February 17, 2004 07:01:00 (ET)

IDAHO FALLS, Idaho, Feb 17, 2004 /PRNewswire-FirstCall via COMTEX/ -- Intrepid Technology and Resources, Inc. (ITR) a renewable energy company (IESV, Trade) announces they have signed a letter of intent to initiate the design that will lead to the construction of their second Anaerobic digester and methane production facility. This renewable energy production plant will be built on a 6000 head dairy near Wendell, Idaho.

It is anticipated that the combination of this and the previously announced Whitesides Dairy facility will be capable of producing approximately 150 million cubic feet (150 billion BTUs of energy) per year -- or enough to supply the average energy needs of 1000 homes.

Besides the considerable economic benefits to be derived from this form of energy production, anaerobic digestion also produces large environmental benefits. These include significant reductions in "greenhouse gas" emissions, odors and the amount of phosphorus currently being released to the soil via land application of animal wastes. Control of phosphorous release is becoming an increasingly critical factor in the continued economic health of the dairy and cattle industries, and the reductions achieved through digestion will have a very positive impact on ensuring the future success of both.

ITR anticipates that the gas produced from the digestion process, which is "Green Energy", will be distributed in a number of potential value added forms ranging from commercial natural gas to liquid natural gas and propane replacement. Idaho alone uses nearly 18 million gallons of propane annually providing a potentially substantial and robust local market.

About Intrepid Technology: We are a premier technology applications innovator of Biogas, bio-diesel and Ethanol products and services designed to assist in national energy independence and reduced pollution. All of these "Green Energy" products are from renewable agriculture feedstock and industrial and agriculture waste materials.

Statements released by Intrepid Technologies and Resources that are not purely historical are forward looking within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, intentions and strategies for the future. Investors are cautioned that forward-looking statements involve risk and uncertainties that may affect the company's business prospects and performance. The company's actual results could differ materially from those in such forward-looking statements. Risk factors include but are not limited to general economic, competitive, governmental and technological factors as discussed in the company's filings with the SEC on Forms 10-K, 10-Q and 8-K. The company does not undertake any responsibility to update the forward-looking statements contained in this release.

SOURCE Intrepid Technology and Resources, Inc.

Steve Ellis of Intrepid Technology and Resources, Inc.,
+1-208-529-5337, sellis@intrepid21.com
(IESV)

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RESULTS OF OPERATIONS

REVENUE

Revenue for the second quarter of the fiscal year 2004 ended December 31, 2003 increased 21.9% to $630,473 compared to $517,390 for the three months ended December 31, 2002. The total revenue for six months ended December 31, 2003 also increased 23.39% to $1,434,411 compared to $1,162,503 in 2002. This increase was mainly attributed to additional engineering contracts performed during this three and six month period.

Throughout calendar year 2003 and 2002, the Company has managed an engineering services agreement with Idaho National Engineering and Environmental Laboratory ("INEEL") at Idaho Falls, Idaho, which constituted the majority of the Company's revenue. The Company's other primary customers were: Fluor Federal Services, Inc., Duratek, Argonne National Laboratory West, the Bureau of Land Management and the State of Idaho. Only INEEL provided more than ten percent of the total revenue recognized by the Company in 2003.

DIRECT OPERATING COSTS

Direct operating costs for the three months ending December 31, 2003 and 2002, were $350,076 and $378,439 respectively, representing a 7.5% decrease. For the six months ended December 31, 2003 direct operating costs also declined 11.2% to $844,651 from $951,703 in 2002. The Company made many efforts to reduce direct costs by using less subcontracted services, eliminating certain rental fees, closing the Montana and Washington offices, making better use of supplies, and exercising better management of direct payroll costs.

GROSS PROFIT

The Company had gross profit of $280,397 in the second quarter ended December 31, 2003 compared to $138,951 for the same quarter in 2002, representing a 101.8% increase. Similarly, for the six months ended December 31, 2003 gross profit increased by 180% to $589,760 compared to $210,800 for the same period in 2002. This increase in gross profit is a mark of increased sales and better management and utilization of available resources.

GENERAL SELLING AND ADMINISTRATIVE EXPENSES

For the three months ended December 31, 2003 general selling and administrative expenses were $264,227 compared to $108,475 for the same quarter ended December 31, 2002. This 144% increase was the result of increased sales and certain expenses increased significantly over the prior year due to an effort to as the Company continues to expand its operations. During the second quarter of the prior year some deferred compensation was reversed thereby reducing the total general selling and administrative expenses in that period.

For the six months ended December 31, 2003, general selling and administrative expenses increased 35.9% to $497,173 compared to $365,969 for the same period of 2002.

INTEREST EXPENSE

For the three months ended December 31, 2003 the Company had interest expense of $7,551 compared to $7,618 for the same period ending December 31, 2002. For the six months ended December 31, 2003 the Company had interest expense of $14,186 compared to $14,405 for the same period ending December 31, 2002. The interest expense was for interest paid on the bank line of credit and term loan with the 10% interest accrued on notes payable to officers and directors of the Company.

INCOME TAXES

The Company has established a valuation allowance for the deferred tax asset due to realization of uncertainties inherent with the limitations on utilization of acquired net operating loss carry forwards for tax purposes. The net change to the valuation allowance for 2003 was $0. The net operating loss carry forward was approximately $1,800,000 at December 31, 2003, and begins to expire in the year 2008. The amount of net operating loss carry forward expires $66,000 in 2008, $21,000 in 2018, $7,000 in 2019, $89,000 in 2020, $77,000 in 2021, and $1,371,000 in 2022 and $169,000 in 2023.

NET INCOME (LOSS)

For the three months ended December 31, 2003 the Company had a net income of $8,619 compared to $14,858 for the same period ended December 31, 2002. For the six months ended December 31, 2003 the Company had a net income of $53,975 compared to a loss of $99,770 for the same period ended December 31, 2002. In 2002, the majority of the loss was attributed to the ongoing merger costs and heavy general and administrative costs, which totaled $262,033. The revision of the report on Form 10-KSB/A for the year ended June 30, 2003 has since removed all goodwill and intangible assets, and therefore no other merger costs remain on the balance sheet to be amortized over future periods.

CAPITAL RESOURCES AND LIQUIDITY

The Company has made reasonable efforts to meet cash flow demands from ongoing operations and has improved its capital position over that of one year ago. The Company finished the second quarter ending December 31, 2003 with cash available of $50,427 compared to $33,722 for the same period of 2002. The Company believes that it will still be necessary to continue to supplement the cash flow from operations with the use of outside resources such as additional loans and possibly investment capital by issuance of debenture notes and preferred stock. As of December 31, 2003, the Company had a working capital deficit of $333,868 compared to a deficit of $356,018 for the same period ending December 31, 2002. The current ratio at December 31, 2003 was: .58:1 and .51:1 at December 31, 2002.

The Company has had ongoing capital-intensive engineering projects and continues to search for new investment capital through private preferred stock and debenture bonds to fund the start up of renewable energy projects. The Company believes that with new engineering and technical services contracts and prospects for bringing these renewable energy projects on line that it will be able to meet obligations as they become due. The Company is also continuing its aggressive collection of its accounts receivable. No receivables appear to be uncollectible.

The Company had an available line of credit of $200,000 of which $190,000 was converted to a term loan as of September 25, 2003. The term loan or note payable bears interest at the prime rate plus two percent and is secured by all business assets and personally guaranteed by the officers and key employees of the Company. As of December 31, 2003, the loan was in good standing. The Company also has shareholder notes payable from certain officers, employees or directors. The notes are unsecured demand notes. It is not anticipated by the Company that the notes will be called in the next year. The following are shareholder creditors to the company: The loans from Mr. Kenoyer of $22,415 and Mr. Dustin of $44,811 accrue interest at an annual rate of 10 percent payable on demand.

Access to Capital - Over the next twelve months the Company believes that it will be necessary to supplement the cash flow from operations with the use of outside resources such as additional loans and possibly investment capital by issuance of debenture notes or preferred stock.

Material Commitments for Capital Expenditures - The Company has no outstanding commitments at this time, though it anticipates purchase of engineering design hardware and software, additional computers, and office furniture to expand its operations. The Company also intends to purchase a proprietary process design for ethanol production. Source of funding for office-related expenses will come from ongoing operations generated by engineering services. The source of funding for proprietary design and potential acquisitions will be made by outside capital resources.

Seasonal Changes - The Company's operating revenue is generally not affected by seasonal changes.

RISK FACTORS

The Company's primary focus is obtaining permits and developing favorable properties for alternative and renewable energy production, and providing the associated engineering design and construction management services required to support the construction and operation of related facilities, and cannot provide any guarantees of profitability at this time. The Company will continue to expand its engineering services base, "work for others" to generate additional revenue to augment working capital requirements in support of its alternative and renewable energy efforts. The realization of profits is dependent upon successful execution of new business opportunities and the development of prototype digester models for renewable energy. The Company is dependent upon inducing larger companies or private investors to purchase these "turn-key" alternative renewable energy generation and production facilities. These projects when developed and depending on their success will be the future of the Company. The Company cannot give any reasonable assurance to their success.