PROVO, Utah--(BUSINESS WIRE)--Raser Technologies, Inc. (OTCBB: RZTI), an energy technology company, today announced financial results for the third quarter and nine-month period ended September 30, 2010.

“We are committed to building a stronger financial foundation for Raser. This includes extinguishing debt and capitalizing the Company. Raser has one of the largest resource portfolios in the geothermal industry, and we believe as we prove out these resources we will see value return to the Company.”

Recent Highlights:

• Raser signed a Letter of Intent (LOI) with a private investor for the purpose of forming and capitalizing Via Automotive Inc., a new and independent electric vehicle company. As part of the agreement, Via Automotive, Inc., a Delaware corporation, will purchase certain of our Transportation and Industrial Business segment assets for $2.5 million in cash ($1.5 million to be paid at closing and $1.0 million to be paid on or before December 20, 2010) , and the issuance to us of 39% of the common shares of Via Automotive. The LOI also provides that the private investor will capitalize Via Automotive with an additional $2.0 million and that Via Automotive will assume certain identified liabilities. Via Automotive anticipates raising an additional $10 million in the first quarter of 2011 with no dilution to Raser’s equity position.
• Successfully re-entered a well (TFD-55-7) at the Lightning Dock project located in the Animas basin in southwestern New Mexico. The well produced water temperatures above 300 degrees Fahrenheit. Ultimately, Raser believes the Lightning Dock project will be a 15 megawatt power plant.
• Obtained preliminary financing with Evergreen-FE Lightning Dock, LLC (Evergreen-FE) for the development of the Lightning Dock, New Mexico geothermal project (LDG). The agreement contemplates that Evergreen-FE will invest $15.3 million in exchange for a 51% interest in the project and that Raser will develop and manage the project, subject to the negotiation and execution of definitive agreements satisfactory to the parties. The agreement provides for an initial investment in the form of loans of up to approximately $2 million to LDG to fund certain resource development of the project. Upon execution of definitive documents governing Evergreen-FE's equity investment in LDG, the loan balance will be credited toward the purchase price payable by Evergreen-FE for its interest in LDG.
• Lightning Dock Geothermal HI-01, LLC signed term sheet with Ormat Nevada, Inc., a subsidiary of Ormat Technologies, Inc., to provide the engineering, procurement and construction of the Lightning Dock project. The broad scope of work includes the installation of two large Ormat binary turbo generators and all associated above-ground plant equipment including, but not limited to, well field pumps, pipelines, cooling towers, electric interconnection equipment and transmission equipment.
• Entered into an agreement to repay a substantial portion of the debt held by the senior secured lender, Prudential, of Thermo No. 1. Under the arrangement, the lender received an immediate payment of $27 million out of project escrow accounts and waived compliance with certain debt-related covenants and obligations until February 1, 2011. In addition, Raser is required to make an additional payment of up to $6.25 million by February 1, 2011.
• Re-paid $2.5 million of Raser’s $5.3 million line of credit balance pursuant to the issuance of stock and warrants of Raser.
• Made significant progress in the marketing of the Thermo No. 1 plant. We expect to close this transaction in the first quarter of 2011.

“We are very pleased with the progress we made in the third quarter,” said Raser Chief Executive Officer Nick Goodman. “We are moving forward in several key areas including: the separation of the renewable energy and automotive segments of the Company, the development of our Lightning Dock project and the sale of Thermo No. 1.”

Financial Results

During the three months ended September 30, 2010, we recognized revenue totaling $1.0 million compared to $0.8 million of revenue during the same period in 2009. During the second quarter of 2009, we began selling electricity generated by our Thermo No. 1 geothermal power plant to the City of Anaheim. During the third quarter of 2010, we generated and sold approximately 11,686 MW hours of electricity compared to 9,819 MW hours of electricity during the same period in 2009.

Cost of revenue for the three months ended September 30, 2010 totaled $1.4 million compared to $2.9 million for the same period in 2009. The decrease in cost of revenue for 2010 was primarily due to the decrease in depreciation expense of $0.7 million due to a reduction of the basis in the Thermo No. l plant by 30% due to receipt of the federal grant in 2009 and an impairment in the fair value of the Thermo No. 1 plant that occurred during the second quarter of 2010 that also reduced the amount of depreciation expense over the estimated useful life of the plant.

Gross margin was approximately ($0.3) million for the third quarter compared to gross margin of approximately ($2.0) million during the same period in 2009.

As previously disclosed, management is actively engaged in the sale of all or a portion of its interest in the Thermo No. 1 plant, to help establish the value of other geothermal interests in Raser’s portfolio as well as further capitalize the Company and pay down debt.

Mr. Goodman added, “We are committed to building a stronger financial foundation for Raser. This includes extinguishing debt and capitalizing the Company. Raser has one of the largest resource portfolios in the geothermal industry, and we believe as we prove out these resources we will see value return to the Company.”

Total operating expenses were $3.8 million for the third quarter of 2010 compared to $4.0 million for the third quarter of 2009.

Included in the operating expenses were:

• General and administrative expenses decreased by approximately $0.7 million to $1.7 million for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009. Non-cash employee compensation associated with general and administrative employees decreased $0.4 million from $0.7 million for the three months ended September 30, 2009 to $0.3 million for the quarter ended September 30, 2010. The decrease was primarily due to general staff reductions and accounting adjustments for forfeitures of non-cash compensation awards.
• Power project development expenses during the three months ended September 30, 2010 remained relatively flat at $1.2 million compared to the three months ended September 30, 2009. During the third quarter of 2010, employment related costs decreased approximately $0.2 million due primarily to reassigning responsibilities for certain employees, resulting in a change in classification from power project development costs to cost of revenues and general staff reductions at the beginning of the third quarter of 2010. Equity based non-cash employee compensation associated with power project development employees and other operating costs for the three months ended September 30, 2010 decreased by approximately $0.1 million as compared to the third quarter of 2009.
• Research and Development expense increased from $0.4 million in the three months ended September 30, 2009 to $0.9 million for the three months ended September 30, 2010. Equity based non-cash employee compensation associated with research and development employees decreased by $0.1 million during the three months ended September 30, 2010 compared to the same period in 2009. This was due primarily to decreased headcount as a result of our decision to reduce the cash requirements associated with the research and development activities at our design center in 2009 and accounting adjustments for forfeitures of non-cash compensation awards.
• Non-controlling interest decreased by $0.2 million during the three months ended September 30, 2010 compared to the three months ended September 30, 2009. The decrease resulted from the withdrawal and redemption of Merrill Lynch’s interest in the Thermo Subsidiary in connection with amendments to the Thermo No. 1 financing arrangements in December 2009. As a result, we own 100% of the Thermo Subsidiary, thereby eliminating the non-controlling interest.

Raser’s net loss applicable to common stockholders for the three months ended September 30, 2010 was approximately $13.0 million, or $(0.14) per basic and diluted share (based on 92.9 million shares outstanding) compared to a net loss applicable to common stockholders of $3.8 million, or $(0.05) per basic and diluted share (based on 74.9 million shares outstanding) for the three months ended September 30, 2009.

During the nine months ended September 30, 2010, we recognized revenue totaling $3.1 million compared to revenue of $1.3 million during the same period in 2009. During the second quarter of 2009, we began selling electricity generated by our Thermo No. 1 geothermal power plant to the City of Anaheim. During the nine months ended September 30, 2010, we generated and sold approximately 34,690 MW hours of electricity compared to 14,695 MW hours of electricity during the same period in 2009.

Cost of revenue for the nine months ended September 30, 2010 totaled $5.2 million compared to $4.7 million for the same period in 2009. The increase in cost of revenue for 2010 was due to the increase sales of electricity from the Thermo No. 1 plant during the nine months ended September 30, 2010 as compared to the same prior year period. Gross margin was approximately $(2.2) million year to date compared to gross margin of approximately $(3.5) million during the same period in 2009. Total operating expenses for the year were $64.5 million compared to $15.7 million during the same period in 2009.

Raser’s net loss applicable to common stockholders for the nine months ended September 30, 2010 was $84.5 million, or $(0.97) per basic and diluted share (based on 87 million shares outstanding), compared to a net loss applicable to common stockholders of $14.2 million, or $(0.21) per basic and diluted share (based on 68 million shares outstanding) for the nine months ended September 30, 2009.