IdaTech India deadline 'likely to be missed'

IdaTech has announced an update to the supply agreement for natural gas fuel cell backup power systems with Ballard and Acme Telpower in India.

While product acceptance testing (PAT) was successfully met for the hydrogen system in July 2009, IdaTech has now indicated that the PAT for the natural gas system, scheduled for October 16, 2009, is likely to be missed. The Supply Agreement provides for an extension of the product acceptance process of up to 6 months if an acceptable remediation plan is submitted by 16 November 2009.

Although IdaTech has achieved a significant cost reduction in the system design and established a competitive supply chain, it has taken longer for certain components to be developed and the supply chain to be built. The supply chain is more geographically spread than originally envisaged and now spans India, China, North America and Europe. To date IdaTech has not been able to achieve the challenging cost targets to a level that would be profitable at the price level specified in the Supply Agreement.

Under the terms of the Supply Agreement, missing this particular milestone in the product acceptance testing process may result in the termination of the Supply Agreement without penalties to any party. If the Supply Agreement is terminated, this would mean significantly lower sales for 2010 for both IdaTech and Ballard. IdaTech's Directors believe this will have no material impact on the timing of cash breakeven for the Company.

A further update and the results for the six months ended 30 June 2009 will be published on 30 September 2009.

http://www.idatech.com/uploadDocs/ACME%20Contract%20Update%20092309.pdf

Source: Fuel Cell Today