Raser Technologies Inc. (NYSE: RZ)

Raser Technologies Inc. (RZ) is a geothermal power development and technology licensing company. The Company operates in two business segments: power systems, and transportation and industrial technology. The power systems segment develops renewable geothermal electric power plants and bottom-cycling operations. The transportation and industrial technology segment focuses on using its Symetron family of technologies to improve the efficiency of electric motors, generators and power electronic drives used in electric and hybrid electric vehicle propulsion systems.

RZ has accumulated a portfolio of geothermal interests in four western continental states and a geothermal concession in Indonesia. It has initiated the development of eight geothermal projects in its Power Systems segment, as of December 31, 2008. Its transportation and industrial segment focuses on electric motor, generator and drive technologies. It provides electromagnetic machine and power electronic drive technologies for applications in AC induction, permanent-magnet synchronous, and hybrid reluctance electric motors; generators and power electronic drives; automotive alternators; and integrated starter alternators for use in industrial and transportation applications, hybrid-electric and electric vehicle propulsion systems, and other applications where the performance of electricity-to-motion or motion-to-electricity power conversions can be enhanced. The Company has a strategic relationship with UTC Power to manufacture the principal components of a geothermal power plant; and a collaboration agreement with Hummer to produce the hybrid H3.

Raser Technologies Inc. was founded in 2003 and is based in Provo, Utah.

Source: http://www.reuters.com/finance/stocks/incomeStatement?stmtType=INC&perType=INT&symbol=RZ , https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=RZ , http://www.rasertech.com/investor_relations

Financial Summary

Although RZ is no longer considered a development stage company, its ability to secure liquidity in the form of additional financing or otherwise remains crucial for the execution of its plans and its ability to continue as a going concern. RZ’s current cash balance, together with cash anticipated to be provided by operations, will not be sufficient to satisfy its anticipated cash requirements for normal operations, accounts payable and capital expenditures for the foreseeable future.

Obligations that may exert further pressure on RZ’s liquidity situation include the obligation to repay amounts borrowed under the Line of Credit, which are due in July 2010 but may need to be repaid as early as November 2009. However, the principal balance and any accrued interest thereon, can be paid in the form of cash or equity securities at RZ’s sole discretion. In addition, if the Company fails to achieve “Final Completion” of its Thermo No. 1 geothermal power plant by September 15, 2009, it may incur penalties of between $2.0 million to $3.0 million.

During 2008 and continuing through the first half of 2009, economic conditions have weakened significantly and global financial markets have experienced significant liquidity challenges. The current economic environment makes it challenging for the Company to access the liquidity that it needs, on terms acceptable to it, to successfully pursue such development plans and operations. Although RZ has obtained additional funding in 2009, including, most recently, $23.8 million of net proceeds from a registered direct offering in July 2009, these recent sources of funding alone will be insufficient for the Company to properly execute its current business plan.

The Company intends to continue to seek financing arrangements from a variety of sources to fund its development activities, which may include the issuance of debt, preferred stock, equity or a combination of these instruments. RZ also continues to evaluate a variety of alternatives to finance the development of its geothermal power projects. These alternatives could include project financing and tax equity financing, government funding from grants, loan guarantees or private activity bonds, joint ventures, the sale of one or more of the Company’s projects or interests therein, entry into prepaid power purchase agreements with utilities or municipalities, or a merger and/or other transaction, a consequence of which could include the sale or issuance of stock to third parties.

RZ’s Transportation & Industrial segment expects to begin to generate modest revenues in the future from contracts it has entered into for the development of extended range PHEV demonstration vehicles. The Transportation & Industrial segment will not generate significant revenues or cash flows unless the Company is able to license its Symetron^TM technologies to third parties. Although progress is being made by each of the Company’s business segments, significant revenues may not be generated as expected by either of its segments, if at all.

The Company has incurred significant losses since its inception. As of June 30, 2009, it had incurred an accumulated deficit of approximately $99.9 million on cumulative revenues since inception of approximately $1.4 million. Net losses applicable to common stockholders for the six months ended June 30, 2009, and 2008 totaled $10.4 million and $12.9 million, respectively.

During the three months ended June 30, 2009, RZ recognized revenue totaling $0.4 million as compared to $6,000 during the same period in 2008. During the second quarter of 2009, it began selling electricity generated by its Thermo No. 1 geothermal power plant to the City of Anaheim. During the second quarter, the Company generated approximately 4,876 MW hours of electricity which was sold at a price of $78.00 per MW.

Source: http://www.reuters.com/finance/stocks/estimates?symbol=RZ

Analyst Consensus

No chart available.

Source: Financial Times.com

Source: http://www.reuters.com/finance/stocks/estimates?symbol=RZ

Investment Highlights

RZ announced last week that U.S. Secretary of Commerce Gary Locke invited the Company’s Principal Executive Officer Richard Clayton to participate in a forum titled “Clean Energy Economy.” The forum was held October 22, 2009, in Washington, D.C.

The American Recovery and Reinvestment Act passed earlier this year sets aside millions of dollars in grants and billions in loan guarantees to support and advance renewable energy projects. RZ has applied for several innovative exploration grants through the Department of Energy’s Geothermal Technologies Program and also intends on applying for the 30% Treasury Grant for its current and future power plants as well as loan guarantees for its Lightning Dock, New Mexico project and others. RZ commissioned its first geothermal power plant in April of this year. That plant, located in southern Utah, now delivers clean, renewable energy to Anaheim, Calif. The Company has plans to build additional plants in Utah, New Mexico, Nevada and Oregon.

RZ announced last week that it has entered into a transaction with three of its line of credit lenders to facilitate the repayment of its loan principal and accrued interest totaling $5.4 million. The offering from RZ to the lenders includes 3,201,526 shares of common stock priced at $1.68 per share, which was at a premium to the closing price of the common stock on the day the offering to the lenders was completed. In addition, the lenders received warrants to purchase 1,600,762 shares of common stock with a strike price of $1.61. The Company’s fourth major lender, Kraig Higginson, RZ’s chairman, is precluded from participating in this offering due to certain regulatory restrictions relating to his position as an officer of the Company. The Company intends to explore alternative structures for satisfying its obligations to this lender under the line of credit at a later date. Higginson has told the Company that he intends to enter into a similar transaction with RZ once an appropriate alternative structure is determined. The principal and accrued interest outstanding to Higginson currently totals $5.3 million.

In addition to the sale to the lenders, the Company is also required to offer up to 1,120,526 additional shares and warrants to purchase up to 560,258 shares of common stock to certain stockholders and former stockholders of RZ who have the right to participate in this offering pursuant to agreements entered into on June 30, 2009 as part of the Company’s registered direct equity offering. Each of the participation rights holders is entitled to purchase a number of shares and warrants equal to its pro rata portion of 35% of the shares and warrants offered on the same terms and conditions as the line of credit lenders. If all of these participation rights holders elect to participate in the offering to the full extent possible, RZ will receive additional gross cash proceeds totaling $1.9 million.

Earlier this month RZ released an update on its geothermal activities and its PHEV project, updating stockholders, the media and the public on its progress and strategy. The Company recently received final approval of a key permit from the New Mexico Oil Conservation Division (OCD) for injection of geothermal fluids for the Lightning Dock No. 1 project. RZ’s in-house geology and reservoir management team is conducting its final review of the Lightning Dock resource in anticipation of commencing drilling on site, pending the completion of funding for the project. RZ is also in the process of negotiating a revision to its power purchase agreement (PPA) with the Salt River Project Agricultural Improvement and Power District. The revision is expected to include an increase in the expected output from the Lightning Dock project as well as an increase in the price of energy under the PPA.

RZ is now in the final stages of testing the fifth production well needed for the completion of Thermo No. 1 as part of its plan to bring the plant to full capacity by the end of the year. The Company is also preparing to re-work existing wells and is taking other steps to optimize the operations of the plant, including working with Pratt & Whitney Power Systems to make certain modifications to the PureCycle units on site. RZ is also actively planning future phases of development utilizing the Thermo resource which is estimated to contain more than 200 MW of potential power. These efforts include moving forward with permitting, environmental compliance, engineering, transmission and interconnection, and negotiation of a pre-paid power purchase agreement with the Southern California Public Power Authority (SCPPA).

Source: Scottrade.com, Reuters.com, http://www.rasertech.com/

Technical Analysis

Source: www.stockcharts.com

Moving Average Price Compare

RZ is below its 50-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

Bollinger Bands

RZ is trading near its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.

MACD

The MACD for RZ currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

Comparative Analysis

Source: Reuter.com, Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

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