Beacon Power Corporation (Nasdaq:BCOND), a leading provider of
advanced products and services to support a more stable, reliable
and efficient electricity grid, announced its financial results for
the fourth quarter and fiscal year ended December 31, 2010.
In Fiscal Year 2010, the Company
accomplished the following:
Relating to Stephentown
- Completed construction of a significant portion of the 20 MW
flywheel energy storage plant in Stephentown, NY. Beacon began
earning revenue on 8 MW of frequency regulation capacity in January
2011. Currently, Beacon has energized, interconnected and is
earning revenue from 14 MW of capacity and anticipates that all 20
MW will be online and earning revenue during the second quarter of
2011.
- Actively promoted the adoption of performance-based payments
for fast-response systems. On February 17, 2011, the Federal Energy
Regulatory Commission issued a Notice of Proposed Rulemaking that
we expect will result in pay-for-performance tariffs in the
open-bid electricity markets, which in turn will increase revenue
from the Company's merchant regulation plants.
- Signed a $43 million loan agreement at favorable interest rates
which was guaranteed by the U.S. Department of Energy, and
received loan proceeds of $22.2 million.
- Was awarded a $2 million grant from New York State Energy
Research and Development Authority (NYSERDA) that provides funding
for a portion of Stephentown interconnection costs as well as other
NYSERDA grant milestones.
Relating to Other Plants and Facilities
- Continued activities related to site selection for additional
merchant plants, including a 20 MW plant in Hazle Township,
Pennsylvania, for which the Company has been awarded a $24 million
DOE Smart Grid stimulus grant. Activities included obtaining site
control, applying for interconnection, and completing system impact
studies and an environmental assessment.
- Increased marketing efforts to domestic and foreign utilities
that lack open-bid markets, with the objective of selling flywheel
plants on a turnkey basis.
Relating to Parent Company
- Signed a $2.25 million two-year ARPA-E contract in support of
developing a next-generation flywheel energy storage system.
- Continued to operate and earn revenue from up to 3 MW of
frequency regulation capacity under the ISO-NE regulation pilot
program.
- Raised approximately $8.7 million through the sale of
convertible preferred stock, preferred stock warrants and common
stock warrants, $2.3 million from the sale of stock to investors,
and $5.9 million from warrant exercises.
Summary of Financial Results
For the fiscal year ended December 31, 2010, Beacon Power
reported revenue of $896,000 and a net loss of $22.7 million, or
($1.19) per share, compared with revenue of $968,000 in 2009 and a
net loss of $19.1 million, or ($1.56) per share. These results have
been restated to reflect the 1-for-10 reverse stock split effective
February 25, 2011. For the fourth quarter of 2010, the Company
reported revenue of $370,000 and a net loss of $6.1 million, or
($0.29) per share, compared to revenue of $303,000 and a net loss
of $4.7 million, or ($0.31) per share, for the fourth quarter of
2009.
Revenue and Gross Margin
Frequency regulation revenue earned in 2010 through our
participation in the ISO-NE pilot program increased by $87,000, or
30%, over 2009 levels, due to increased capacity. Contract and
grant revenue decreased by $213,000, or 32%, in 2010 as compared to
2009. Other revenue increased by approximately $54,000. For the
fourth quarter of 2010, Beacon earned revenue of $370,000, as
compared to $303,000 in the fourth quarter of 2009.
Beacon's frequency regulation revenue decreased by $75,000, or
70%, during the fourth quarter of 2010 as compared to the fourth
quarter of 2009. This was due to the Company's transfer of 2 of the
3 MW of capacity from the ISO-NE pilot program to its Stephentown
site, combined with lower average regulation clearing prices than
during the prior year. Contract revenue increased by $128,000 due
to revenue earned from a grant from NYSERDA.
Beacon earned a gross margin of $356,000 for the year ended
December 31, 2010, compared to a negative gross margin of $23,000
for 2009. Gross margin for the fourth quarter of 2010 was $204,000,
compared to $16,000 in the fourth quarter of 2009. The gross margin
improvement is attributed to a change in the way energy costs are
calculated for the ISO-NE pilot program, the NYSERDA grant and
lower-than-expected costs on one of its research and development
contracts.
Operating Expenses
During the fourth quarter of 2010, Beacon Power
incurred operations and maintenance expenses of $1.6 million,
compared to $0.8 million in the fourth quarter of 2009. The
increase was due primarily to amounts Beacon was billed by NYSEG
for changes required to their substation, which are loan-eligible
expenses under the Stephentown loan. Research and development
expenses were $1.2 million during the fourth quarter of 2010,
compared to $1.5 million in the fourth quarter of 2009. Selling,
general and administrative expenses were $2.7 million in the fourth
quarter of 2010, compared to $1.7 million in the fourth quarter of
2009. The increase was due to direct costs associated with the
Company's preferred stock offering in December. Total operating
expenses for the three months ended December 31, 2010, were $6.1
million, compared to $4.6 million for the same period in 2009.
Operations and maintenance expenses were $3.6 million during the
fiscal year ended December 31, 2010, compared to $2.9 million in
the fiscal year ended December 31, 2009. Research and development
expenses were $6.7 million in 2010 compared to $6.8 million in
2009. Selling, general and administrative expenses in 2010 were
$9.3 million, compared to $7.1 million in the prior-year period.
Loss on contract commitments was $1 million for 2010, compared to
$0.2 million in 2009, due primarily to the cost share associated
with the ARPA-E contract. Total operating expenses for the fiscal
year ended December 31, 2010, were $22.7 million, compared to $18.9
million in 2009.
Cash and Fundraising Activities
Net cash used in operating activities decreased from $16.7
million in 2009 to $15.6 million in 2010. Net cash used in
investing activities increased from $7.4 million in 2009 to $33.5
million in 2010. This was primarily due to the purchase and
construction of property and equipment of approximately $29.8
million along with an increase in restricted cash of approximately
$3.0 million related to the Stephentown project. Cash provided by
financing activities increased from $32.4 million in 2009 to $37.4
million in 2010. Cash received from financing activities in 2010
included $22.2 million from the DOE-guaranteed loan, $8.3 million
from the sale of Company stock and warrant exercises and $10
million from the sale of Series B convertible preferred stock and
associated warrants. These proceeds were partially offset by $0.7
million in loan repayments to MassDevelopment and $2.3 million paid
for financing costs associated with the DOE loan.
As of December 31, 2010, the Company had cash and cash
equivalents of $10.9 million, as compared to $22.6 million at the
end of 2009, and working capital of $(8.8) million at December 31,
2010, as compared to $18.4 million at December 31, 2009. Working
capital as of the end of 2010 is negative largely due to the
accounting treatment required for the preferred stock, preferred
warrants and common stock warrants that were issued in December
2010, which required the Company to record these instruments as
liabilities at fair value. However, Beacon expects these
liabilities to be settled in common stock rather than cash. The
other factor impacting the Company's working capital relates to the
timing of disbursements from the DOE loan. The Company is only able
to draw on this loan once per month, and at any given point in time
its liabilities may include a substantial amount that it will be
able to include in future loan draws.
Beacon will need to raise additional funds through
a combination of equity, project financing and/or grants to execute
its business plan and continue as a going concern. As in each of
the past several years, because of the continued uncertainty of
successfully completing the required financing, the Company's
independent registered public accounting firm has maintained an
explanatory paragraph related to a going concern uncertainty in
their Audit Report on the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2010.
Conference Call Details
The Company will host a conference call today, March 16, 2011,
at 11:00 a.m. Eastern Time. During the call, Bill Capp, Beacon
Power president and CEO, and Jim Spiezio, CFO, will review the
Company's operations and results, followed by a question and answer
session. Beacon Power invites all those interested in hearing
management's discussion to join the call by dialing 708-290-1368
and entering participant access code 48116871 when prompted. A live
webcast of the call will also be available via the Company's
website, at www.beaconpower.com. Please connect at least 15 minutes
prior to the webcast to ensure adequate time for any software
download that may be needed.
A replay of the event will be available two hours after its
completion, and for seven days following the call, by dialing
706-645-9291 and entering access code 48116871 when prompted. The
webcast will also be archived on the Beacon website at
www.beaconpower.com.
About Beacon Power
Beacon Power Corporation designs, develops and commercializes
advanced products and services to support stable, reliable and
efficient electricity grid operation. The Company's primary
business strategy is to build merchant plants and sell turnkey
regulation facilities to meet both domestic and international grid
requirements using its patented flywheel energy storage technology.
Beacon's Smart Energy Matrix, which is now in production, operating
and earning revenue, is a non-polluting, megawatt-level,
utility-grade flywheel-based solution to provide sustainable
frequency regulation services. Beacon is a publicly traded company
with its research, development and manufacturing facility in the
U.S. For more information, visit www.beaconpower.com.
Safe Harbor Statements under the Private Securities
Litigation Reform Act of 1995:
The Material contained in this press release may include
statements that are not historical facts and are considered
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements reflect Beacon Power Corporation's current views about
future events, financial performances, and project development.
These "forward-looking" statements are identified by the use of
terms and phrases such as "will," "believe," "expect," "plan,"
"anticipate," and similar expressions identifying forward-looking
statements. Investors should not rely on forward-looking statements
because they are subject to a variety of risks, uncertainties, and
other factors that could cause actual results to differ materially
from Beacon's expectation. These factors include: a short operating
history; a history of losses and anticipated continued losses from
operations; the complexity and other challenges of arranging
project financing and resources for one or more frequency
regulation power plants, including uncertainty about whether we
will be able to comply with the conditions or ongoing covenants of
the Federal Financing Bank loan for our Stephentown, New York,
facility; our need to comply with any disbursement or other
conditions under the DOE Smart Grid grant program; a need to raise
additional equity to fund Beacon's projects and our other
operations in uncertain financial markets; conditions in target
markets, such as that some ISOs are taking longer than others to
comply with FERC's requirement to update market rules to include
new technology such as ours, and also such as that frequency
regulation pricing is lower in the short-term than at many times in
the past; our ability to obtain site interconnection approvals,
landlord approvals, or other zoning and construction approvals in a
timely manner; limited experience manufacturing commercial products
or supplying frequency regulation services on a commercial basis;
limited commercial contracts for revenues to date; the dependence
of revenues on the achievement of product optimization,
manufacturing and commercialization milestones; dependence on
third-party suppliers; intense competition from companies with
greater financial resources, especially from companies that are
already in the frequency regulation market; possible government
regulation that would impede the ability to market products or
services or affect market size; possible product liability claims
and the negative publicity which could result; any failure to
protect intellectual property; retaining key executives and the
possible need in the future to hire and retain key executives; the
historical volatility of our stock price, as well as the volatility
of the stock price of other companies in the energy sector,
especially in view of current conditions in the financial markets
generally. These factors are elaborated upon and other factors may
be disclosed from time to time in Beacon Power filings with the
Securities and Exchange Commission.
Beacon Power expressly does not undertake any duty to update
forward-looking statements.
|
|
BEACON POWER
CORPORATION AND SUBSIDIARIES |
|
CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
|
December 31, |
December 31, |
|
|
2010 |
2009 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 10,865,760 |
$ 22,605,147 |
|
Accounts receivable, trade |
279,376 |
46,907 |
|
Unbilled costs on government
contracts |
66,725 |
577,356 |
|
Prepaid expenses and other current
assets |
725,862 |
636,887 |
|
Total current assets |
11,937,723 |
23,866,297 |
|
|
|
|
|
Property and equipment, net |
56,192,205 |
24,373,941 |
|
Restricted cash |
3,228,933 |
212,557 |
|
Deferred financing costs |
3,496,120 |
1,198,873 |
|
Advance payments to suppliers |
851,984 |
235,879 |
|
Other Assets |
230,270 |
114,933 |
|
Total assets |
$ 75,937,235 |
$ 50,002,480 |
|
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 6,172,210 |
$ 1,154,613 |
|
Accrued compensation and benefits |
1,205,071 |
1,764,053 |
|
Other accrued expenses |
4,260,769 |
1,543,507 |
|
Advance billings on contracts |
26,409 |
35,418 |
|
Accrued contract loss |
1,045,545 |
257,698 |
|
Deferred rent - current |
164,308 |
138,558 |
|
Current portion of long term debt |
661,215 |
608,105 |
|
Mandatorily redeemable convertible
preferred stock |
2,900,170 |
-- |
|
Preferred warrant liability -
current |
1,009,388 |
-- |
|
Common stock warrant liability |
3,242,600 |
-- |
|
Total current liabilities |
20,687,685 |
5,501,952 |
|
Long term liabilities: |
|
|
|
Lease liability - long term |
582,210 |
746,518 |
|
Long term debt, net of discount |
25,169,568 |
3,676,569 |
|
Preferred stock warrant liability - long
term |
864,012 |
-- |
Total long term liabilities |
26,615,790 |
4,423,087 |
Stockholders' equity: |
|
|
|
Common stock |
209,675 |
1,716,416 |
|
Additional paid-in-capital |
257,772,383 |
245,029,557 |
|
Deficit accumulated during the
development stage |
(228,635,459) |
(205,955,693) |
|
Less: treasury stock, at cost |
(712,839) |
(712,839) |
|
Total stockholders' equity |
28,633,760 |
40,077,441 |
|
|
|
|
|
Total liabilities and stockholders'
equity |
$ 75,937,235 |
$ 50,002,480 |
|
|
|
BEACON POWER
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
Three months ended
December 31, |
Year ended December
31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Revenue |
$ 370,328 |
$ 302,685 |
$ 895,703 |
$ 968,421 |
Cost of goods sold |
166,075 |
286,961 |
539,749 |
991,481 |
Gross profit |
204,253 |
15,724 |
355,954 |
(23,060) |
Operating expenses: |
|
|
|
|
Operations and maintenance |
1,604,413 |
764,112 |
3,589,990 |
2,931,315 |
Research and development |
1,217,621 |
1,493,413 |
6,688,609 |
6,796,025 |
Selling, general and administrative |
2,740,313 |
1,759,549 |
9,301,008 |
7,115,905 |
Loss on sales and contract
commitments |
-- |
106,062 |
970,836 |
238,562 |
Depreciation and amortization |
522,485 |
493,625 |
2,113,753 |
1,839,164 |
Total operating expenses |
6,084,832 |
4,616,761 |
22,664,196 |
18,920,971 |
|
|
|
|
|
Loss from operations |
(5,880,579) |
(4,601,037) |
(22,308,242) |
(18,944,031) |
Other income (expense), net |
(169,465) |
(60,741) |
(371,524) |
(116,455) |
|
|
|
|
|
Net loss |
$ (6,050,044) |
$ (4,661,778) |
$ (22,679,766) |
$ (19,060,486) |
|
|
|
|
|
Loss per share, basic and diluted |
$ (0.29) |
$ (0.31) |
$ (1.19) |
$ (1.56) |
Weighted-average common shares
outstanding |
20,067,791 |
14,102,353 |
19,003,001 |
12,220,078 |
CONTACT: Chris Witty
Darrow Associates
646.438.9385
cwitty@darrowir.com
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