Exhibit 99.1
| NEWS RELEASE |
| Contacts: | J. Chris Boswell, SVP & CFO |
| | Particle Drilling Technologies, Inc. |
| | 713-223-3031 |
| | |
FINAL DRAFT 12/10/07 5:00 PM | | Jack Lascar/Sheila Stuewe |
| | DRG&E / 713-529-6600 |
PARTICLE DRILLING TECHNOLOGIES NEARS COMPLETION OF
NEW INJECTOR SYSTEM AND ANNOUNCES YEAR END RESULTS
Operational Highlights
· Final Assembly of the New Injection System Scheduled for Mid-December;
· In-house Test Program of the Injector Scheduled to Commence in Late December and
Conclude in Early January;
· Next Field Trial Expected Within 30 days of a Successful In-house Test Program
Houston — December 11, 2007 — Particle Drilling Technologies, Inc. (NASDAQ: PDRT) (“Company”) today announced that it is in the final stages of assembling its new particle injection system. An in-house test program of the new system is scheduled to commence in the latter portion of December 2007. The test program is designed to:
1) Evaluate the functionality and reliability of the automated control system;
2) Confirm and verify the durability of the injector’s pressure barriers, and
3) Confirm and verify the reliability of controlled particle injection rates into pressures and volumes that are as or more rigorous than those previously experienced in the field.
Once the test program is concluded and the new injection system is deemed ready for field use, the results will be announced along with a more definitive date for the next commercial field trial. Assuming the injector testing is successful, the Company will be prepared to conduct its next commercial trial in the Travis Peak formation within 30 days thereafter.
Jim B. Terry, the Company’s President and CEO stated, “We have been focused and disciplined in our approach to properly develop and test a new injection system. While it has taken more time than originally anticipated, we are confident that our shareholders and commercial prospects will benefit from our current solution, as well as from our focused effort to engineer a low cost and reliable injection system.
“As previously disclosed, the primary reasons for the non-productive drilling time on the most recent field trial were the limitations and inconsistent performance of the hydraulic injection system. Because the new injection system functions as a volumetric feeder, it will not be susceptible to hydraulic limitations nor impacted by fluctuations of standpipe pressures that caused problems during the most recent field trial. Once we have thoroughly evaluated this new system, we will communicate the results and also announce the date of the next field trial.”
The Company also announced its financial results for the fourth quarter and for the year ended September 30, 2007. The financial results reflect the Company’s status as a development stage company during 2007, generating no revenue. The following is a summary of the quarterly and yearend results:
| | Three Months Ended September 30, | | Year Ended September 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | (Unaudited) | | (Unaudited) | | (Unaudited) | | | |
| | | | | | | | | |
Revenues | | $ | — | | $ | — | | $ | — | | $ | — | |
Gross profit | | — | | — | | — | | — | |
Loss from operations | | (2,176,033 | ) | (2,546,537 | ) | (11,131,982 | ) | (10,546,042 | ) |
Net loss | | (2,115,842 | ) | (2,514,152 | ) | (10,754,269 | ) | (10,189,587 | ) |
Net loss per share - basic and diluted | | $ | (0.07 | ) | $ | (0.10 | ) | $ | (0.36 | ) | $ | (0.42 | ) |
The Company will hold a conference call at 10:00 a.m. Eastern Time on Wednesday, December 12, 2007, to discuss its year end results and to provide an operational update. To participate in the call, dial 303-262-2140 and ask for the Particle Drilling call at least 10 minutes prior to the start time, or access it live over the Internet by logging onto the web at www.particledrilling.com, on the “Investor Relations” section of the Company’s website. To listen to the live call on the web, please visit the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.
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If you cannot listen to the live webcast, an archive will be available shortly after the call for a period of 90 days on the “Investor Relations” section of the Company’s website. A telephonic replay of the conference call will be available through December 19, 2006 and may be accessed by calling 303-590-3000 and using the pass code 11102432.
Particle Drilling Technologies, Inc., headquartered in Houston, Texas, is a development stage oilfield service and technology company owning certain patents and pending patents related to the Particle Impact Drilling technology. The Company’s technology is designed to enhance the rate-of-penetration function in the drilling process, particularly in hard rock drilling environments.
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 equity capital, if necessary, and its ability to obtain equity financing on acceptable terms, if at all, a severe worldwide slowdown 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.
— tables to follow —
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(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three Months Ended September 30, | | Year Ended September 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | (Unaudited) | | (Unaudited) | | (Unaudited) | | | |
| | | | | | | | | |
Revenues | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Research and development | | 899,157 | | 1,494,989 | | 5,894,101 | | 5,964,438 | |
General and administrative | | 981,616 | | 1,051,548 | | 4,942,621 | | 4,581,604 | |
Impairment of asset | | 295,260 | | | | 295,260 | | | |
| | | | | | | | | |
Total operating expenses | | 2,176,033 | | 2,546,537 | | 11,131,982 | | 10,546,042 | |
| | | | | | | | | |
Loss from operations | | (2,176,033 | ) | (2,546,537 | ) | (11,131,982 | ) | (10,546,042 | ) |
| | | | | | | | | |
Other income (expenses) | | | | | | | | | |
Interest income | | 61,718 | | 36,600 | | 384,484 | | 260,914 | |
Rental income - related party | | — | | — | | — | | 46,565 | |
Gain on debt extinguishment | | — | | — | | — | | — | |
Gain on assignment of lease - related party | | — | | — | | — | | 55,614 | |
Interest expense | | (1,527 | ) | (4,215 | ) | (6,771 | ) | (6,638 | ) |
| | | | | | | | | |
Total other income (expenses) | | 60,191 | | 32,385 | | 377,713 | | 356,455 | |
| | | | | | | | | |
Net loss | | $ | (2,115,842 | ) | $ | (2,514,152 | ) | $ | (10,754,269 | ) | $ | (10,189,587 | ) |
| | | | | | | | | |
Net loss per common share, basic and diluted | | $ | (0.07 | ) | $ | (0.10 | ) | $ | (0.36 | ) | $ | (0.42 | ) |
| | | | | | | | | |
Weighted average number of common shares outstanding, basic and diluted | | 30,907,265 | | 25,001,047 | | 30,185,030 | | 24,520,619 | |
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PARTICLE DRILLING TECHNOLOGIES, INC.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
| | September 30, | | September 30, | |
| | 2007 | | 2006 | |
| | (Unaudited) | | | |
| | | | | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 4,461,929 | | $ | 2,291,586 | |
Short term investments | | — | | 385,839 | |
Assets held for sale | | 900,000 | | — | |
Prepaid expenses | | 233,174 | | 234,488 | |
| | | | | |
Total current assets | | 5,595,103 | | 2,911,913 | |
| | | | | |
Property, plant & equipment, net | | 867,168 | | 1,326,713 | |
| | | | | |
Intangibles, net | | 1,312,246 | | 1,230,086 | |
| | | | | |
Other assets | | 52,562 | | 14,650 | |
| | | | | |
Total assets | | $ | 7,827,079 | | $ | 5,483,362 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 1,028,999 | | $ | 830,552 | |
Short-term notes payable | | 88,258 | | 179,143 | |
Current portion of long-term debt | | 13,511 | | 19,270 | |
Accrued liabilities | | 134,988 | | 471,463 | |
| | | | | |
Total current liabilities | | 1,265,756 | | 1,500,428 | |
| | | | | |
Long-term debt | | 24,537 | | 15,305 | |
Deferred Rent | | 45,539 | | — | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock, $.001 par value, 100,000,000 shares authorized, 34,632,987 shares issued and 31,629,901 shares outstanding at September 30, 2007, and 28,013,291 shares issued and 25,010,205 shares outstanding at September 30, 2006 | | 34,634 | | 28,014 | |
Additional paid-in capital | | 38,510,488 | | 25,239,221 | |
Treasury stock at cost, 3,003,086 shares at September 30, 2007 and September 30, 2006 | | (1,511,817 | ) | (1,511,817 | ) |
Deficit accumulated during the development stage | | (30,542,058 | ) | (19,787,789 | ) |
| | | | | |
Total stockholders’ equity | | 6,491,247 | | 3,967,629 | |
| | | | | |
Total liabilities and stockholders’ equity | | $ | 7,827,079 | | $ | 5,483,362 | |
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PARTICLE DRILLING TECHNOLOGIES, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Twelve Months Ended September 30, | |
| | 2007 | | 2006 | |
| | (Unaudited) | | | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net loss | | $ | (10,754,269 | ) | $ | (10,189,587 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
Impairment of asset | | 295,260 | | — | |
Depreciation and amortization | | 811,754 | | 688,185 | |
Gain on assignment of lease - related party | | — | | (54,103 | ) |
Warrants issued for services | | — | | — | |
Stock-based employee compensation | | 2,520,432 | | 2,014,476 | |
Changes in operating assets and liabilities: | | | | | |
Decrease in note receivable | | 385,839 | | — | |
Decrease in prepaid expenses | | 1,314 | | 249,460 | |
(Decrease) Increase in accounts payable | | 198,447 | | (226,181 | ) |
Increase (Decrease) in accrued liabilities | | (336,475 | ) | 325,627 | |
Increase in other assets | | (37,912 | ) | — | |
Increase in other liabilities | | 45,539 | | — | |
| | | | | |
Net cash used in operating activities | | (6,870,071 | ) | (7,192,123 | ) |
| | | | | |
Cash flows from investing activities: | | | | | |
Payments to purchase property and equipment | | (1,496,985 | ) | (636,930 | ) |
Payments to purchase intangibles | | (132,644 | ) | (178,170 | ) |
Payments to purchase other assets | | — | | (28,415 | ) |
| | | | | |
Net cash used in investing activities | | (1,629,629 | ) | (843,515 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from issuance of common stock | | 10,757,455 | | 6,089 | |
Repurchase of common stock | | — | | (11,817 | ) |
Repayments of notes payable | | (87,412 | ) | (171,694 | ) |
| | | | | |
Net cash provided by financing activities | | 10,670,043 | | (177,422 | ) |
| | | | | |
Net increase in cash and cash equivalents | | 2,170,343 | | (8,213,060 | ) |
| | | | | |
Cash and cash equivalents - beginning of period | | 2,291,586 | | 10,504,646 | |
| | | | | |
Cash and cash equivalents - end of period | | $ | 4,461,929 | | $ | 2,291,586 | |
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