009 compared to the third quarter of 2008, reflecting constant
average salaries and employment levels.
* Power project development expenses during the three months ended September 30,
2009 totaled $1.2 million as compared to $3.2 million for the three months ended
September 30, 2008. During the third quarter of 2009, professional services
decreased by approximately $2.0 million due to costs incurred during the third
quarter of 2008 relating to geological engineering consulting, transmission line
capacity studies and legal fees associated with debt and tax equity financing
structures contemplated by geothermal financing commitments that were not
incurred during the third quarter of 2009. These fees were higher during the
2008 period due to the negotiation of the commitment letter we obtained from our
debt and tax equity provider and the financing we obtained for the Thermo No. 1
plant. Employment related and other operating costs remained relatively flat as
compared to the third quarter of 2008. Equity-based non-cash employee and
contractor compensation for the three months ended September 30, 2009 also
remained relatively flat as compared to the third quarter of 2008.
* Research and Development expense decreased from $971,000 in the three months
ended September 30, 2008 to $365,000 for the three months ended September 30,
2009. Equity-based non-cash employee and contractor compensation for the third
quarter of 2009 was relatively flat over the third quarter of 2008 primarily due
to offsetting factors relating to decreasing headcount from the prior year while
issuing stock grants to employees as part of their severance agreements during
the current year resulting from the decision to reduce the cash requirements at
Raser`s design center. Payroll costs also decreased by approximately $0.3
million due to the decrease in headcount. During the three months ended
September 30, 2009, professional services decreased by approximately $0.2
million compared to the third quarter of 2008 primarily due to completing the
majority of the consulting work relating to the PHEV project during the first
quarter of 2009.
* Non-controlling interest for the third quarter of 2009 included the portion of
the net loss allocated to a third party that owns a non-controlling interest in
Raser`s Thermo subsidiary totaling $(249,000). Non-controlling interest during
the third quarter of 2008 totaled $(1.2) million. Non-controlling interest
increased during the third quarter of 2009 due to accruing liquidation
preferences in accordance with the Thermo No. 1 plant financing agreements
totaling $1.0 million. Previously, this line item was presented in Raser`s
financial statements as minority interest.
* In aggregate, non-cash, equity-based expenses and equity-based compensation
totaled $1.0 million during the third quarter of 2009 compared to $0.7 million
in the third quarter of 2008.

Raser`s net loss applicable to common stockholders for the three months ended
September 30, 2009 was $3.8 million, or $(0.05) per basic and diluted share
(based on 74.9 million shares outstanding) compared to a net loss of $8.8
million, or $(0.15) per basic and diluted share (based on 57.8 million shares
outstanding) for the three months ended September 30, 2008.

For the nine months ended September 30, 2009, Raser reported revenue of
approximately $1.3 million compared to approximately $166,000 for the nine
months ended September 30, 2008. Cost of sales for the nine months ended
September 30, 2009 were approximately $4.7 million compared to approximately
$74,000 for the nine months ended September 30, 2008. Gross margin was
approximately $(3.5) million for the nine months ended September 30, 2009
compared to gross margin of approximately $92,000 during the same period in
2008. Total operating expenses for the nine months ended September 30, 2009 were
$15.7 million down from $18.7 million during the same period in 2008.

Raser`s net loss applicable to common stockholders for the nine months ended
September 30, 2009, was $14.2 million, or $(0.21) per basic and diluted share
(based on 68.3 million shares outstanding) compared to a net loss of $21.7
million, or $(0.38) per basic and diluted share (based on 56.6 million shares
outstanding) for the nine months ended September 30, 2008.

Conference Call with Investors

Management will host a conference call at 5 p.m. Eastern Time on Monday,
November 9, 2009 to discuss Raser`s results with the investment community.
Anyone interested in participating should call 877-407-0784, if calling within
the United States, or 201-689-8560, if calling internationally. A replay will be
available until November 16, 2009, which can be accessed by dialing
877-660-6853, if calling within the United States, or 201-612-7415, if calling
internationally. Please enter account #3055 and conference ID #336145 to access
the replay. The call will also be accompanied by a live webcast over the
Internet and will be accessible at
http://www.talkpoint.com/viewer/starthere.asp?Pres=128475 or www.rasertech.com.

About Raser Technologies

Raser Technologies (NYSE: RZ) is an environmentally focused technology licensing
and development company operating in two business segments. Raser`s Power
Systems segment is seeking to develop clean, renewable geothermal electric power
plants and bottom-cycling operations, incorporating licensed heat transfer
technology and Raser`s Symetron technology developed internally by its
Transportation and Industrial Technology segment. Raser`s Transportation and
Industrial Technology segment focuses on extended-range plug-in-hybrid vehicle
solutions and using Raser`s award-winning Symetron technology to improve the
torque density and efficiency of the electric motors and drive systems used in
electric and hybrid-electric vehicle powertrains and industrial applications.
Further information on Raser may be found at: www.rasertech.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including, but not limited to, our beliefs
about preliminary drilling results; our beliefs about the potential for
geothermal power generation on our leased properties and its qualification for
certain federal tax credits; our beliefs about our ability to exploit the
available geothermal resources; our beliefs about the expected timing relating
to the completion of our geothermal power projects; our beliefs about our
ability to increase production at our Thermo No. 1 plant to full capacity; our
beliefs about our ability to obtain adequate development funding; our beliefs
about our ability to restructure our financing arrangements with the tax-equity
partner and debt holder for the Thermo No. 1 project; our beliefs about our
ability to satisfy our remaining obligations under our line of credit; our
beliefs about the progress of our negotiations with SCPPA with respect to
potential pre-paid power purchase agreements; our beliefs about our ability to
utilize available technologies to produce electric power from the available
resources; our beliefs about the geothermal market in general; our beliefs about
the performance and market applicability of our products; our beliefs about the
status and enforceability of Raser`s intellectual property; our beliefs about
the strength of our existing and potential business relations in the motor
industry; our beliefs about the strength and enforceability of our agreements,
our beliefs about the performance capabilities of our technology; our beliefs
about the capabilities, expertise and intentions of our partners; our ability to
hire, train and retain key personnel, including our ability to replace our Chief
Executive Officer; and our ability to successfully complete field testing of
Symetron technologies. These forward-looking statements involve certain risks
and uncertainties that could cause actual results to differ, including, without
limitation, the competitive environment and our ability to compete in the
industry; our ability to adapt our technology for geothermal applications; our
ability to secure necessary permits; the strength of our intellectual property;
and such other risks as identified in our quarterly report on Form 10-Q for the
quarter ended June 30, 2009, as filed with the Securities and Exchange
Commission, and all subsequent filings.

All forward-looking statements in this press release are based on information
available to us as of the date hereof, and we undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of this press release.

RASER TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

Three months ended September 30, Nine months ended September 30,
2009 2008 2009 2008
Revenue $ 845,265 $ 30,000 $ 1,252,506 $ 166,423
Cost of revenue
Direct costs 2,150,652 - 3,283,296 74,112
Depreciation and amortization 735,126 - 1,445,900 -
Gross margin (2,040,513 ) 30,000 (3,471,690 ) 92,311

Operating expenses
General and administrative 2,352,612 2,447,878 7,633,943 7,562,902
Power project development 1,245,849 3,232,729 6,509,230 8,012,210
Research and development 364,557 970,925 1,592,124 3,134,138
Total operating expenses 3,963,018 6,651,532 15,735,297 18,709,250
Operating loss (6,003,531 ) (6,621,532 ) (19,211,987 ) (18,616,939 )
Interest income 33,538 94,030 122,342 265,306
Interest expense (3,481,165 ) (1,077,695 ) (8,714,110 ) (2,180,976 )
Gain on derivative instruments 5,918,100 - 12,917,454 -
Other - - (131,442 ) 75,775
Loss before income taxes (3,533,058 ) (7,605,197 ) (15,017,743 ) (20,456,834 )
Tax benefit (expense) - - - -
Net loss $ (3,533,058 ) $ (7,605,197 ) $ (15,017,743 ) $ (20,456,834 )
Non-controlling interest in the Thermo No. 1 subsidiary (248,513 ) (1,226,070 ) 806,458 (1,226,070 )
Net loss applicable to common stockholders $ (3,761,571 ) $ (8,831,267 ) $ (14,211,285 ) $ (21,682,904 )
Loss per common share-basic and diluted $ (0.05 ) $ (0.13 ) $ (0.21 ) $ (0.38 )
Weighted average common shares-basic and diluted 74,881,000 57,785,000 68,321,000 56,646,000

RASER TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

September 30, December 31,
2009 2008
Assets
Current assets:
Cash and cash equivalents $ 3,817,632 $ 1,534,820
Restricted cash 76,921 75,704
Notes receivable, net - 144,525
Accounts receivable, net 274,871 -
Restricted marketable securities (held to maturity) 4,382,258 6,521,347
Other current assets 1,421,559 1,147,562
Total current assets 9,973,241 9,423,958
Restricted cash 12,387,611 20,900,135
Land 1,811,063 1,811,063
Geothermal property, plant and equipment, net 107,708,919 -
Power project leases and prepaid delay rentals 6,730,136 8,630,643
Geothermal well field development-in-progress 857,234 31,388,628
Power project construction-in-progress 8,036,019 74,072,394
Power project equipment, net - 19,727,500
Equipment, net 679,585 608,886
Intangible assets, net 1,543,323 1,587,310
Deferred financing costs, net 6,812,908 7,670,382
Power project development deposits - 4,196,550
Other assets 1,618,608 4,006,999
Total assets $ 158,158,647 $ 184,024,448

Liabilities and Stockholders` Equity
Current liabilities:
Accounts payable and accrued expenses $ 15,536,392 $ 64,471,336
Unsecured line of credit, net of discount of $462,403 10,211,449 -
Short-term portion of long-term notes 3,001,754 1,831,147
Note payable - 945,833
Deferred revenue 200,000 200,000
Total current liabilities 28,949,595 67,448,316
Asset retirement obligation 2,695,217 2,152,230
Long-term 7.00% senior secured note (non-recourse), net of discount of $4,575,832 and $4,898,833, respectively 24,946,381 25,120,464
Long-term 8.00% convertible senior notes 55,000,000 55,000,000
Warrants 14,254,259 -
Total liabilities 125,845,452 149,721,010

Contingencies and commitments, (see Notes A,D,E,G)
Non-controlling interest in Thermo No. 1 subsidiary 27,850,256 28,025,116
Stockholders` equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued and outstanding - -
Common stock, $.01 par value, 250,000,000 shares authorized, 76,020,619 and 63,519,455 shares issued and outstanding, respectively 760,206 635,195
Additional paid in capital 107,419,484 102,350,814
Accumulated deficit (103,716,751 ) (96,707,687 )
Total stockholders` equity 4,462,939 6,278,322
Total liabilities and stockholders` equity $ 158,158,647 $ 184,024,448

Raser Technologies, Inc.
Issa Arnita, 801-765-1200
investorrelations@rasertech.com
or
Hayden IR
Cameron Donahue, 651-653-1854
cameron@haydenir.com

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