Business Highlights:
Michael L. Asmussen replaced Bernhard Steiner as president, chief executive officer (CEO) and director early in 2009 primarily to increase focus on commercialization of Clean Diesel’s patented technologies both internationally and in the Americas.
Sales of the company’s retrofit solution to the London Low Emission Zone provided the bulk of Clean Diesel’s 2008 sales; the results proved a major success and enhanced the company’s position as a key player in the developing Low Emission Zone (LEZ) market.
During 2008, Clean Diesel completed licenses to Headway Machine Co., Ltd., and both Eaton Corporation and Hilite International, Inc. in US. These license agreements extend Clean Diesel’s global reach and continue the company’s policy of granting non-exclusive licenses.
Management’s Comments:
While far from content with the overall results, increased revenues during 2008 reflect the evolution of the marketplace and indicate continued adaptation of emission reduction strategies which can be met by our technologies. Indeed, we are well placed to take advantage of profitable growth opportunities in the future, said the new CEO of Clean Diesel, Michael Asmussen.
During the past year, we saw increased international demand for Clean Diesel’s technologies and solutions as compliance requirements become increasingly stringent worldwide and LEZs are enacted in major cities. By using our intellectual property to create products which demonstrate how our retrofit expertise can meet the needs of LEZs, we’ve been able to move from license fees to products.
There are over 63 million diesel engines on the roads today and over 11 million new engines going into service annually, so diesel will continue to play a major role in on-road markets. As the call for worldwide regulatory emission controls grows, and current legislation such as the U.S. EPA 2010 limits and California’s Off-Road Equipment Rule takes effect, our market will continue to expand.
Inevitably, we have been impacted by the current economic climate and downturn in the automotive industry. Recognizing this, we are taking a ‘building block’ approach to transforming the company. Decisions will be data-driven and we will build a process orientation. We are making structural changes for greater operational efficiency. We are implementing a formal strategic planning process and instituting greater management performance accountability. We will focus sharply on those opportunities with the greatest revenue potential in order to achieve earlier profitability.
In sum, our market window appears to be moving closer and we need to focus on those technologies best suited for that window. With the tightening regulatory environment now creating a near-term need for emission reduction products based on our intellectual property estate, our revitalized business model and corporate structure should enable us to capitalize on appropriate business opportunities and enable greatest shareholder value to be earned for Clean Diesel, concluded Asmussen.
Financial Results:
Total revenue for the fourth quarter of 2008 was $0.7 million compared to $1.0 million in the same quarter in 2007. As expected, the decrease corresponded with the successful completion of the London Low Emission Zone July 2008 compliance deadline. Net loss for the fourth quarter of 2008 was $3.3 million, or $0.40 per share, compared to $2.9 million, or $0.38 per share, in the comparable period in 2007. Net loss for the fourth quarter of 2008 included $0.4 million non-cash charges for the fair value of stock options compared to $1.5 million in the fourth quarter of 2007. The company recorded a loss on the fair value of its investment in auction rate securities which was offset, in part, by a gain recognized for the fair value of the auction rate securities right to receive par value for the securities from June 30, 2010, resulting in a $0.2 million, net charge to operations.
Net loss for the 12 months ended December 31, 2008 included $1.4 million of non-cash charges for the fair value of stock options compared to $2.2 million in non-cash stock option compensation expense in the year ended December 31, 2007. The company also recorded a loss on the fair value of its investment in auction rate securities which was offset, in part, by a gain recognized for the fair value of the auction rate securities right to receive par value for the securities from June 30, 2010, resulting in a net charge to operations of $0.2 million.
