Highlights
- 64 holes successfully drilled in 6 1/2 inch size removing 100% of rock with particles
- Customer identified weak zone in seismic data causing cancelation of scheduled well trial
- Working with same customer to identify opportunities in Haynesville and Pinedale
- Currently designing most common sized 9 7/8 inch bit for much broader application
- Company unsuccessful in appealing NASDAQ delisting decision
During the second quarter, the Company has focused all of its efforts on meeting the requirements of its customer's development plans that called for the Particle Impact Drilling ("PID") technology to be on location and drilling in
Subsequent to that event, we have been working with this customer and others in evaluating alternative field trial opportunities for the 6 1/2 inch PID bits. Drilling 6 1/2 inch hole in very hard formations is fairly uncommon, which is one of the reasons this customer paid for the development of this size bit.
We continue to work with this customer in evaluating opportunities in both 9 7/8 inch and 6 inch hole sizes. As a result of developing the 6 1/2 inch PID bit, we now understand the viability of removing 100% of the rock with steel particles. We believe that this breakthrough is scalable to other PID bit sizes and will increase bit life well beyond our previous expectations. Bit life had always been a concern and now that we have confirmed this ability, we can do away with the rock ring and the need to remove any rock with mechanical force.
The full scale drilling laboratory we built for developing the 6 1/2 inch bit is completely compatible with developing both smaller and larger size PID bits and will significantly reduce the cycle time for new sizes and the reliability of the performance for new size bits.
As a result of an unfavorable decision in the Company's appeal to NASDAQ, the Company's stock will be delisted on
"We are obviously disappointed about the cancelation of our 6 1/2 inch trial but we are at the same time pleased with the significant technical progress we have made in improving the PID bit durability as demonstrated with 100% rock removal by particles alone," stated
As previously announced, the Special Committee of the Board of Directors has retained Parks Paton Hoepfl & Brown, LLP to serve as the Special Committee's financial advisor in connection with its evaluation and review of any potential strategic alternatives, including a strategic industry joint venture, technology licensing arrangement, sale of the company and any other available alternatives. We have yet to determine which particular strategic alternative to pursue, if any, and do not intend to disclose developments with respect to this evaluation unless and until the Board of Directors has approved a course of action or otherwise deemed disclosure appropriate.
Particle Drilling Technologies' financial results reflect its status as a development stage company during the first quarter of fiscal 2009 generating no revenue. The following is a summary of the quarterly results:
Three Months Ended March 31, Six Months Ended March 31, 2009 2008 2009 2008 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $- $- $- $- Gross profit - - - - Loss from operations (1,571,207) (2,339,338) (3,596,023) (5,559,255) Net loss (1,571,513) (2,329,074) (3,591,295) (5,555,610) Net loss per share - basic and diluted $(0.05) $(0.08) $(0.10) $(0.18)
Particle Drilling Technologies, Inc., headquartered in
Certain statements in this press release that are not historical but are forward-looking are subject to known and unknown risks and uncertainties, which may cause PDTI's actual results in future periods to be materially different from any future performance that may be suggested in this press release. Such risks and uncertainties may include, but are not limited to, PDTI's ability to raise capital, if necessary, and its ability to obtain financing on acceptable terms, if at all, a worldwide downturn in the energy services sector, working capital constraints and other risks described in PDTI's filings with the SEC. Further, PDTI is a development stage company that operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond PDTI's control such as announcements by competitors and service providers.
Contacts: Jason D. Davis VP & Interim CFO Particle Drilling Technologies, Inc. 713-223-3031 Jack Lascar / Sheila Stuewe DRG&E / 713-529-6600
PARTICLE DRILLING TECHNOLOGIES, INC. (a development stage enterprise) CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended March 31, March 31, 2009 2008 2009 2008 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $- $- $- $- Operating expenses: Research and development 813,521 1,546,200 1,779,183 3,327,012 General and administrative 756,939 1,434,859 1,903,064 2,913,964 Gain on sale of assets 747 (641,721) (86,224) (641,721) Total operating expenses 1,571,207 2,339,338 3,596,023 5,599,255 Loss from operations (1,571,207) (2,339,338) (3,596,023) (5,599,255) Other income (expenses) Interest income 863 11,803 7,729 47,507 Interest expense (1,169) (1,539) (3,001) (3,862) Total other income (expenses) (306) 10,264 4,728 43,645 Net loss $(1,571,513) $(2,329,074) $(3,591,295) $(5,555,610) Net loss per common share, basic and diluted $(0.05) $(0.08) $(0.10) $(0.18) Weighted average number of common shares outstanding, basic and diluted 34,651,201 30,851,502 34,595,330 30,819,479
PARTICLE DRILLING TECHNOLOGIES, INC. (a development stage enterprise) CONSOLIDATED BALANCE SHEETS March 31, September 30, 2009 2008 (Unaudited) Audited ASSETS Current assets: Cash and cash equivalents $503,925 $2,296,143 Accounts receivable 10,000 - Deferred financing costs, net 71,296 - Prepaid expenses 142,131 260,686 Total current assets 727,352 2,556,829 Property, plant & equipment, net 410,330 1,213,918 Intangibles, net 1,705,780 1,552,266 Other assets 41,144 41,144 Total assets $2,884,606 $5,364,157 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $900,435 $850,944 PIK Note payable, net of discount of $304,623 $170,377 $- Short-term notes payable 8,253 84,277 Current portion of long-term debt 4,229 8,651 Accrued liabilities 172,323 353,881 Total current liabilities 1,255,617 1,297,753 Long-term debt 13,203 15,381 Deferred Rent 139,694 135,531 Stockholders' equity: Common stock, $.001 par value, 100,000,000 shares authorized, 38,743,435 shares issued and 35,740,349 shares outstanding at March 31, 2009, and 38,767,018 shares issued and 35,763,932 shares outstanding at September 30, 2008 38,743 38,768 Additional paid-in capital 47,369,458 46,217,538 Treasury stock at cost, 3,003,086 shares (1,511,817) (1,511,817) Deficit accumulated during the development stage (44,420,292) (40,828,997) Total stockholders' equity 1,476,092 3,915,492 Total liabilities and stockholders' equity $2,884,606 $5,364,157
PARTICLE DRILLING TECHNOLOGIES, INC. (a development stage enterprise) CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended March 31, 2009 2008 (Unaudited) (Unaudited) Cash flows from operating activities: Net loss $(3,591,295) $(5,555,610) Adjustments to reconcile net loss to net cash used in operating activities: Gain on sale of assets (86,224) (641,721) Depreciation and amortization expense 156,468 301,824 Amortization of deferred financing costs 6,482 - Amortization of discount on note payable 13,756 - Stock-based employee compensation 908,513 1,418,797 Changes in operating assets and liabilities: Decrease in note receivable - - (Increase) in accounts receivable (10,000) - (Increase) Decrease in prepaid expenses 118,556 51,046 Increase (Decrease) in accounts payable 49,491 (259,297) Increase (Decrease) in accrued liabilities (259,335) 397,457 Decrease in other assets - 11,418 Increase in other liabilities 4,163 60,996 Net cash used in operating activities (2,689,425) (4,215,090) Cash flows from investing activities: Payments to purchase property and equipment (85,492) (37,332) Proceeds from the sale of assets 850,050 686,620 Payments to purchase intangibles (184,727) (83,989) Net cash used in investing activities 579,831 565,299 Cash flows from financing activities: Proceeds from borrowings under loan agreements 400,000 - Proceeds from issuance of common stock - 13,200 Repayments of notes payable (82,624) (82,242) Net cash provided by (used in) financing activities 317,376 (69,042) Net increase (decrease) in cash and cash equivalents (1,792,218) (3,718,833) Cash and cash equivalents - beginning of period 2,296,143 4,461,929 Cash and cash equivalents - end of period $503,925 $743,096
SOURCE Particle Drilling Technologies, Inc.