Altair Nanotechnologies Reports Second Quarter 2011 Financial Results

Altair Nanotechnologies Inc. (Altairnano) reported financial results for the second quarter ended June 30, 2011.

Of these recent highlights, the most significant by far was the closing of the Canon investment. According to the Altairnano, this transaction has been anticipated since early first quarter and with its close now provides Altairnano with a significantly stronger balance sheet. Under the terms of this investment Canon purchased newly issued common shares of Altairnano resulting in its owning 53.3% of the company’s outstanding shares, 49.8% on a fully diluted basis, immediately following the close.

For the 2011 second quarter, Altairnano reported revenues to $0.5 million, down from $1.5 million in the second quarter of 2010. The overwhelming driver for this reduction was the termination of its military business at the end of 2010 in order to close the Canon transaction. In addition, YTE, the operating entity of Canon, has not yet resumed acceptance of LTO shipments from Altairnano in accordance with the Conditional Supply and Technology Licensing Agreement signed in September 2010.

The net loss was $3.0 million, or $0.10 per share, compared to a net loss of $4.9 million, or $0.19 per share, for the second quarter of 2010. The basic and diluted weighted average shares outstanding for the quarter were 30.4 million, compared to 26.3 million for the same period in 2010.

"The second quarter was a very challenging period because of our severe cash constraints resulting from the delays in the Canon investment close; however, we did make progress in some key areas," said Dr. Terry Copeland, Altairnano’s President and Chief Executive Officer. "We announced a three-year lease of our new 1.8 MW/ 300 kWh ALTI-ESS Advantage product, have made significant progress in getting the 10 MW INE frequency regulation project back on track and continue to make inroads in the various OEM industrial markets we have targeted."

For the quarter, gross profit declined by $0.6 million and operating expenses were lower by 31%, falling from $5.5 million in the second quarter of 2010 to $3.8 million for the same period this year. The primary driver for the reduced gross profit was the lower contribution from early stage products and the elimination of our military sales in 2011, while the primary drivers to the lower operating expenses were the deferral of all development and non-critical customer work due to the severe cash constraints caused by the Canon close delay.

Altairnano’s cash and cash equivalents decreased by $2.1 million, from $4.7 million at December 31, 2010 to $2.6 million at June 30, 2011. This is primarily due to net cash used in operations of approximately $8.8 million, partially offset by the sale of additional common stock for a net amount of $5.7 million and a mortgage on our Reno property of $1.5 million. The bulk of the cash used in operations went to cover normal compensation and non-labor expenses. Significant additional items adding to our cash balance from operations were a decrease of $0.8 million in product inventories and a decrease of $0.4 million in accounts receivable, largely offset by a decrease of $1.0 million in accounts payable and a decrease of $0.9 million in deferred revenue. Investing activities consisted of the purchase of fixed assets of approximately $0.3 million. Financing activities of $7.0 million is a result of the money raised from the company’s March registered direct financing of $5.7 million and the mortgage of our Reno property for $1.5 million offset by leasing payments of $0.2 million.