Alkaline fuel cells specialist AFC Energy's pre-tax losses rose to £3.04m in the year to the end of October - up from £2.3m last time.
But the firm said it reduced the cost of its technology significantly to make its fuel cell system a commercially compelling proposition.
Chairman Tim Yeo said: "AFC is a much stronger company than a year ago. Progress has been made technically, commercially and financially. Experienced management has been recruited.
"We have added world-class partners and our financial position is sounder.
"This provides a strong platform from which to drive forward our projects and begin to deliver on our potential.
"AFC invoiced its first commercial revenue during the year.
"The board expects that these revenues will increase through 2011 and 2012.
At 9:59am (LON:AFC) share price was +0.88p at 58p