Final Results

 

TIDMPYF 
 
RNS Number : 7348R 
PolyFuel Inc. 
06 May 2009 
 
? 
06 May 2009 
POLYFUEL, INC. 
SURPASSES LITHIUM ION BATTERIES IN RUNTIME VERSUS SIZE AND WEIGHT 
AND ANNOUNCES PRELIMINARY RESULTS FOR 
12 MONTHS ENDED 31 DECEMBER 2008 
PolyFuel, Inc. (AIM: PYF) ("PolyFuel" or the "Company"), a world leader in fuel 
cell membrane products and related technologies, today announces the achievement 
of a key milestone in its Non-Stop Power reference design programme, a Direct 
Methanol Fuel Cell (DMFC) system which surpasses a lithium ion equivalent 
battery, a major industry technological achievement. The Company also announces 
its preliminary results for the year ended 31 December 2008. 
During the year, PolyFuel continued to develop its third generation DM3 membrane 
and novel Membrane Electrode Assembly (MEA), which together enable a significant 
simplification in customers' fuel cell system designs and the delivery of 
non-stop power for end users.  PolyFuel resolved several key technical 
challenges and has now achieved the 5th of 5 key milestones, in its cost-shared 
DOE programme, defined as completing a working demonstration prototype of a fuel 
cell power supply that achieves the small consumer-acceptable form factor 
necessary to integrate with a notebook PC and surpasses the performance of 
today's lithium-ion batteries in terms of runtime versus size and weight. 
Specifically, PolyFuel achieved this milestone by increasing the power output of 
the fuel cell, improving the thermal management of the system, improving the 
capacity of the fuel cartridge, and fine tuning the properties of the MEA to 
achieve the correct amount of water recycling. The industry-defined performance 
target for the fuel cell power supply was 10 hours of runtime at 15 watts 
average power in a 500cc integrated package, equating to an energy density of 
300 watt-hours per liter. PolyFuel's unit was able to easily surpass this, 
delivering 313 watt-hours per liter, at a 30% weight saving compared to any of 
today's equivalent lithium-ion battery packs. 
2008 Financial Highlights: 
  *       Generated revenue of US$2.0 million, an increase of US$0.6 million over 
  2007 revenue of 

    US$1.4 million, the majority of which was from the 
  Company's ATP program, DOE program, 

    and the US Army CERDEC program; 
  *       Net loss for the year was US$(7.6) million, an improvement of US$0.9 
  million from a US$(8.5) 

    million loss in 2007; 
  *       Reduced overall expenditure levels to significantly lower the Company's 
  cash burn rate (2009 

    cash burn rate is currently expected to average in 
  the US$425,000 to US$450,000 per month 

    range, down from an average of 
  approximately US$600,000 per month in 2008); and 
  *       Finished 2008 with US$6.6 million in cash and cash equivalents. 
 
Jim Balcom, Chief Executive Officer commented: 
"2008 was a challenging year for fuel cell technology in general, for the 
application of fuel cell technology to portable electronics in particular, and 
for PolyFuel. The development of portable fuel cell systems technology did not 
progress as quickly as we had expected. However, despite the slow progress on 
the commercialization front, the demand on behalf of consumers for longer 
runtime power supplies continues to grow.  Major consumer electronics companies 
and battery manufacturers continue to invest in portable fuel cell technology 
development, and particularly in direct methanol fuel cell technology.  PolyFuel 
continues to be recognized as a world leader in this field. 
PolyFuel has continued to advance the state of the art in DMFC with the 
announcement today that its prototype has surpassed lithium-ion batteries in 
terms of runtime versus size and weight.  We were also encouraged by the DOE's 
announcement two weeks ago that PolyFuel was awarded a grant of $2.5 million to 
further miniaturize the Company's Non-Stop Power reference design technology and 
to extend its durability and reduce its cost for broader commercial application. 
On the customer front we have signed Memoranda of Understanding with two large 
consumer electronics manufacturers for use of our Non-Stop Power technology and 
are working to progress those to joint development agreements for the 
introduction of fuel cell powered consumer products. 
We continue to seek additional capital to extend the Company's runway, which 
will be necessary to achieve the Company's objectives. " 
PolyFuel anticipates receiving an unqualified opinion from its auditors, 
PriceWaterhouseCoopers, regarding the Company's 2008 financial statements.  The 
PWC opinion, which will appear in PolyFuel's 2008 Annual Report, is also 
expected to include an explanatory paragraph with regard to the Company's 
ability to continue as a going concern. 
For further information, please contact: 
+----------------------------------+-------------------+ 
| PolyFuel, Inc.                   | Tel: [phone]   | 
|                                  | 4646              | 
+----------------------------------+-------------------+ 
| Jim Balcom, Chief Executive      |                   | 
| Officer                          |                   | 
+----------------------------------+-------------------+ 
| Hogarth Partnership Limited      | Tel:  +44 (0)20   | 
|                                  | 7357 9477         | 
+----------------------------------+-------------------+ 
| Nick Denton / Ian Payne          |                   | 
+----------------------------------+-------------------+ 
| KBC Peel Hunt (Nominated Adviser | Tel:  +44 (0)20   | 
| and Broker)                      | 7418 8900         | 
+----------------------------------+-------------------+ 
| Jonathan Marren / David Anderson |                   | 
+----------------------------------+-------------------+ 
About PolyFuel 
PolyFuel (www.polyfuel.com) is a world leader in fuel cell technology, 
particularly engineered membranes that provide significantly improved 
performance in both direct methanol and hydrogen fuel cells, especially for 
portable electronic and automotive applications. The state of the art of fuel 
cells is closely tied to the membrane, and PolyFuel's best in class, 
hydrocarbon-based membranes, enable a new generation of fuel cells that for the 
first time can deliver on the long-awaited promise of clean, long-running, and 
cost-effective portable power.  PolyFuel was spun out of SRI International 
(formerly the Stanford Research Institute) in 1999, after 14 years of applied 
membrane research. The company is based in Mountain View, California, and is 
publicly listed on the AIM stock exchange in London. 
 
Chairman and Chief Executive's Review 
2008 was a challenging year for fuel cell technology in general, for the 
application of fuel cell technology to portable electronics in particular, and 
for PolyFuel. 
The development of portable fuel cell systems technology did not progress as 
quickly as PolyFuel had expected.  However, during the year PolyFuel continued 
to develop its third generation DM3 membrane and novel membrane electrode 
assembly (MEA), which together will enable a significant simplification in 
customers' fuel cell system designs and the delivery of non-stop power for end 
users. These breakthroughs have been developed with the assistance of a $3 
million grant from the US Department of Energy.   PolyFuel solved several key 
challenges along the way to successfully reaching the 5th of five milestones in 
the program, defined as completing a working demonstration prototype of a fuel 
cell power supply that achieves the small consumer-acceptable form factor 
necessary to integrate with a notebook PC. 
Specifically, the achievement of this milestone included increasing the power 
output of the fuel cell, improving the thermal management of the system, 
improving the capacity of the fuel cartridge, and fine tuning the properties of 
the MEA to achieve the correct amount of water recycling. The specific 
performance target for the fuel cell power supply was 10 hours of runtime at 15 
watts average power in a 500cc integrated package, equating to an energy density 
of 300 watt-hours per liter. The Company's prototype system was able to easily 
surpass this, delivering an energy density of 313 watt-hours per liter, at a 30% 
weight saving compared to any of today's lithium-ion battery packs. 
PolyFuel is in discussions with several major notebook PC and Lithium ion 
battery manufacturers to secure one or more agreements for joint development of 
preproduction prototype systems for consumer electronic applications.  These 
agreements, which are expected to include a license to PolyFuel's non-membrane 
DM3 technology and long term supply agreement for PolyFuel's DM3 membrane, 
should accelerate commercialization of the partners'  fuel cell powered 
products.  Two of the targeted partners have signed MOUs confirming their 
intentions to complete negotiations with PolyFuel on the joint development 
agreements. 
In 2008, PolyFuel was awarded a continuation of its funded program with the US 
Army's Communications, Electronics Research and Development and Engineering 
Command (CERDEC).  The program is conducted in partnership with the University 
of North Florida and is expected to contribute approximately $450,000 in funding 
to PolyFuel during 2009.  The program goal is to ruggedize the Company's 
demonstration prototype system based on its breakthrough DM3 membrane and MEA 
technology. 
In April 2009, the Company received news from the US Department of Energy that 
it had been awarded a US$2.5 million grant under the American Recovery and 
Reinvestment Act.  The objectives of the program are to advance the Company's 
Non-Stop Power technology to achieve the durability targets required for 
commercialization, to further decrease the size of its demonstration prototype 
system, and to conduct design for manufacturability and assembly analyses along 
with its consumer electronics partners to achieve commercial cost targets. 
PolyFuel encountered difficulty with the commercial introduction of its second 
generation DM2 membrane.  The new DM2 membrane introduced in 2008 is designed to 
be a drop-in replacement for DuPont's more long-established Nafion membrane for 
customers that had already designed their prototype systems to accommodate the 
Nafion material.  During the development effort, customers had expressed a clear 
preference for the properties of PolyFuel's DM2 membrane compared to Nafion. 
However, the introduction of PolyFuel's DM2 membrane was delayed due to 
integration problems during customer qualification trials.  The Company invested 
significant time and effort in 2008 and early 2009 to identify and correct the 
cause of these problems and qualification trials of the DM2 membrane have 
recently been resumed with selected customers. 
During 2008 and into 2009 the Company implemented a number of cost saving 
measures.  Its monthly cash burn rate is currently expected to average 
approximately US$425,000-$450,000 in 2009, down from an average of approximately 
US$600,000 in 2008. 
PolyFuel finished 2008 with US$6.6 million in cash and cash equivalents. The 
Company has begun an aggressive program to secure additional sources of capital 
to help fund the completion of the Company's technology and product development 
and achieve commercial introduction, a process which is continuing in 2009. 
Fuel cell technology remains a challenging field, characterized by deep 
multidisciplinary science, significant technical hurdles, and a need for 
regulatory and infrastructure changes.  2008 saw a further key step in the 
worldwide implementation of new transportation regulations enabling portable 
fuel cells to be carried on board and operated on commercial aircraft and all 
other forms of commercial transportation.  The implementation of such 
regulations has been progressing strongly since before 2004, and all necessary 
directives related to the transport of direct methanol fuel cells and methanol 
fuel cartridges are now in place, enabling fuel cell powered portable electronic 
devices to become a commercial reality. 
Despite the slow progress on the commercialization front, the demand on behalf 
of consumers for longer runtime power supplies continues to grow.  Major 
consumer electronics companies and battery manufacturers continue to invest in 
portable fuel cell technology development, and particularly in direct methanol 
fuel cell technology.  PolyFuel continues to be recognized as one of the world 
leaders in this field. 
PolyFuel, Inc. 
(A development stage enterprise) 
UNAUDITED Consolidated Statements of Operations 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |       Period | 
|                        |             |          |             |          |              |          |         from | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |           27 | 
|                        |             |          |             |          |              |          |      January | 
|                        |             |          |             |          |              |          |         1999 | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |  (Inception) | 
|                        |             |          |             |          |              |          |           to | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |                    Year Ended 31 December                      |          |           31 | 
|                        |                                                                |          |     December | 
+------------------------+----------------------------------------------------------------+----------+--------------+ 
|                        |        2008 |          |        2007 |          |         2006 |          |         2008 | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |       U.S.$ |          |       U.S.$ |          |        U.S.$ |          |        U.S.$ | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Revenues               |   2,012,402 |          |   1,391,247 |          |      184,600 |          |    5,473,457 | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Costs and operating    |             |          |             |          |              |          |              | 
| expenses               |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Research and           |   5,431,751 |          |   5,665,354 |          |    5,582,924 |          |   40,731,751 | 
| development            |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| General and            |   4,457,005 |          |   5,099,380 |          |    5,433,608 |          |   34,266,612 | 
| administrative         |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|      Total expenses    |   9,888,756 |          |  10,764,734 |          |   11,016,532 |          |   74,998,363 | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Loss from operations   | (7,876,354) |          | (9,373,487) |          | (10,831,932) |          | (69,524,906) | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Other income           |    (26,933) |          |     (4,688) |          |     (12,865) |          |     (61,048) | 
| (expense), net         |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Interest income        |     292,771 |          |     921,176 |          |    1,230,979 |          |    3,405,066 | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Interest expense       |       (586) |          |       (635) |          |     (59,863) |          |  (1,591,912) | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Net loss               | (7,611,102) |          | (8,457,634) |          |  (9,673,681) |          | (67,772,800) | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Net loss attributable  | (7,611,102) |          | (8,457,634) |          |  (9,673,681) |          | (55,557,688) | 
| to common stockholders |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Net loss per share     |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|             Basic      |      (0.13) |          |      (0.15) |          |       (0.17) |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |      (0.13) |          |      (0.15) |          |       (0.17) |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|                        |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| Weighted average       |             |          |             |          |              |          |              | 
| number of shares used  |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
| in net loss per share  |             |          |             |          |              |          |              | 
| calculations           |             |          |             |          |              |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|             Basic      |  57,811,388 |          |  57,368,049 |          |   56,154,107 |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
|             Diluted    |  57,811,388 |          |  57,368,049 |          |   56,154,107 |          |              | 
+------------------------+-------------+----------+-------------+----------+--------------+----------+--------------+ 
 
PolyFuel, Inc. 
(A development stage enterprise) 
UNAUDITED Consolidated Balance Sheets 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |                  31 December                    | 
+--------------------------------+-------------------------------------------------+ 
|                                |         2008 |  |         2007 |  |         2006 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |        U.S.$ |  |        U.S.$ |  |        U.S.$ | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Assets                         |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Current assets                 |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Cash and cash      |    6,574,138 |  |    7,126,685 |  |   15,177,509 | 
|             equivalents        |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Short-term         |           -- |  |    6,576,170 |  |    6,654,886 | 
|             investments        |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Accounts           |      197,782 |  |      134,511 |  |       35,434 | 
|             receivable         |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Inventories        |       15,021 |  |      114,192 |  |       88,806 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Prepaid expenses   |      486,104 |  |      330,392 |  |      357,435 | 
|             and other current  |              | |              |  |              | 
|             assets             |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Total current assets           |    7,273,045 |  |   14,281,950 |  |   22,314,070 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Property and equipment, net    |      366,977 |  |      337,039 |  |      460,405 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Other assets                   |       23,556 |  |      195,300 |  |      195,300 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Total assets                   |    7,663,578 |  |   14,814,289 |  |   22,969,775 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Liabilities and Stockholders'  |              |  |              |  |              | 
| Equity                         |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Current liabilities            |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Accounts payable   |      813,690 |  |      922,629 |  |    1,162,994 | 
|             and accrued        |              | |              |  |              | 
|             expenses           |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Deferred revenue   |           -- |  |        1,336 |  |      115,475 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Total current liabilities      |      813,690 |  |      923,965 |  |    1,278,469 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Total liabilities              |      813,690 |  |      923,965 |  |    1,278,469 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|             Stockholders'      |              |  |              |  |              | 
|             equity             |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         Common stock: US$0.001 |              |  |              |  |              | 
|         par value;             |              | |              |  |              | 
|         100,000,000,           |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         100,000,000 and        |              |  |              |  |              | 
|         70,000,000 shares      |              | |              |  |              | 
|         authorised at          |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         31 December 2008, 2007 |              |  |              |  |              | 
|         and 2006,              |              | |              |  |              | 
|         respectively;          |              | |              |  |              | 
|         57,886,388,            |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         57,436,388,and         |              |  |              |  |              | 
|         57,282,839 shares      |              | |              |  |              | 
|         issued and outstanding |              | |              |  |              | 
|         at                     |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         31 December 2008, 2007 |       57,886 |  |       57,436 |  |       57,283 | 
|         and 200, respectively  |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         Additional paid-in     |   59,844,118 |  |   59,272,722 |  |   58,616,546 | 
|         capital                |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         Accumulated other      |           -- |  |        1,180 |  |          857 | 
|         comprehensive income   |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|         Deficit accumulated    | (53,052,116) |  | (45,441,014) |  | (36,983,380) | 
|         during development     |              | |              |  |              | 
|         stage                  |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Total stockholders' equity     |    6,849,888 |  |   13,890,324 |  |   21,691,306 | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
|                                |              |  |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
| Total liabilities and          |    7,663,578 |  |   14,814,289 |  |   22,969,775 | 
| stockholders' equity           |              | |              |  |              | 
+--------------------------------+--------------+-+--------------+--+--------------+ 
 
PolyFuel, Inc. 
(A development stage enterprise) 
UNAUDITED Consolidated Statements of 
stockholders'EQUITY (deficit) 
+----------------------+-------+----+---+----+------------+--------------+---------------+-----------+-------+---+----------+ 
|                      |                |    |            |              |               |           Deficit |              | 
+----------------------+----------------+----+------------+--------------+---------------+-------------------+--------------+ 
|                      |                |    |            |        Notes |   Accumulated |       Accumulated |        Total | 
+----------------------+----------------+----+------------+--------------+---------------+-------------------+--------------+ 
|                      |                |    | Additional |   Receivable |         Other |            During | Stockholders | 
|                      |                |    |            |              |               |               the |              | 
+----------------------+----------------+----+------------+--------------+---------------+-------------------+--------------+ 
|                      |                |    |    Paid-in |         from | Comprehensive |       Development |       Equity | 
+----------------------+----------------+----+------------+--------------+---------------+-------------------+--------------+ 
|                      |       Common        |    Capital | Stockholders |        Income |     Stage | (Deficit) |          | 
|                      |        Stock        |            |              |               |           |           |          | 
+----------------------+---------------------+------------+--------------+---------------+-----------+-----------+----------+ 
|                      |     Shares |  U.S.$ |      U.S.$ |        U.S.$ |         U.S.$ |             U.S.$ |        U.S.$ | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of common   |            |        |            |              |               |                   |              | 
| stock for cash at    |            |        |            |              |               |                   |              | 
| US$25 per share      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| in January 1999      |          4 |     -- |        100 |           -- |            -- |                -- |          100 | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |            -- |          (59,926) |     (59,926) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Balances at 31       |          4 |     -- |        100 |           -- |            -- |          (59,926) |     (59,826) | 
| December 1999        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of common   |            |        |            |              |               |                   |              | 
| stock for in-process |            |        |            |              |               |                   |              | 
| research and         |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| development and      |      9,120 |      9 |    205,191 |           -- |            -- |                -- |      205,200 | 
| notes payable in     |            |        |            |              |               |                   |              | 
| October 2000         |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |            -- |       (4,316,346) |  (4,316,346) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Balances at 31       |      9,124 |      9 |    205,291 |           -- |            -- |       (4,376,272) |  (4,170,972) | 
| December 2000        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |            |        |            |              |               |                   |              | 
| with credit line and |            |        |            |              |               |                   |              | 
| lease line           |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| in May and July 2001 |         -- |     -- |     93,986 |           -- |            -- |                -- |       93,986 | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Exercise of common   |            |        |            |              |               |                   |              | 
| stock options at     |            |        |            |              |               |                   |              | 
| US$22.50 per share   |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| for cash and notes   |      5,707 |      6 |    128,394 |    (127,116) |            -- |                -- |        1,284 | 
| receivable in May    |            |        |            |              |               |                   |              | 
| and December 2001    |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Stock based          |         -- |     -- |      5,954 |           -- |            -- |                -- |        5,954 | 
| compensation expense |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Interest accrued on  |         -- |     -- |         -- |      (4,907) |            -- |                -- |      (4,907) | 
| notes receivable     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |            -- |       (4,839,193) |  (4,839,193) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Balances at 31       |     14,831 |     15 |    433,625 |    (132,023) |            -- |       (9,215,465) |  (8,913,848) | 
| December 2001        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |         -- |     -- |     45,175 |           -- |            -- |                -- |       45,175 | 
| with lease line in   |            |        |            |              |               |                   |              | 
| June 2002            |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Exercise of common           | 64 |     -- |      1,438 |           -- |            -- |                -- |        1,438 | 
| stock options at             |    |        |            |              |               |                   |              | 
| US$22.50 per share for       |    |        |            |              |               |                   |              | 
| cash                         |    |        |            |              |               |                   |              | 
+------------------------------+----+--------+------------+--------------+---------------+-------------------+--------------+ 
| Stock based          |         -- |     -- |     23,207 |           -- |            -- |                -- |       23,207 | 
| compensation expense |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Cancellation of      |         -- |     -- |         -- |       44,438 |            -- |                -- |       44,438 | 
| notes receivable     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Interest accrued on  |         -- |     -- |         -- |      (3,131) |            -- |                -- |      (3,131) | 
| notes receivable     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Repurchase of common |            |        |            |              |               |                   |              | 
| stock at US$4.50 per |            |        |            |              |               |                   |              | 
| share                |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| for notes receivable |    (2,224) |    (2) |   (10,008) |       10,010 |            -- |                -- |           -- | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |            -- |       (7,017,090) |  (7,017,090) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Balances at 31       |     12,671 |     13 |    493,437 |     (80,706) |            -- |      (16,232,555) | (15,819,811) | 
| December 2002        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |            |        |            |              |               |                   |              | 
| with consulting      |            |        |            |              |               |                   |              | 
| agreement            |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| in August and        |         -- |     -- |     44,571 |           -- |            -- |                -- |       44,571 | 
| December 2003        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |         -- |     -- |     44,944 |           -- |            -- |                -- |       44,944 | 
| with finance         |            |        |            |              |               |                   |              | 
| facility in          |            |        |            |              |               |                   |              | 
| September 2003       |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Exercise of common   |            |        |            |              |               |                   |              | 
| stock options at     |            |        |            |              |               |                   |              | 
| US$22.50 and         |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| US$4.50 per share    |      1,467 |      1 |      7,733 |           -- |            -- |                -- |        7,734 | 
| for cash             |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Cancellation of      |         -- |     -- |         -- |       34,469 |            -- |                -- |       34,469 | 
| notes receivable     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Interest accrued on  |         -- |     -- |         -- |      (6,384) |            -- |                -- |      (6,384) | 
| notes receivable     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Repurchase of common |            |        |            |              |               |                   |              | 
| stock at US$4.50 per |            |        |            |              |               |                   |              | 
| share                |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| for notes receivable |    (1,067) |    (1) |    (4,799) |        4,800 |            -- |                -- |           -- | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |            -- |       (8,887,814) |  (8,887,814) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Balances at 31       |     13,071 |     13 |    585,886 |     (47,821) |            -- |      (25,120,369) | (24,582,291) | 
| December 2003        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Conversion of Series |            |        |            |              |               |                   |              | 
| A1, A2 and B         |            |        |            |              |               |                   |              | 
| redeemable           |            |        |            |              |               |                   |              | 
| convertible          |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| preferred stock in   |            |        |            |              |               |                   |              | 
| common stock and     |            |        |            |              |               |                   |              | 
| Series AA redeemable |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| convertible          |     83,988 |     84 |  6,022,301 |           -- |            -- |        14,720,684 |   20,743,069 | 
| preferred stock upon |            |        |            |              |               |                   |              | 
| recapitalisation     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Repurchase of common |            |        |            |              |               |                   |              | 
| stock at US$22.50    |            |        |            |              |               |                   |              | 
| per share            |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| for notes receivable |    (1,891) |    (2) |      (186) |       47,821 |            -- |                -- |       47,633 | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |         -- |     -- |    174,150 |           -- |            -- |                -- |      174,150 | 
| with finance         |            |        |            |              |               |                   |              | 
| facility in May 2004 |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |         -- |     -- |    533,957 |           -- |            -- |                -- |      533,957 | 
| with bridge loans in |            |        |            |              |               |                   |              | 
| February and April   |            |        |            |              |               |                   |              | 
| 2004                 |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Exercise of common   |      2,833 |      3 |        280 |           -- |            -- |                -- |          283 | 
| stock options at     |            |        |            |              |               |                   |              | 
| US$0.10 per share    |            |        |            |              |               |                   |              | 
| for cash             |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |            -- |       (8,966,989) |  (8,966,989) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Balances at 31       |     98,001 |     98 |  7,316,388 |           -- |            -- |      (19,366,674) | (12,050,188) | 
| December 2004        |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of warrants |         -- |     -- |     69,618 |           -- |            -- |                -- |       69,618 | 
| with consulting      |            |        |            |              |               |                   |              | 
| agreement in May     |            |        |            |              |               |                   |              | 
| 2005                 |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Conversion of Series |            |        |            |              |               |                   |              | 
| AA and BB redeemable |            |        |            |              |               |                   |              | 
| convertible          |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| preferred stock into | 28,655,645 | 28,656 | 22,608,911 |           -- |            -- |                -- |   22,637,567 | 
| common stock upon    |            |        |            |              |               |                   |              | 
| admission to AIM     |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of common   |            |        |            |              |               |                   |              | 
| stock and Series A   |            |        |            |              |               |                   |              | 
| Warrants for cash    |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| at US$0.90 per unit  |            |        |            |              |               |                   |              | 
| in connection with   |            |        |            |              |               |                   |              | 
| initial public       |            |        |            |              |               |                   |              | 
| offering             |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| in July 2005, net of | 15,686,276 | 15,686 | 11,217,287 |           -- |            -- |                -- |   11,232,973 | 
| issuance costs of    |            |        |            |              |               |                   |              | 
| US$2,767,027         |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Issuance of common   |            |        |            |              |               |                   |              | 
| stock options to     |            |        |            |              |               |                   |              | 
| financial advisor    |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| in connection with   |         -- |     -- |    242,568 |           -- |            -- |                -- |      242,568 | 
| AIM Listing          |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Stock-based          |         -- |     -- |     16,726 |           -- |            -- |                -- |       16,726 | 
| compensation expense |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Exercise of common   |            |        |            |              |               |                   |              | 
| stock options at     |            |        |            |              |               |                   |              | 
| US$0.90 and          |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| US$0.10 per share    |    110,171 |    110 |     11,740 |           -- |            -- |                -- |       11,850 | 
| for cash             |            |        |            |              |               |                   |              | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
| Net loss             |         -- |     -- |         -- |           -- |               |       (7,943,025) |  (7,943,025) | 
+----------------------+------------+--------+------------+--------------+---------------+-------------------+--------------+ 
|                      |            |        |            |              |               |                   |              | 
+----------------------+-------+----+---+----+------------+--------------+---------------+-----------+-------+---+----------+ 
 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Balances at 31       | 44,550,093 |   44,550 | 41,483,238 |       -- |       -- | (27,309,699) |  14,218,089 | 
| December 2005        |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Issuance of common   |            |          |            |          |          |              |             | 
| stock for cash at    |            |          |            |          |          |              |             | 
| US$1.4052 per        |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| share in connection  |            |          |            |          |          |              |             | 
| with follow-on       |            |          |            |          |          |              |             | 
| offering in January  |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| 2006, net of         | 12,500,000 |   12,500 | 16,736,850 |       -- |       -- |           -- |  16,749,350 | 
| issuance costs of    |            |          |            |          |          |              |             | 
| US$816,653           |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Stock-based          |         -- |       -- |    373,417 |       -- |       -- |           -- |     373,417 | 
| compensation expense |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Comprehensive income |            |          |            |          |          |              |             | 
| - change in          |            |          |            |          |          |              |             | 
| unrealised gain on   |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| available-for-sale   |         -- |       -- |         -- |       -- |      857 |           -- |         857 | 
| investments          |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Exercise of common   |    232,746 |      233 |     23,041 |       -- |       -- |           -- |      23,274 | 
| stock options at     |            |          |            |          |          |              |             | 
| US$0.10 per share    |            |          |            |          |          |              |             | 
| for cash             |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Net loss             |         -- |       -- |         -- |       -- |          |  (9,673,681) | (9,673,681) | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
|                      |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Balances at 31       | 57,282,839 |   57,283 | 58,616,546 |       -- |      857 | (36,983,380) |  21,691,306 | 
| December 2006        |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Stock-based          |         -- |       -- |    640,975 |       -- |       -- |           -- |     640,975 | 
| compensation expense |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Comprehensive income |            |          |            |          |          |              |             | 
| - change in          |            |          |            |          |          |              |             | 
| unrealised gain on   |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| available-for-sale   |         -- |       -- |         -- |       -- |      323 |           -- |         323 | 
| investments          |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Exercise of common   |    153,549 |      153 |     15,201 |       -- |       -- |           -- |      15,354 | 
| stock options at     |            |          |            |          |          |              |             | 
| US$0.10 per share    |            |          |            |          |          |              |             | 
| for cash             |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Net loss             |         -- |       -- |         -- |       -- |          |  (8,457,634) | (8,457,634) | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Balances at 31       | 57,436,388 |   57,436 |59,272,722  |        - |    1,180 | (45,441,014) |  13,890,324 | 
| December 2007        |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
|                      |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Stock-based          |         -- |       -- |    526,846 |       -- |       -- |           -- |     526,846 | 
| compensation expense |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Comprehensive income |            |          |            |          |          |              |             | 
| - change in          |            |          |            |          |          |              |             | 
| unrealised loss on   |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| available-for-sale   |         -- |       -- |         -- |       -- |  (1,180) |           -- |     (1,180) | 
| investments          |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Exercise of common   |    450,000 |      450 |     44,550 |       -- |       -- |           -- |      45,000 | 
| stock options at     |            |          |            |          |          |              |             | 
| US$0.10 per share    |            |          |            |          |          |              |             | 
| for cash             |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Net loss             |         -- |       -- |         -- |       -- |          |  (7,611,102) | (7,611,102) | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
| Balances at 31       | 57,886,388 |   57,886 |59,844,118  |        - |       -- | (53,052,116) |   6,849,888 | 
| December 2008        |            |          |            |          |          |              |             | 
+----------------------+------------+----------+------------+----------+----------+--------------+-------------+ 
PolyFuel, Inc. 
(A development stage enterprise) 
UNAUDITED Consolidated Statements of Cash Flows 
+--------------------------------------------+------+--+---+--+------+--+---+-+---------+---+--+--------------+ 
|                                            |      |  |             |  |   |           |         Period from | 
+--------------------------------------------+------+--+-------------+--+---+-----------+---------------------+ 
|                                            |      |  |             |  |   |           |          27 January | 
|                                            |      |  |             |  |   |           |                1999 | 
+--------------------------------------------+------+--+-------------+--+---+-----------+---------------------+ 
|                                            |      |  |             |  |   |           |         (Inception) | 
|                                            |      |  |             |  |   |           |                  to | 
+--------------------------------------------+------+--+-------------+--+---+-----------+---------------------+ 
|                                            | Year Ended 31 December                   |         31 December | 
+--------------------------------------------+------------------------------------------+---------------------+ 
|                                            |        2008 |  |        2007 |  |        2006 |  |         2008 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |       U.S.$ |  |       U.S.$ |  |       U.S.$ |  |        U.S.$ | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Cash flows from operating activities       |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Net loss                                   | (7,611,102) |  | (8,457,634) |  | (9,673,681) |  | (67,772,800) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Adjustments to reconcile net loss to net   |             |  |             |  |             |  |              | 
| cash used in operating activities:         |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Depreciation and amortisation           |     186,596 |  |     221,863 |  |     338,217 |  |    3,345,190 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Purchased research and development      |          -- |  |          -- |  |          -- |  |    3,825,984 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Stock-based expense - non-employees     |          -- |  |          -- |  |          -- |  |       45,887 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Stock-based employee compensation       |     526,846 |  |     640,975 |  |     373,417 |  |    1,541,238 | 
|    expense                                 |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Realized gain on sale of investments    |     (9,907) |  |          -- |  |          -- |  |      (9,907) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Provision for excess and obsolete       |       2,313 |  |          -- |  |          -- |  |        2,313 | 
|    inventory                               |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Loss (Gain) on sale of equipment        |       6,990 |  |       4,058 |  |          -- |  |    (105,677) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Non-cash expense related to notes       |             |  |             |  |             |  |              | 
|    receivable                              |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    from stockholders                       |          -- |  |          -- |  |          -- |  |      112,118 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Non-cash expense related to issuance of |          -- |  |          -- |  |          -- |  |    1,006,401 | 
|    warrants                                |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Non-cash interest expense related to    |          -- |  |          -- |  |          -- |  |       34,980 | 
|    bridge loans                            |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    Changes in assets and liabilities:      |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|             Accounts receivable            |    (63,271) |  |    (99,077) |  |     (4,634) |  |    (197,782) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|             Inventories                    |      96,858 |  |    (25,384) |  |    (88,806) |  |     (17,334) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|             Prepaid expenses and other     |      19,288 |  |      27,043 |  |       1,215 |  |    (311,104) | 
|             current assets                 |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|             Other assets                   |     (3,257) |  |          -- |  |   (112,701) |  |    (198,557) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|             Accounts payable and accrued   |   (108,939) |  |   (240,366) |  |     317,623 |  |    1,036,722 | 
|             expenses                       |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|             Deferred revenue               |     (1,336) |  |   (114,139) |  |     115,475 |  |           -- | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Net cash used in operating activities      | (6,958,921) |  | (8,042,661) |  | (8,733,875) |  | (57,662,328) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Cash flows from investing activities       |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Purchases of available for sale            | (3,701,253) |  | (6,083,465) |  | (8,620,502) |  | (26,923,926) | 
| investments                                |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Maturities and sales of available for sale |  10,286,151 |  |   6,162,503 |  |   3,064,404 |  |   26,933,833 | 
| investments                                |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Proceeds from sale of property and         |      12,651 |  |         255 |  |          -- |  |      153,631 | 
| equipment                                  |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Purchase of property and equipment         |   (236,175) |  |   (102,810) |  |   (182,858) |  |  (3,760,121) | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Net cash provided by (used in) investing   |   6,361,374 |  |    (23,517) |  | (5,738,956) |  |  (3,596,583) | 
| activities                                 |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Cash flows from financing activities       |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Proceeds from issuance of common stock     |      45,000 |  |      15,354 |  |  16,772,624 |  |   28,331,208 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Proceeds from issuance of redeemable       |             |  |             |  |             |  |              | 
| convertible                                |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|     preferred stock, net                   |          -- |  |          -- |  |          -- |  |   37,097,656 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Proceeds from lease line and finance       |          -- |  |          -- |  |          -- |  |    2,545,612 | 
| facility                                   |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Repayment of lease line and finance        |          -- |  |          -- |  |   (500,733) |  |  (2,545,612) | 
| facility                                   |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Proceeds from issuance of notes payable    |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| and bridge loans                           |          -- |  |          -- |  |          -- |  |    2,404,185 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Net cash provided by financing activities  |      45,000 |  |      15,354 |  |  16,271,891 |  |   67,833,049 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Net increase (decrease) in cash and cash   |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| equivalents                                |   (552,547) |  | (8,050,824) |  |   1,799,060 |  |    6,574,138 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Cash and cash equivalents at beginning of  |   7,126,685 |  |  15,177,509 |  |  13,378,449 |  |           -- | 
| period                                     |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Cash and cash equivalents at  end of       |   6,574,138 |  |   7,126,685 |  |  15,177,509 |  |    6,574,138 | 
| period                                     |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|                                            |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Supplemental disclosure of non-cash        |             |  |             |  |             |  |              | 
| investing                                  |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| and financing activities                   |             |  |             |  |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Issuance of common and redeemable          |             |  |             |  |             |  |              | 
| convertible                                |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| preferred stock for in-process research    |             |  |             |  |             |  |              | 
| and                                        |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    development and notes payable           |          -- |  |          -- |  |          -- |  |    4,153,200 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Issuance of warrants in connection with    |             |  |             |  |             |  |              | 
| finance                                    |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
|    facilities and consulting arrangements  |          -- |  |          -- |  |          -- |  |    1,006,901 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Repurchase of common stock for notes       |          -- |  |          -- |  |          -- |  |       62,631 | 
| receivable                                 |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Cancellation of notes receivable           |          -- |  |          -- |  |          -- |  |       78,907 | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Conversion of redeemable convertible       |             |  |             |  |             |  |              | 
| preferred stock                            |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| upon recapitalisation and admission to     |          -- |  |          -- |  |          -- |  |   43,380,636 | 
| AIM                                        |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| Issuance of common stock options in        |             |  |             |  |             |  |              | 
| connection                                 |             |  |             | |             |  |              | 
+--------------------------------------------+-------------+--+-------------+-+-------------+--+--------------+ 
| with AIM Listing                           |          -- |  |          -- |  |          -- |  |      242,568 | 
+--------------------------------------------+------+--+---+--+------+--+---+-+---------+---+--+--------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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