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Raser Technologies, Inc. Announces Second Quarter Financial Results

PROVO, Utah-(Business Wire)-August 11, 2008 - Raser Technologies, Inc. (NYSE Arca: RZ) today announced financial results for the second quarter ended June 30, 2008 and provided an update on its progress in executing its strategic business plan.

Financial Results

Revenue for the second quarter was $5,880, a decrease from $28,562 in the second quarter of 2007. Revenue in the prior year was primarily the result of work on the ARINC subcontract for the U.S. Army. This subcontract was completed in the first quarter of 2008.

Total operating expenses were $6.5 million during the second quarter of 2008 compared to $3.5 million in the same period for the prior year. The increase was primarily the result of increased development costs of Raser's geothermal projects, and includes non-cash equity compensation expense of $0.9 million. The increase also included $1.8 million of increased legal costs, professional services and certain other structuring costs, a significant portion of which are not expected to recur in future periods. The Company's net loss applicable to common stockholders was $7.4 million, or $0.13 basic and fully diluted loss per share, for the second quarter of 2008 compared to a net loss of $3.2 million, or $0.06 basic and fully diluted loss per share, for the second quarter of 2007.

Revenue for the first six months ended June 30, 2008 was $136,423, a decrease from $152,325 for the first six months of 2007. Revenue in the comparable 2007 period was primarily the result of work on the ARINC subcontract for the U.S. Army that began in October 2006 and was completed in the first quarter of 2008.

Total operating expenses for the six months ended June 30, 2008, were $12.1 million compared to $8.4 million for the same period in the prior year and included non-cash equity compensation expense of $1.7 million. The year over year increase also included $2.8 million of increased legal costs, professional services and certain other structuring costs, a significant portion of which are not expected to recur in future periods. The Company's net loss applicable to common stockholders was $12.9 million, or $0.23 basic and fully diluted loss per share, six months ended June 30, 2008 compared to a net loss of $7.9 million, or $0.15 basic and fully diluted loss per share, for the first six months of 2007.

Raser's cash position at the end of the second quarter of 2008 was $5.1 million compared to $5.9 million at December 31, 2007. During the quarter, Raser received $5.0 million in gross proceeds from the exercise of the overallotment option relating to the Company's convertible notes offering completed in the first quarter. Subsequent to the end of the second quarter, Raser has sold 0.7 million shares of its common stock, raising an aggregate of $7.2 million pursuant to its previously announced $25 million shelf registration ATM Equity Offering program. Raser has been funding much of the construction of its Thermo plant from its own cash balances ahead of the anticipated closing of construction financing under the previously announced Merrill Lynch financing commitment for that project.

Second Quarter and Subsequent Highlights:

Raser has initiated the development of eight geothermal power projects to date. During the second quarter of 2008 and early part of the third quarter, Raser continued its development of these projects, secured an additional power purchase agreement (PPA) with a production tax credit (PTC) extension backstop, completed a third party analysis of the geothermal resource at the Thermo project and took delivery of UTC Power geothermal power generating units. The Company made progress in its efforts to monetize its geothermal assets, including:

— Industry leading geological consultant GeothermEx concluded in its report on Raser's Thermo resource that the project had more than sufficient resources to support the planned 10 megawatts (MW) geothermal power plant and that Raser's overall geothermal resources in that area could most likely sustain 238 MW of gross geothermal power with a 90% probability of sustaining 138 MW. Raser added to its holdings in that area by leasing an additional 26,000 adjacent acres to the Thermo project. Raser also has completed the transmission lines from the facility to interconnect with the grid with a 138,000 volt line, an increase from the previously planned 25,000 volt line to allow for the planned future development of the larger resource.

— Raser completed the second quarter with more than 240,000 acres of geothermal interests under its control for the purpose of generating clean, renewable geothermal electricity. The Company believes these geothermal land assets have the potential to support the company's power systems business development plans over many years.

— Raser signed two additional commitment letters with Merrill Lynch for the project financing and tax equity funding for its planned 10 MW plants for Thermo geothermal power plant near Beaver, Utah, and Lightning Dock geothermal power plant in Hidalgo County, New Mexico. The commitment letters provide for non-recourse debt financing and tax equity capital for these geothermal projects. The tax equity capital will be provided by Merrill Lynch and/or by additional partners, at the option of Merrill Lynch, that can utilize the many tax benefits provided by the renewable energy project.

— Raser executed a PPA with the Salt River Project Agricultural Improvement and Power District (SRP), the third largest public utility district in the nation serving the Phoenix, AZ area. The power for the PPA is expected to come from Raser's planned Lightning Dock geothermal power plant in New Mexico. The PPA will provide for the delivery by Raser of approximately 10 MW, or enough electricity to power approximately 5,500 homes in the Phoenix area, of renewable geothermal power for 20 years. Raser plans to complete this project in the first quarter of 2009.

— The Company took delivery of the first UTC Power PureCycle(R) geothermal power generating units expected to be installed at the Lightning Dock project. Lightning Dock is expected to be the first commercial scale geothermal power plant built in the state of New Mexico. The New Mexico site is a well studied, known geothermal resource which has provided direct use geothermal fluids to a local greenhouse operation for many years.

— Raser took delivery of the full 50 UTC Power PureCycle(R) geothermal power generating units ordered for the first geothermal power plant to be built in the state of Utah in over 20 years. The project is designed to generate net power between 10 and 11 MW, or enough electricity to power approximately 9,000 homes.

Martin Petersen, Raser's Chief Financial Officer, commented, "We believe we have made substantial progress in advancing our geothermal business. We have amassed what we believe to be one of the largest undeveloped portfolios of geothermal resources in the United States. The recent GeothermEx report confirmed our belief that our Thermo site in Utah has vast potential geothermal generating capacity. We have established valuable relationships and commitments with substantial, well regarded companies relating to geothermal equipment, technology, financing, and resource identification and evaluation, among others. We have secured, or are in the process of finalizing, power purchase agreements from utilities that are anxious to purchase the power we plan to generate. We believe we are engaged in an exciting business and have the opportunity to play a meaningful role in providing clean, renewable power to consumers. Not everything has been in keeping with our original timeframes and expectations. Some of our projects have experienced longer development timelines than originally planned. However, we believe our first power plant is being built in a fraction of the time of that typically required for other geothermal power plants, and we expect to have it placed in service later in 2008. We look forward to developing our large geothermal resource portfolio using our unique, rapid deployment business model."

Symetron(TM) Updates:

Raser also discussed its progress of its projects incorporating its Symetron(TM) electromagnetic motor and generator technology during the quarter, including:

— Raser is developing a 100 mile per gallon (mpg) light truck demonstration vehicle in addition to a 100 mpg SUV demonstration vehicle. Raser's plug-in electric drive system is designed to allow light trucks such as the Chevy Silverado, Ford F-150, or Dodge Ram to achieve over 100 mpg in typical local daily driving with near zero emissions, by using electricity instead of petroleum as the primary fuel. Raser is nearing completion of the 100 mpg SUV demonstration vehicle, built in cooperation with a leading global OEM, using the same drive system.

— Raser announced that Wilson Auto Electric has completed field testing of its heavy duty alternators incorporating Raser's Symetron(TM) technology. Wilson will evaluate the results of the field tested units analyzing their durability and performance. Once the evaluation is completed, Wilson plans to begin manufacturing and selling the units to heavy duty alternator original equipment and after market customers. Additional units have been running successfully on laboratory durability test stands which simulate life testing in an accelerated manner.

Webcast

Raser will host a webcast to discuss the quarterly and year-to-date results on Tuesday, August 12, 2008, at 9:30 AM MDT. Stockholders, analysts and interested parties may access the webcast and discussion at http://viavid.net/dce.aspx?sid=000054C4.

About Raser Technologies

Raser (NYSE Arca: RZ) is a publicly traded, environmentally focused technology licensing and development company operating in two business segments. Raser's Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology and Raser's Symetron(TM) technology developed internally by its Transportation and Industrial Technology segment. Raser's Transportation and Industrial Technology segment focuses on extended-range plug-in-hybrid vehicle solutions and using Raser's award-winning Symetron(TM) technology to improve the torque density and efficiency of the electric motors and drive systems used in electric and hybrid-electric vehicle powertrains and industrial applications. Further information on Raser may be found at: www.rasertech.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, statements regarding: our beliefs about the potential for geothermal power generation on our leased properties; our belief about our ability to exploit the available geothermal resources; our beliefs about the strength and enforceability of our agreements; and our beliefs about the geothermal market generally; our beliefs about our ability to utilize our technology and other available technologies to produce electric power from the available resources; our beliefs about our ability to secure the equipment and services, on acceptable terms, required to complete our power projects; our ability to attract alliance, monetization or financial partners for the power projects we intend to develop; our beliefs about our ability to successfully conclude contract negotiations on acceptable terms; our beliefs about the performance and market applicability of our products; our beliefs about the status and enforceability of our intellectual property; our beliefs about the strength of our existing and potential business relations in the motor industry; our beliefs about the performance capabilities of our technology; our ability to commercially license our technology; our ability to hire employees sufficient to accelerate engineering and testing; and our ability to successfully complete testing and verification of Symetron(TM) technologies. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ, including, without limitation, the competitive environment and our ability to compete in the industry; our ability to adapt our technology for geothermal applications; our ability to secure necessary permits; the strength of our intellectual property; our inability to attract, train and retain key personnel; and such other risks as identified in our quarterly report on Form 10-Q for the quarter ended June 30, 2008, as filed with the Securities and Exchange Commission, and all subsequent filings.

All forward-looking statements in this press release are based on information available to us as of the date hereof, and we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release. -0- *T RASER TECHNOLOGIES, INC. AND SUBSIDIARIES (a development stage enterprise) Condensed Consolidated Balance Sheets (Unaudited) December 31, June 30, 2008 2007 ——————- ——————- Assets Current assets: Cash and cash equivalents $5,092,226 $5,912,210 Restricted cash 75,000 75,000 Accounts receivable 5,880 12,200 Unbilled receivable — 192,157 Note receivable and accrued interest, net 142,500 506,273 Restricted short-term marketable securities (held to maturity) 4,428,960 — Power project equipment deposits 5,036,500 — Other current assets 3,038,843 725,648 ——————- ——————- Total current assets 17,819,909 7,423,488 Restricted long-term marketable securities (held to maturity) 4,293,208 — Land 33,952 — Unproved property and prepaid delay rentals 6,447,151 6,153,688 Geothermal well field development 20,008,352 4,750,525 Power project construction-in-progress 19,638,949 603,814 Equipment, net 674,624 680,188 Intangible assets, net 516,053 515,037 Deferred financing costs, net 2,433,857 — Power project development deposits 502,926 3,562,500 Other assets 1,093,851 95,213 ——————- ——————- Total assets $73,462,832 $23,784,453 ============= ============= Liabilities and Stockholders' (Deficit) Equity Current liabilities: Accounts payable $8,290,813 $3,623,359 Accrued liabilities 20,224,901 623,424 Note payable 920,833 — Deferred revenue 200,000 — ——————- ——————- Total current liabilities 29,636,547 4,246,783 Asset retirement obligation 60,893 86,193 Long-term 8.00% convertible senior notes 55,000,000 — ——————- ——————- Total liabilities 84,697,440 4,332,976 Contingencies and commitments, (see Notes C, I, J and K) Stockholders' (deficit) equity: Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued and outstanding. — — Common stock, $.01 par value, 250,000,000 shares authorized, 56,145,267 and 55,923,705 shares issued and outstanding, respectively 561,453 559,237 Additional paid in capital 52,278,230 70,114,893 Accumulated deficit (30,972,177 ) (30,972,177 ) Accumulated deficit after re-entry into development stage (33,102,114 ) (20,250,476 ) ——————- ——————- Total stockholders' (deficit) equity (11,234,608 ) 19,451,477 ——————- ——————- Total liabilities and stockholders' (deficit) equity $73,462,832 $23,784,453 ============= ============= *T -0- *T RASER TECHNOLOGIES, INC. AND SUBSIDIARIES (a development stage enterprise) Condensed Consolidated Statements of Operations (Unaudited) Three months ended June 30, —————————————- 2008 2007 ——————— —————— Revenue $ 5,880 $ 28,562 ——————— —————— Operating expense Cost of sales — 27,662 General and administrative 2,224,758 2,027,518 Power project development 3,102,037 619,371 Research and development 1,194,030 785,472 ——————— —————— Total operating expenses 6,520,825 3,460,023 ——————— —————— Operating loss (6,514,945) (3,431,461) Interest income 111,542 217,590 Interest expense (1,037,770) — Other — (10,146) ——————— —————— Loss before income taxes (7,441,173) (3,224,017) Tax benefit (expense) — — ——————— —————— Net loss applicable to common stockholders $(7,441,173) $(3,224,017) ============== ============ Loss per common share-basic and diluted $ (0.13) $ (0.06) ============== ============ Weighted average common shares—basic and diluted 56,118,000 54,311,000 ============== ============ Six months ended June 30, For the period ————————————— after re-entry into development stage (October 1, 2006 through 2008 2007 June 30, 2008) —————— —————— ————————- Revenue $ 136,423 $ 152,325 $ 501,212 ——————- —————— ————————- Operating expense Cost of sales 74,112 493,792 746,036 General and administrative 5,005,414 5,433,456 18,808,213 Power project development 4,889,091 864,262 7,526,406 Research and development 2,163,213 1,581,771 6,496,360 ——————- —————— ————————- Total operating expenses 12,131,830 8,373,281 33,577,015 ——————- —————— ————————- Operating loss (11,995,407) (8,220,956) (33,075,803) Interest income 171,276 401,528 1,128,444 Interest expense (1,103,282) — (1,103,282) Other 75,775 (31,158) (51,473) ——————- —————— ————————- Loss before income taxes (12,851,638) (7,850,586) (33,102,114) Tax benefit (expense) — — — ——————- —————— ————————- Net loss applicable to common stockholders $(12,851,638) $(7,850,586) $(33,102,114) ============= ============ ================= Loss per common share- basic and diluted $ (0.23) $ (0.15) ============= ============ Weighted average common shares—basic and diluted 56,070,000 52,906,000 ============= ============ *T

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