Electro Energy Announces First Quarter Results
Electro Energy Inc. announced first quarter results for the period ended March 31, 2007. Consolidated net revenue for the 2007 first quarter was $799,681 compared with $1,096,560 for the three months ended March 31, 2006. Service revenue was $721,703 in the first quarter of fiscal 2007 compared to $712,849 in the fiscal 2006 period. Product revenue of $77,978 declined 80% compared to 383,711 in fiscal 2006 as a result of a decline in sales to EaglePicher under a supply agreement, partially offset by an increase in sales of general aircraft products and Apache helicopter battery sales. The service contract backlog as of March 31, 2007 was approximately $2.4 million.
Consolidated gross loss for the three months ended March 31, 2007 was $225,103, compared with $87,934 in the same period in fiscal 2006. The higher gross loss was mainly due to the decline in product revenue which resulted in a decline in product manufacturing volume despite a fixed level of overhead costs. Net loss for the three months ended March 31, 2007 was $(2,860,752) or $(0.13) per share compared with $760,208 or $0.05 per share in the first quarter of fiscal 2006.
Selling, general and administrative ("SG&A") expense for the three months ended March 31, 2007 was $1,635,337 compared with $530,062 in 2006. The increase in SG&A was primarily a result of $830,474 of start-up costs associated with the Florida manufacturing facility and an increase of approximately $290,000 in legal, consulting and professional fees, partially offset by a decrease of $64,720 in stock-based compensation expense. Research and development ("R&D") expense for the 2007 first quarter was $403,824 compared with $139,842 in 2006. R&D expense increased due to increase activities related to experimentation and product development for bipolar nickel metal hydride batteries for hybrid electric vehicle (HEV) and plug-in hybrid vehicle (PHEV) applications for automotive applications, for improved nickel cadmium batteries for the aerospace market, and for bipolar lithium ion for advanced military applications. Interest expense for the 2007 first quarter was $487,143 compared to $3,297 in the year-earlier period, primarily as a result of interest expense on the 8.5% senior secured convertible notes issued in April 2006. The company ended the 2007 first quarter with $5.0 million in cash and cash equivalents, including $2.1 million of restricted cash, compared to $6.3 million at year-end.
"During the first quarter we made significant progress in positioning our Florida facility to become a major supplier of advanced rechargeable batteries to domestic markets," said Michael E. Reed, CEO of Electro Energy. "We successfully started debug and qualification of our electrode and 18650 cylindrical cells production equipment. We are shipping sample products to targeted customers in the second quarter and expect significant customer commitments for shipment this year. We also have a strong backlog of service revenue. We believe that Electro Energy is well positioned to generate significant revenue growth."