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Summary:

It’s no secret that Quantum Fuel Systems Technologies Worldwide is betting big on plug-in hybrid vehicle startup Fisker Automotive — the green car startup’s genesis was built on a vision of having the well-known luxury car designer Henrik Fisker design a vehicle around a Quantum drivetrain. […]

It’s no secret that Quantum Fuel Systems Technologies Worldwide is betting big on plug-in hybrid vehicle startup Fisker Automotive — the green car startup’s genesis was built on a vision of having the well-known luxury car designer Henrik Fisker design a vehicle around a Quantum drivetrain. The risk of that bet comes out loud and clear in Quantum’s latest earnings report, which covers the company’s financial results for the first nine months of the 2010 fiscal year.

Quantum’s revenue sank to just $1.5 million in the third quarter of fiscal year 2010, down from $5.9 million in the same three months of 2009. For the first nine months of fiscal year 2010, revenue dropped to $7.2 million, down from $17 million in the year-earlier period. According to Quantum’s earnings statement, discussed in a call with shareholders this morning, “The decrease in revenue for the third quarter and first nine months of fiscal 2010 is primarily related to delays at Fisker Automotive related to the Fisker Karma development program.”

Quantum anticipates that its contract revenues will continue to suffer this year as a result of the slow pace of development at Fisker, which it expects to be one of its biggest customers for the foreseeable future. Quantum still expects Fisker to hit its target of producing “a certified, saleable” plug-in hybrid vehicle towards the end of the 2010 calendar year. But it notes that “delays in funding at Fisker Automotive related to the finalization of their Department of Energy loan,” resulted in “reduced levels of activities,” on the development program for the upcoming Karma model. (See: “After DOE Nod, a Long Road Ahead for Green Car Startups.”)

Things are looking up for the next quarter, however, says Quantum. While Fisker has yet to gain access to the DOE funds (awarded on a conditional basis last fall), Quantum notes that the startup’s $115 million private equity financing round earlier this year (kick-started by an investment from battery supplier A123Systems), allowed “activities under the Fisker Karma program…to ramp up significantly near the end of January 2010.” Accordingly, Quantum expects its contract revenues in the fourth quarter of the 2010 fiscal year to pick up compared to the previous quarter.

In addition to benefiting from Fisker’s government funding, Quantum had also been hoping to garner a boost from Uncle Sam in the form of a direct loan. The company requested $175 million under the Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) loan program back in December 2008, and has been working through the agency’s review process. But according to Quantum’s earnings statement, the company is all but out of the running for an award based on its current application, having, “recently been informed by the DOE that certain ATVM Program parameters and loan conditions have changed and that they believe we no longer fit within the parameters and conditions of the ATVM Program.”

As a result of this decision, Quantum explains that it’s now in the process of “withdrawing or revising” its loan application, although it may still pursue funding through DOE grant and loan programs for development of plug-in vehicle and battery tech.

Quantum faces serious pressure at this point to improve its finances. The company reports that last week, on March 8, the NASDAQ Stock Market notified Quantum that because the closing bid price for a share of its common stock has clocked in below $1.00 for 30 consecutive trading days, the company is no longer in compliance with NASDAQ’s minimum bid price rule for continued listing.

“In order to regain compliance with the minimum bid price rule, the closing stock price of a share of our Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days prior to September 1, 2010,” Quantum explains. Among the options Quantum is now considering is a reverse stock split, but the company says, “We have not yet determined what action, if any, we will take in order to cure the deficiency.”

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  1. Partdo Smithy Monday, March 15, 2010

    Lachlan Seward and Matt Rogers are killing every electric car company they can. Less than 20 car companies (The ATVM people say there were tons of applications but only a handful were car companies) applied for $25 BILLION DOLLARS in taxpayer money managed by a certain smug group of people at DOE in order to get loans to make green cars for Americans. This was not all of DOE that did bad things, just a private cadre of men led by Lachland Seward and Matt Rogers and his McKinsey “Partner” who flew back and forth to their homes in Silicon Valley every weekend on the taxpayer dime.

    There was enough money to help every single one of the car companies that applied. The administrators applied their interpretations of the law in order to benefit the large lobby group-related firms and avoided every one of the “politically unconnected “independent American companies.

    The amount of lobby and influence money spent by each awardee is in direct ratio to the amount of money awarded. Pay-to-play was the process.

    The smaller companies, due to lower overhead, could have dramatically more productive results with the money than the large burdened companies yet the money was given out based on political career advantages for the administrators rather than the technology advantages for Americans.

    The way the ATVM people set it up (Google “Siry says stifles innovation” for more), the smaller applicants were prevented from getting outside investor funding.

    All of the people that reviewed the applications had political and financial connections to GM, Ford, Chrysler and the large Detroit recipients.

    Each of those smaller American companies had technology and resources that presented a powerful economic threat, if they got the loans, to the large politically connected companies that did receive funds. The big car companies wanted the small companies cut-out at all costs.

    The Section 136 law was written to provide first-come-first serve funding but when the small companies got their applications in first, while the big ones arrogantly felt that they did not even need to apply because it was already pre-staged for them, the ATVM officials changed the rules in order to remove the first-come-first-serve standard of the law in order to cut out the smaller independents.

    Some of the companies that have gotten money have backed out of making the electric cars they said they would make. But they still get to keep the money.

    The Section 136 Law was created by the lobbyists for GM, Ford & Chrysler when they saw that they were about to go bankrupt and wanted to tap into additional taxpayer dollars by claiming the money was going to be used for electric cars in order to win rapid support for Section 136 by tugging at heartstrings. In retrospect, the money mostly went to gasoline car projects. Multiple public hearings have already shown the sister loan guarantee program to have been a failed program via intentional delays, the head was fired and replaced & massive complaints have been filed by many.

    Some of the companies that got the money have already wasted more money than other companies applied for as their total request.

    Some of the companies that got taxpayer loan money are not even American companies and/or are doing their manufacturing offshore with non-American employees. Thus, the ATVM process has cost American’s jobs.

    Those who got the money had to fill out little, or no, paperwork, went through little, or no, review and were connected to the DOE people who gave them the money and shepherded them through the process. Those who they wanted to keep out were forced to jump through more hoops, were slow-tracked in review and had made no political deals via hired law and lobby firms that the big companies has used to conduit “influence”.

    The decision about who would get money was made in 2008 by a private group who then pretended there was a lengthy review throughout 2009 but in fact, the money was pre-wired for a select few.

    All of the things that the rejected small companies (who did not pay lobby fees) were rejected for, were the same things that the insider big companies were doing. In at least two cases, big companies who were in violation of Section 136 rules were guided by reviewer-insiders to change their whole business structure in order to become suddenly “compliant “with section 136 while smaller companies received no such “help”.

    How does this affect you? It cost you and your friends jobs, it delayed American innovation, it made your family have to breath toxic petroleum fumes for another decade, it furthered a corrupt practice and it hurt domestic small business. This was all about money. Controlling who got to make money off of the technology and who got to delay electric cars so the old oil and steel guys could still make money off of their old assets.

  2. How is natural gas converted to electricity? What is the efficiency of the process in real life? Monday, March 15, 2010

    [...] Fisker & DOE Loan Delays Deal Blow to Quantum [...]

  3. Josie Garthwaite,

    You have been report to the SEC for spreading false information about a publicly traded company.

    Quantum never made the statements you claim.

    Specifically they never made any announcements about there plans to regain compliance with Nasdaq.

    My statements can be verified through Quantum’s investor relations

    http://qtww.com/contact/#investor_relations

    1. See Part II, Item 1A (page 56) of Quantum’s March 12 10-Q filing with the U.S. Securities and Exchange Commission: http://sec.gov/Archives/edgar/data/1166380/000119312510055578/d10q.htm

      Direct quote: “On March 8, 2010, we received notification from the Nasdaq Stock Market that we were not in compliance with Nasdaq’s continued listing rule 5450(a)(1) because the closing bid price for a share of our Common Stock was below $1.00 for 30 consecutive trading days.”

  4. Electric Vehicle Maker Fisker Closes $529M DOE Loan Friday, April 23, 2010

    [...] 2010). For Fisker, finalizing the loan and accessing funds has taken longer than Fisker and one of its chief backers and suppliers expected.     [...]

  5. Fisker Closes $189M Round, Tees Up for Federal Loans Tuesday, June 1, 2010

    [...] For Tesla, it took at least seven months between the time of the initial loan announcement (late June 2009) and the first funds actually rolling out the door (February 2010). For Fisker, finalizing the loan and accessing funds has taken longer than Fisker and one of its chief backers and suppliers expected. [...]

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