SOURCE: Hoku Scientific, Inc.

February 13, 2006 16:57 ET

Hoku Updates Status of Contract With the U.S. Navy and Top-Line Revenue Guidance

KAPOLEI, HI -- (MARKET WIRE) -- February 13, 2006 -- Hoku Scientific, Inc. (NASDAQ: HOKU), a designer, developer and manufacturer of non-fluorinated membranes and membrane electrode assemblies (MEAs) for proton exchange membrane (PEM) fuel cells today provided an update on the status of its contact with the U.S. Navy.

Hoku announced on January 19, 2006 that along with partner IdaTech it would begin manufacturing 11 fuel cell systems, 10 of which will be field tested by the U.S. Navy over a twelve-month period. This manufacturing and demonstration agreement is the result of Hoku's successful completion of all milestones in its initial contract with the U.S. Navy.

Dustin Shindo, chairman, president and chief executive officer of Hoku Scientific said, "We are working with the U.S. Navy to finalize the demonstration site selection, preparation and logistics, which is taking longer than we had previously anticipated. In addition, although we have achieved all of our initial Navy contract milestones on time, including the successful demonstration of our Hoku MEA in the IdaTech fuel cell stack and system generating in excess of 1-kilowatt of electrical power in December 2005, we have not yet run an IdaTech fuel cell stack incorporating our Hoku MEA for a prolonged period of time. As we previously announced, this fuel cell demonstration program is our first opportunity to publicly demonstrate Hoku MEA in full-size fuel cell systems operating under real-world conditions. Therefore, we are taking advantage of the delays in finalizing the site selection to conduct further internal testing and evaluation of the continuous runtime of our Hoku MEA in the IdaTech fuel cell stacks and systems. IdaTech has begun manufacturing the fuel cell systems for the 12- month demonstration, and we expect to finalize the site selection and preparation, complete the additional testing and deliver the first systems to the U.S. Navy by this summer."

As a result of the delay in the commencement of the Navy demonstration system installations, Hoku is revising its revenue guidance for the fourth quarter ending March 31, 2006, to $1.4 million. Fluctuations in quarterly revenue are expected to continue in future periods due to uncertainty regarding the level and the timing of revenue from customer contracts and achievement of contract milestones.

In March 2005, Hoku Scientific was awarded a contract by the U.S. Navy to develop and demonstrate a PEM fuel cell power plant prototype that incorporates Hoku Scientific's Hoku MEA within IdaTech's fuel cell stacks and integrated fuel cell systems. Under the contract, the U.S. Navy agreed to pay Hoku Scientific up to an aggregate of $2.1 million if and when the Company completed specified testing and performance milestones, which it has now done.

On September 30, 2005, Hoku Scientific and the U.S. Navy entered into an Amendment of Solicitation/Modification of Contract pursuant to which the U.S. Navy exercised its two options under the PEM fuel cell demonstration contract. The amendment to the contract provided that when Hoku Scientific successfully met the remaining milestones in its contract, the U.S. Navy will purchase 11 demonstration-ready fuel cell systems for a total of $1.1 million in installments payable as each fuel cell power plant is completed. In December 2005, the Company achieved the remaining milestones in its initial contract.

The second option provides that Hoku Scientific will operate and maintain 10 of the 11 fuel cell power plants purchased under the first option for a period of 12 months at a U.S. Navy facility, for which the U.S. Navy has agreed to pay the Company a total of $1.4 million in monthly installments.

About Hoku Scientific, Inc.

Hoku Scientific (NASDAQ: HOKU) develops and manufactures fuel cell membranes and membrane electrode assemblies (MEA) for stationary (including residential and back-up power applications) and automotive proton exchange membrane (PEM) fuel cells. For more information visit www.hokuscientific.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to our expectations regarding the U.S. Navy field trials; our ability to deliver 11 fuel cell systems to the Navy; the timing of the completion of internal testing, site selection, and the commencement of the demonstration program; the performance of our Hoku MEA during such internal tests, and in such demonstration; our relationship with the U.S. Navy and IdaTech; our future financial performance with respect to the U.S. Navy contract; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in the company's filings with the Securities and Exchange Commission. Except as required by law, the company assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Hoku, Hoku Membrane, Hoku MEA and the Hoku Scientific logo are trademarks of Hoku Scientific, Inc., all rights reserved. All other trademarks, trade names and service marks appearing in this press release are the property of their respective holders.

Contact Information

  • CONTACTS For Hoku :

    In Hawaii:
    Hoku Scientific
    Tel: 808-682-7800
    Email Contact

    In New York:
    David Pasquale, EVP
    The Ruth Group
    Tel: 646-536-7006
    Email Contact