Environmental Power Corporation Committed to 'Doing Well by Doing Good' Announces 3rd Quarter Revenues from Waste Coal Operation to Fuel 'Manure to Energy' Systems.Business Editors/High-Tech Writers PORTSMOUTH Portsmouth, city, England Portsmouth, city (1991 pop. 174,218) and district, Hampshire, S England, on Spithead Channel. The district includes Portsea (naval station), Southsea (residential district and resort), and the old town of Portsmouth proper. , N.H.--(BUSINESS WIRE)--Nov. 14, 2002 Environmental Power Corporation (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : POWR POWR Psychoacoustically Optimized Wordlength Reduction (dithering-filter used in digital audio productions) POWR Pennsylvania Organization for Watersheds and Rivers, Inc. ), a leader in providing solutions for the management of agricultural waste, production of renewable energy Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. and conventional power from a variety of alternative fuel sources, continued to generate a steady stream of revenue from the award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" Scrubgrass waste coal facility while continuing to deploy new technology which converts 'manure into energy'. Joseph E. Cresci, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "Our Scrubgrass waste coal power plant operated at record levels during the last quarter. These revenues along with a successful private placement completed during the quarter have provided us with cash flow to invest in the ongoing roll-out of our anaerobic digestion Anaerobic digestion (AD) is the natural process of biological degradation of organic material in the absence of air. An anaerobic digester is a man-made system that harnesses this process to treat waste and produce biogas and anaerobic digestate, a soil-improving material. technology." "These divisions of Environmental Power form the linchpin linch·pin or lynch·pin n. 1. A locking pin inserted in the end of a shaft, as in an axle, to prevent a wheel from slipping off. 2. of our business strategy: "Doing Well By Doing Good". Scrubgrass with its profitable record demonstrates our commitment to clean, resourceful re·source·ful adj. Able to act effectively or imaginatively, especially in difficult situations. re·source  ful·ly adv. power production. Our highly efficient and proven
'manure to energy' technology serves as our platform for
growth as it addresses the growing market needs for control of air and
water pollution on agricultural sites and the production of renewable
energy." We are well positioned to increase our profitability and
address critical societal so·ci·e·tal adj. Of or relating to the structure, organization, or functioning of society. so·ci e·tal·ly adv.Adj. needs." Net Income (Loss) Net income for the three months ended September September: see month. 30, 2002 amounted to $875,839, or 4 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. (basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), as compared to net income of $922,030, or 6 cents per share (basic) and 5 cents per share (diluted), for the three months ended September 30, 2001. Net income for the nine months ended September 30, 2002 amounted to $899,981, or 4 cents per share (basic and diluted), as compared to net income $1,692,496, or 13 cents per share (basic and diluted), for the nine months ended September 30, 2001. Revenues Power generation revenues for the three months ended September 30, 2002 amounted to $14,683,232 as compared to $13,914,475 for the same period in 2001, an increase of 5.5%. Power generation revenues for the nine months ended September 30, 2002 amounted to $40,773,693, as compared to $39,494,244 for the same period in 2001, an increase of 3.2%. Segments The Company manages and evaluates its operations in two reportable business segments: Scrubgrass project (Waste Coal) and Microgy (Renewable Energy). These segments have been classified separately by the chief operating decision maker because of the different technologies used in the generation of energy and the future growth prospects of those business technologies. Financial data for reportable business segments (with Microgy results included beginning July July: see month. 23, 2001) is as follows:
Renewable
Waste Coal Energy
Scrubgrass Microgy Other Consolidated
Nine Months Ended 9/30/02:
Pre-tax income 4,562,581 (2,039,837) (268,362) 2,254,382
Identifiable assets 82,065,756 8,494,181 657,353 91,217,290
Nine Months Ended 9/30/01:
Pre-tax income 2,350,414 (137,041) 620,123 2,833,496
Identifiable assets 73,809,797 6,873,543 2,286,793 82,970,133
Acquired Technology In July 2001, Environmental Power Corporation acquired Microgy Cogeneration cogeneration In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power. Systems, Inc., a development stage company offering management of agricultural waste and renewable energy, a market with an estimated target market of over $14 billion, including an initial target market of $7 billion. The Company believes Microgy's business compliments com·pli·ment n. 1. An expression of praise, admiration, or congratulation. 2. A formal act of civility, courtesy, or respect. 3. the Company's existing environmentally sound alternative fuel power business. With the acquisition of Microgy, the Company obtained the exclusive North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. license for a highly efficient anaerobic digestion technology that produces renewable energy generated by methane methane (mĕth`ān), CH4, colorless, odorless, gaseous saturated hydrocarbon; the simplest alkane. It is less dense than air, melts at −184°C;, and boils at −161.4°C;. derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from animal wastes. Chairman Cresci stated, "We believe this technology provides a unique solution to two critical market needs: the need for pollution control by large animal feeding operations; and the rapidly growing renewable energy market. In addition, we expect that the technology will turn an expensive agricultural industry problem into a profit-generating solution for farmers." Chairman Cresci continued, "The Microgy business has continued to accelerate. We are seeking to develop projects from Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). to Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and . Farmers are excited about our animal waste control system and power companies are anxious to work with us with our renewable and distributed energy." ABOUT ENVIRONMENTAL POWER CORPORATION Environmental Power Corporation (OTCBB: POWR) is an entrepreneurial en·tre·pre·neur n. A person who organizes, operates, and assumes the risk for a business venture. [French, from Old French, from entreprendre, to undertake; see enterprise. energy company established in 1982 with annual revenues in excess of $50 million. The Company focuses on environmentally sound power generation and anaerobic digestion systems, a development stage business in a market with an estimated target market of over $14 billion, including an initial target market of $7 billion. CAUTIONARY STATEMENT The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (the "Act") provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Certain statements contained in this press release such as statements concerning future growth prospects, estimated target markets, beliefs as to Microgy's business complimenting Environmental Power Corporation's existing business, beliefs as to the our licensed technology providing a unique solution to two critical market needs, the technology turning an expensive agricultural industry problem into a profit-generating solution for farmers and other statements contained herein regarding matters that are not historical facts are forward looking statements as such term is defined in the Act. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, uncertainties involving development stage companies, financing requirements and uncertainties, difficulties involved in developing and executing on a business plan, technological uncertainties, risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc managing and integrating acquired businesses, volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. and unpredictable developments (including plant outages and repair requirements), the difficulty of estimating construction, development, repair and maintenance costs and timeframes, the uncertainties involved in estimating insurance and implied warranty A promise, arising by operation of law, that something that is sold will be merchantable and fit for the purpose for which it is sold. Every time goods are bought and sold, a sales contract is created: the buyer agrees to pay, and the seller agrees to accept, a certain price recoveries, if any, the inability to predict the course or outcome of any negotiations with parties involved with POWR's or Microgy's projects, uncertainties relating to general economic and industry conditions, the amount and rate of growth in expenses, uncertainties relating to government and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. policies, the legal environment, intellectual property issues, the competitive environment in which POWR and Microgy operate and other factors, including those described in the Company's filings with the Securities and Exchange Commission, including the section ``Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations -- Certain Factors That May Impact Future Results'' of POWR's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended September 30, 2002. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. POWR undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30
2002 2001 2002 2001
POWER GENERATION
REVENUES $14,683,232 $13,914,475 $40,773,693 $39,494,244
COSTS AND EXPENSES:
Operating expenses 5,564,303 5,292,285 18,178,847 17,779,358
Lease expenses 5,332,121 5,988,593 18,407,178 17,862,716
General and
administrative
expenses 1,774,198 1,101,420 4,108,740 2,589,900
Depreciation and
amortization 136,719 111,870 409,379 284,981
12,807,341 12,494,168 41,104,144 38,516,955
OPERATING INCOME
(LOSS) 1,875,891 1,420,307 (330,451) 977,289
OTHER INCOME
(EXPENSE):
Interest income 12,350 17,944 34,382 59,688
Interest expense (41,355) (43,047) (111,916) (145,474)
Amortization of
deferred gain 77,103 77,103 231,308 231,308
Sales of NOx
emission credits 0 -- 2,428,200 --
Other income 0 32,723 2,859 1,710,685
48,098 84,723 2,584,833 1,856,207
INCOME BEFORE
INCOME TAXES 1,923,989 1,505,030 2,254,382 2,833,496
INCOME TAX EXPENSE (1,048,150) (583,000) (1,354,401) (1,141,000)
NET INCOME $ 875,839 $ 922,030 $ 899,981 $ 1,692,496
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 20,600,872 15,547,945 20,298,245 12,802,339
Diluted 20,707,675 17,063,405 20,382,005 13,322,677
EARNINGS PER
COMMON SHARE:
Basic $ 0.04 $ 0.06 $ 0.04 $ 0.13
Diluted $ 0.04 $ 0.05 $ 0.04 $ 0.13
ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
2002 2001
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 596,900 $ 468,271
Restricted cash 923,842 1,014,580
Receivable from utility 8,620,084 7,905,864
Other current assets 701,664 607,590
TOTAL CURRENT ASSETS 10,842,490 9,996,305
PROPERTY, PLANT AND EQUIPMENT, NET 934,164 652,830
LEASE RIGHTS, NET 2,049,750 2,161,503
ACCRUED POWER GENERATION REVENUES 68,556,991 63,648,995
GOODWILL 4,912,866 4,912,866
LICENSED TECHNOLOGY RIGHTS, NET 3,489,433 3,628,177
OTHER ASSETS 431,596 565,570
TOTAL ASSETS $ 91,217,290 $85,566,246
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 7,713,352 $ 9,382,471
Secured promissory note payable to
related party 750,000 750,000
Other current liabilities 2,097,260 1,363,108
TOTAL CURRENT LIABILITIES 10,560,612 11,495,579
DEFERRED GAIN, NET 4,240,647 4,471,955
SECURED PROMISSORY NOTES PAYABLE
AND OTHER BORROWINGS 1,383,148 1,420,467
DEFERRED INCOME TAX LIABILITY 184,556 146,396
ACCRUED LEASE EXPENSES 68,556,991 63,648,995
TOTAL LIABILITIES 84,925,954 81,183,392
SHAREHOLDERS' EQUITY:
Preferred Stock ($.01 par value;
2,000,000 shares authorized
as of September 30, 2002 and
December 31, 2001, respectively;
no shares issued) 0 0
Preferred Stock (no par value,
10 shares authorized; 10 shares
issued as of September 30, 2002
and December 31, 2001,
respectively) 100 100
Common Stock ($.01 par value;
50,000,000 shares authorized;
22,410,293 and 21,370,293 issued;
and 21,912,839 and 20,251,653
outstanding as of September 30,
2002 and December 31, 2001) 224,103 213,702
Additional paid-in capital 7,665,601 6,850,046
Accumulated deficit (618,409) (1,518,390)
Accumulated other comprehensive loss (60,385) (60,385)
7,211,010 5,485,073
Treasury stock (497,454 and 1,118,640
common shares, at cost, as of September
30, 2002 and December 31, 2001) (273,726) (456,271)
Notes receivable from officers
and board members (645,948) (645,948)
TOTAL SHAREHOLDERS' EQUITY 6,291,336 4,382,854
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 91,217,290 $85,566,246
ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 899,981 $ 1,692,496
Adjustments to reconcile
net income to net cash
Provided by operating activities:
Depreciation and amortization 409,379 284,981
Deferred income taxes 38,160 52,000
Amortization of deferred gain (231,308) (231,308)
Non-cash & Stock Based Compensation 49,706 3,916
Accrued power generation revenues (4,907,996) (5,595,636)
Accrued lease expenses 4,907,996 5,595,636
Changes in operating assets
and liabilities:
Increase in receivable from utility (714,220) (716,219)
Increase in other current assets (113,593) (241,532)
Decrease (Increase) in other assets 107,244 (6,754)
(Decrease) increase in accounts
payable and accrued expenses (1,669,119) 303,984
Decrease in long-term debt to supplier 0 (94,411)
Net cash provided by
operating activities (1,223,770) 1,047,153
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in restricted cash 90,738 (217,927)
Acquisition related expenditures (210,465)
Property, plant and equipment expenditures (393,967) (1,000)
Net cash used in investing
activities (303,229) (429,392)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend payments (3,750) (174,852)
Private Placement Common Stock 780,000
Net borrowings (repayments) under
working capital loan 734,152 (662,794)
Sale of Treasury Stock 182,545
Proceeds from short-term note payable 750,000
Advances on notes receivable from officers (200,000)
Repayment of secured promissory notes
payable and other borrowings (37,319) (76,974)
Net cash generated (used)
in financing activities 1,655,628 (364,620)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 128,629 (253,141)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 468,271 307,666
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 596,900 $ 560,807
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