Hoku Scientific, Inc. (NasdaqNM:HOKU), a designer, developer and manufacturer of membrane electrode assemblies (MEAs) and non-fluorinated membranes for proton exchange membrane (PEM) fuel cells, announced its financial results for the second quarter ended September 30, 2005.
Revenue for the quarter was $1.3 million, compared to none in the quarter ended September 30, 2004. Revenue for the six months ended September 30, 2005 was $2.4 million, compared to $100,000 for the same six month period in 2004. Total deferred revenue, which is attributable to contracts with Nissan Motor Co., Ltd. and the U.S. Navy, declined to $2.7 million at September 30, 2005 compared to $4.2 million at March 31, 2005 primarily due to the recognition of $1.3 million of deferred revenue related to contracts with Nissan Motor Co., Ltd.
Net income for the quarter ended September 30, 2005 was $349,000, or $0.02 per diluted share, compared to a net loss of $799,000, or $0.15 per diluted share for the quarter ended September 30, 2004. Net income for the six months ended September 30, 2005 was $690,000, or $0.05 per diluted share, compared to a net loss of $1.5 million, or $0.29 per diluted share for the same six month period in 2004.
Dustin Shindo, chairman, president and chief executive officer of Hoku Scientific, said, “We achieved our third consecutive profitable quarter, with revenue and profit growth compared to the same period last year. During the quarter, we completed the testing on most of our manufacturing equipment, placing us closer to having our new production line fully operational.”
Business Update
— U.S. Navy Update: In September 2005, the U.S. Navy agreed that if the Company meets the remaining three of seven milestones under the initial contract, the U.S. Navy will proceed with options to have the Company manufacture and provide services to operate and maintain 10 fuel cell power plants over a 12-month period. The first option requires the Company, in coordination with IdaTech, LLC, to manufacture 11 fuel cell power plants for which the U.S. Navy has agreed to pay the Company a total of $1.1 million in installments as each fuel cell power plant is completed. The second option is to have the Company operate and maintain 10 of the 11 fuel cell power plants manufactured under the first option for a period of 12 months at a U.S. Navy facility, for which the U.S. Navy has agreed to pay the Company a total of $1.4 million in 12 equal monthly installments. The Company and the U.S. Navy entered into an Amendment of Solicitation/Modification of Contract to provide for the exercise of the options.
— Manufacturing Facility Update: In October 2005, the Company completed the testing of most of its new manufacturing equipment. The manufacturing equipment has been installed and placed online; however, the Company will not begin producing product on the new equipment until the entire line is fully operational. Current customer demand continues to be satisfied with the Company’s existing equipment.
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