VRB Power reports 2006 financial results



    VANCOUVER, April 27 /CNW/ - VRB Power Systems Inc. (TSX-V: VRB) today
reported its financial results for the year ended December 31, 2006.
    The following is a summary of the key points for the period, updated to
April 27, 2007 (Note - in 2005 the Company changed its financial year-end from
June 30 to December 31. The comparative amounts to December 31, 2005 are
therefore for a six-month period. All dollars are Canadian)

    
        -  Sales revenue and other income was $467,883 for the year compared
           to $213,937 for 2005
        -  Operating expenses were $11,205,275 for the year compared to
           $4,650,235 and other expenses were $15,000 compared to
           $283,660 in 2005
        -  Net loss of $10,752,392 ($0.10 per share) for the year compared to
           $4,719,958 ($0.05 per share) for the comparative period
        -  The Company announced its largest contract to date, the sale of a
           2MW (3MW pulse) x 6hr VRB-ESS(TM) to Tapbury Management Limited
           ("Tapbury") for approximately (euro)7.4 million (US$10.1 million).
           This sale is subject to certain conditions, including execution of
           final contracts
        -  The independent study commissioned by Sustainable Energy Ireland
           and Tapbury was released in March 2007 and validates the key value
           streams of the VRB-ESS and the sizing of the system being
           purchased by Tapbury
        -  Additional sales of five 10kWh systems, one 15kW x 8hr system and
           one 5kW x 4hr system were made during the period with an
           additional 5kW x 4hr system sale since year end
        -  Deliveries of six 10kWh systems and one 30kW x 2hr system were
           made pursuant to sales orders, and deliveries of three 10kWh
           systems were made pursuant to field trial arrangements, during
           the period
        -  All of the systems delivered during 2006 have been commissioned
           and are either in laboratory or field testing. Feedback to date
           has been in line with expectations with the core technology
           performing well
        -  Commercial 5kW multi hour systems will be available from mid 2007
        -  Costs of the 5kW multi hour systems have been significantly
           reduced from the pre-commercial version, in line with expected
           cost reductions
        -  The Company was granted three additional patents as part of its
           strategy of continuing to strengthen its worldwide intellectual
           property portfolio
    

    "2006 was a critical year in the development and positioning of the
Company", said Tim Hennessy, VRB Power Chairman & CEO. "With continued
volatility in global energy markets, a heightened focus on environmental
issues and major environmental incentives announced in Canada, the EU and US,
macro factors continue to move more and more in our favour with many potential
customers in our target markets now accepting the need for energy storage.
    The question is no longer if energy storage is necessary but rather what
is the best storage solution for specific applications? This maturing in
market appreciation has refined our focus on certain sectors, and
applications. While this has taken some time to evolve, we have now made good
progress in a number of key sectors. As part of this process we have also
learned where the "low hanging fruit" is and during 2006 we re-positioned and
expanded our sales team and channels to focus on those markets where we can
demonstrate a strong value proposition.
    The initial success in Ireland is attributable to 18 months spent working
with local customers, utilities, grid operators and the Irish government to
develop a "blueprint" for VRB - wind applications. The announcement of the
conditional (euro) 7.4 million (US$10.1 million) sale of a 2MW x 6hr
(3MW pulse) rated VRB-ESS(TM) to Tapbury Management was the culmination of
this work.
    An emerging area of effort during 2006 has been in coupling our
technology to photovoltaic (PV) applications. Like wind generation, PV power
is not necessarily coincident with peak demand, and many of the same benefits
apply when integrating the VRB technology. Additionally, customers are able to
claim the solar tax credit available in the US with respect to the cost of
total PV systems.
    On the small system side, we finalized the designs of our 5kW cell stacks
during 2006 and shipped ten pre-production systems to strategic customers for
high profile evaluation. All of these systems have been commissioned and are
either in laboratory or field testing in RAPS, solar, telecoms or other
back-up applications. Feedback from several customers and trade shows has been
extremely encouraging.
    To date, performance from these systems has been in line with
expectations and experience gained in the field has been incorporated into the
design of the commercial version which will be available from mid 2007. These
systems will provide a robust, flexible, easy to customize solution at
approximately one third the cost of the pre-production systems.
    The work done by our engineering and manufacturing teams in refining our
designs and reducing costs on our initial commercial systems is another key
achievement of 2006. We now have products that we can sell into a variety of
markets and generate positive margins. We have also continued to expand our
patent portfolio with the award of 3 additional patents and this ongoing
process of making our intellectual property ever stronger will continue."
concluded Hennessy.
    The consolidated financial statements of the Company for the period ended
December 31, 2006 and Management's Discussion and Analysis ("MD&A") thereon
were prepared in accordance with Canadian generally accepted accounting
principles and are presented in Canadian dollars. The Consolidated Statements
of Operations and Deficit, Consolidated Balance Sheets, and Consolidated
Statements of Cash Flows are set out below. The full financial statements and
MD&A will be filed on SEDAR (www.sedar.com) shortly and will also be available
on the Company's website (www.vrbpower.com) later today.

    About VRB Power
    Headquartered in Vancouver, Canada, VRB Power Systems Inc. is an energy
storage technology developer which is marketing, selling and manufacturing
products utilizing the patented VRB Energy Storage System ("VRB-ESS(TM)"). The
VRB-ESS can economically store and supply large amounts of electricity on
demand and is focused on stationary applications. It is a long life, cost
effective, low maintenance, efficient technology that allows for the
scalability of power and storage capacity independently. The VRB-ESS is
particularly beneficial to renewable energy providers, utilities and end users
through its ability to "inventory" electricity, allowing for the optimal match
of supply and demand.
    The VRB-ESS is well suited for a variety of applications. Enabling the
provision of "firm" capacity from intermittent renewable generation such as
wind and solar; more cost effective and efficient generation of electricity in
remote areas; capital deferral for utilities; and load levelling (peak
shaving) applications. The VRB-ESS is also capable of providing backup power
solutions including applications for utility sub-stations and
telecommunication sites. The VRB-ESS is characterized by having the lowest
ecological impact of all energy storage technologies and is unlike most other
conventional energy storage systems that rely on substances such as lead or
cadmium.

    Caution regarding forward-looking statements: VRB Power's press releases
may contain forward-looking statements. These statements are based on
management's current expectations and beliefs which are subject to a number of
known and unknown risks and uncertainties (including, but not limited to, the
risk factors described in VRB Power's Annual Information Form filed with the
British Columbia Securities Commission and available at www.sedar.com) that
could cause actual results to differ materially from those expressed or
implied in our forward-looking statements. The Company does not assume any
obligation to update any forward-looking statements contained in this press
release.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    Simon Clarke
    Executive Vice President, Corporate Development


    
    VRB Power Systems Inc.
    Consolidated statements of operations and deficit
    year ended December 31, 2006, six months ended December 31, 2005 and
    year ended June 30, 2005

                                                   Six months
                                    Year ended          ended     Year ended
                                   December 31,   December 31,       June 30,
                                          2006           2005           2005
    -------------------------------------------------------------------------
                                             $              $              $
    Revenue
      Sales                            217,660              -              -
    -------------------------------------------------------------------------

    Expenses
      General and administrative     5,964,740      2,998,778      4,194,172
      Research and development       2,889,952        559,293      2,165,987
      Amortization of intangible
       assets                        2,028,978      1,013,368      1,042,503
      Amortization of plant
       and equipment                   321,605         78,796         70,097
    -------------------------------------------------------------------------
                                    11,205,275      4,650,235      7,472,759
    -------------------------------------------------------------------------

    Operating loss                 (10,987,615)    (4,650,235)    (7,472,759)
    -------------------------------------------------------------------------

    Other items
      Interest and other income        250,223        113,837         80,100
      Bad debts recovered                    -              -        205,000
      Gain on shares issued by
       Pinnacle VRB Limited                  -              -         88,393
      Gain on disposal of subsidiary,
       Pinnacle VRB Limited                  -              -      4,467,050
      Write-down of plant and
       equipment                       (15,000)      (283,660)             -
      Gain on disposal of investment         -        100,100              -
      Non-controlling interest               -              -        311,706
    -------------------------------------------------------------------------
                                       235,223        (69,723)     5,152,249
    -------------------------------------------------------------------------

    Net loss                       (10,752,392)    (4,719,958)    (2,320,510)
    Deficit, beginning of period   (47,759,452)   (43,039,494)   (40,343,984)
    Cancellation of escrow shares            -              -       (375,000)
    -------------------------------------------------------------------------
    Deficit, end of period         (58,511,844)   (47,759,452)   (43,039,494)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share - basic and
     diluted                             (0.10)         (0.05)         (0.03)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number of
     shares outstanding -
     basic and diluted             111,651,126    100,227,033     91,378,489
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    VRB Power Systems Inc.
    Consolidated balance sheets
    as at December 31, 2006 and 2005 and June 30, 2005

                                                                 December 31,
                                                -----------------------------
                                                         2006           2005
    -------------------------------------------------------------------------
                                                            $              $
    Assets
    Current assets
      Cash and cash equivalents                     6,884,870      7,942,229
      Short-term investments                        2,501,562              -
      Accounts receivable                             138,864              -
      Deposits and other receivables                  249,041        181,271
      Inventory                                       677,451        139,642
    -------------------------------------------------------------------------
                                                   10,451,788      8,263,142

    Raw material inventory                            788,532        950,175
    Plant and equipment                             1,693,916        789,876
    Intangible assets                               6,684,446      8,702,224
    Restricted cash                                   325,231        471,060
    -------------------------------------------------------------------------
                                                   19,943,913     19,176,477
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities        900,479        544,913
    -------------------------------------------------------------------------


    Shareholders' equity
    Share capital                                  74,400,898     64,027,192
    Contributed surplus                             3,154,380      2,363,824
    Deficit                                       (58,511,844)   (47,759,452)
    -------------------------------------------------------------------------
                                                   19,043,434     18,631,564
    -------------------------------------------------------------------------
                                                   19,943,913     19,176,477
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Approved on behalf of the Board

    (Signed) Vincent Sorace                       (Signed) Timothy Hennessy
    -------------------------                     --------------------------
    Vincent Sorace, Director                      Timothy Hennessy, Director



    VRB Power Systems Inc.
    Consolidated statements of cash flows
    year ended December 31, 2006, six months ended December 31, 2005
    and year ended June 30, 2005

                                                   Six months
                                    Year ended          ended     Year ended
                                   December 31,   December 31,       June 30,
                                          2006           2005           2005
    -------------------------------------------------------------------------
                                             $              $              $
    Operating activities
      Net loss                     (10,752,392)    (4,719,958)    (2,320,510)
      Items not affecting cash
        Amortization                 2,350,583      1,092,164      1,112,600
        Non-controlling interest             -              -       (311,706)
        Gain on shares issued by
         Pinnacle VRB Limited                -              -        (88,393)
        Gain on sale of subsidiary,
         Pinnacle VRB Limited                -              -     (4,467,050)
        Stock-based compensation       582,609        577,344        730,152
        Write-down of plant and
         equipment                      15,000        283,660              -
        Other                                -              -        106,134
      Change in non-cash working
       capital
        Increase in accounts
         receivables                  (138,864)             -              -
        Increase in deposits and
         other receivables             (67,770)      (108,935)        (8,504)
        Increase in inventory         (376,166)      (139,642)             -
        Increase (decrease) in
         accounts payable              355,566        (71,091)       151,552
    -------------------------------------------------------------------------
                                    (8,031,434)    (3,086,458)    (5,095,725)
    -------------------------------------------------------------------------

    Investing activities
      Purchase of short-term
       investments                  (2,501,562)             -              -
      Acquisition of technology
       licence                         (11,200)             -       (692,570)
      Decrease in cash on disposal
       of subsidiary                         -              -        (26,516)
      Purchase of plant and
       equipment                    (1,240,645)      (678,023)      (514,120)
      Purchase of raw materials
       inventory                             -              -       (950,175)
      Decrease (increase) in
       restricted cash                 145,829         89,216       (560,276)
    -------------------------------------------------------------------------
                                    (3,607,578)      (588,807)    (2,743,657)
    -------------------------------------------------------------------------

    Financing activities
      Decrease in loans payable              -              -        (76,542)
      Issuance of common shares,
       net of issue costs           10,581,653      9,605,473      5,873,319
      Shares issued by subsidiary
       to non-controlling interest           -              -        286,475
    -------------------------------------------------------------------------
                                    10,581,653      9,605,473      6,083,252
    -------------------------------------------------------------------------

    Net cash (outflow) inflow       (1,057,359)     5,930,208     (1,756,130)
    Cash and cash equivalents,
     beginning of period             7,942,229      2,012,021      3,768,151
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   6,884,870      7,942,229      2,012,021
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents
     consist of
      Cash                             250,520          9,029        346,297
      Short-term money market
       investments                   6,634,350      7,933,200      1,665,724
    -------------------------------------------------------------------------
                                     6,884,870      7,942,229      2,012,021
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    





For further information:

For further information: VRB Power Systems Inc. at (604) 697-8820;
Investor Relations at (604) 697-8835; Or visit the company's web site at:
www.vrbpower.com

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VRB POWER SYSTEMS INC.

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