FOR IMMEDIATE RELEASE
Contact: Beacon Power Corporation
978-694-9121
James Spiezio
spiezio@beaconpower.com
Gene Hunt
hunt@beaconpower.com
BEACON POWER ANNOUNCES FOURTH-QUARTER,
FISCAL YEAR 2005 RESULTS
WILMINGTON, Mass. – March 30, 2006 -- Beacon Power Corporation (NASDAQ: BCON), a development stage company that designs and develops advanced products and services to support more stable and reliable electricity grid operation, announced its financial results for the fourth quarter and fiscal year ended December 31, 2005.
For the fiscal year ended December 31, 2005, Beacon Power reported a net loss of $9.3 million, or ($0.20) per share, compared with a net loss in 2004 of $5.3 million, or ($0.12) per share. The higher loss in 2005 is attributable to the non-recurring gain on the sale of equity investments in Evergreen Solar, Inc., of $3.6 million in 2004, as well as higher spending in 2005 on several research and development contracts and nonrecurring expenses of $1.3 million relating to a proposed acquisition that was terminated.
For the fourth quarter of 2005, the Company reported a net loss of $3.2 million, or ($0.06) per share, compared to net income of $0.9 million, or $0.02 per share, for the fourth quarter of 2004. This result is also primarily attributable to the nonrecurring gain on the sale of equity investments in Evergreen Solar, Inc., which were reported in the fourth quarter of 2004.
At December 31, 2005, the Company had $13.9 million in cash and cash equivalents, compared to $5.1 million at December 31, 2004. The Company’s working capital was $13.2 million. In 2005, the Company raised approximately $17 million through new investment. These funds will be used to develop and test its next-generation flywheel system, as well as begin development on the full-scale Smart Energy Matrix that is expected to provide frequency regulation services on the electricity grid.
The Company’s cash and cash equivalents at December 31, 2005, will support its business plan into the first quarter of 2007. The Company continues to incur losses, and will require further equity investments to continue as a going concern. Because there is no certainty of Beacon
successfully completing the required financing, the Company’s independent registered public accounting firm has inserted an explanatory paragraph related to a going concern uncertainty into their Audit Report on the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. The Company is pursuing various equity investments to alleviate these concerns.
The Company’s key milestones achieved during 2005 included the following:
• | Obtained research and development contracts with two major state agencies to demonstrate the Company’s flywheel-based energy storage systems for frequency regulation of the electricity grid |
• | Obtained a contract from the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense for the preliminary design of a space-based flywheel energy storage system for satellite applications |
• | Maintained ongoing efforts to seek additional contracts to develop other products and applications based on the Company’s patented flywheel technology |
• | Delivered the first scale-power Smart Energy Matrix for demonstration in California |
• | Raised $17 million to fund operations and complete development of the next-generation flywheel |
“2005 was a great year for Beacon Power in terms of the progress we made toward commercialization of our flywheel systems for frequency regulation,” said Bill Capp, Beacon Power president and chief executive officer. “We signed several significant development contracts, designed and delivered our first demonstration system, and made substantial progress on the second system. Our plan to design, build, own and operate multiple 20-megawatt flywheel frequency regulation plants and generate long-term revenues from the services is based in part on what we’ll learn from these demonstrations. Indeed, they provide invaluable opportunities to accelerate our progress toward larger-scale commercialization of high-energy flywheels for frequency regulation.”
“In 2006, we expect to design and build our first 25kWh flywheel, which will be the core component of our Smart Energy Matrix,” Capp continued. “We are hiring experienced engineers and other staff to help us complete this effort on schedule. We will also continue to pursue additional contracts, strengthen our relationships with grid operators, utilities and other potential partners, and identify new markets for our patented energy storage technologies.”
About Beacon Power Corporation
Beacon Power Corporation designs sustainable energy storage and power conversion solutions that would provide reliable electric power for the utility, renewable energy, and distributed generation markets. Beacon’s Smart Energy Matrix is a design concept for a megawatt-level, utility-grade flywheel-based energy storage solution that would provide sustainable power quality services for frequency regulation, and support the demand for reliable, distributed electrical power. Beacon is a publicly traded company with its research, development and manufacturing facility in the U.S.
For more information, please contact James Spiezio, Chief Financial Officer at Beacon Power Corporation, tel. 978.694.9121; fax 978.694.9127; email spiezio@beaconpower.com, or send mail to 234 Ballardvale Street, Wilmington, MA 01887. Visit Beacon Power at www.beaconpower.com
Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995:
Material contained in this press release may include statements that are not historical facts and are considered “forward-looking” 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 and financial performances. These forward-looking statements are identified by the use of terms and phrases such as “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 Power Corporation’s expectation. These factors include: a short operating history; a history of losses and anticipated continued losses from operations; a need to raise additional capital combined with a questionable ability to do so; conditions in target markets; no experience manufacturing any product or supplying frequency regulation services on a commercial basis; limited commercial contracts for sales to date; the dependence of sales on the achievement of product development and commercialization milestones; the uncertainty of the political and economic climate of any foreign countries into which Beacon hopes to sell or in which it operates, including the uncertainty of enforcing contracts and the potential substantial fluctuation in currency exchange rates in those countries; significant technological challenges to successfully complete product development; dependence on third-party suppliers; intense competition from companies with greater financial resources; possible government regulation that would impede the ability to market products; possible product liability claims and the negative publicity which could result; any failure to protect intellectual property; the possible need in the future to hire and retain key executives, particularly in light of the substantial workforce reductions during 2001 and 2002; the recent volatility in the stock price of companies operating in the same sector; These factors are elaborated upon and other factors may be disclosed from time to time in Beacon Power Corporation’s filings with the Securities and Exchange Commission. Beacon Power Corporation expressly does not undertake any duty to update forward-looking statements.
BEACON POWER CORPORATION AND SUBSIDIARY |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
| | | | | | | | | | | |
| | | | | Three months ended December 31, | | Twelve months ended December 31, |
| | | | | 2005 | | 2004 | | 2005 | | 2004 |
| | | | | | | | | | | |
Revenue | | 228,756 | | 59,901 | | 1,487,258 | | 324,694 |
Cost of goods sold | | 223,222 | | 94,299 | | 1,575,240 | | 1,457,869 |
Gross profit | | 5,534 | | (34,398) | | (87,982) | | (1,133,175) |
| | | | | | | | | | | |
Operating expenses: | | | | | | | | |
| Selling, general and administrative | | 2,203,945 | | 868,252 | | 6,334,219 | | 4,196,371 |
| Research and development | | 414,000 | | 789,394 | | 1,408,233 | | 3,532,059 |
| Loss on contract commitments | | 477,732 | | - | | 1,534,298 | | - |
| Depreciation and amortization | | 20,928 | | 57,051 | | 83,031 | | 187,230 |
| | | Total operating expenses | | 3,116,605 | | 1,714,697 | | 9,359,781 | | 7,915,660 |
| | | | | | | | | | | |
Loss from operations | | (3,111,071) | | (1,749,095) | | (9,447,763) | | (9,048,835) |
| | | | | | | | | | | |
Other income, net | | (47,809) | | 14,115 | | 135,659 | | 156,293 |
Gain on sale of equity investments | | - | | 2,674,747 | | - | | 3,562,582 |
Loss to common shareholders | | $ (3,158,880) | | $ 939,767 | | $ (9,312,104) | | $ (5,329,960) |
| | | | | | | | | | | |
Loss per share, basic and diluted | | $ (0.06) | | $ 0.02 | | $ (0.20) | | $ (0.12) |
Weighted-average common shares outstanding | | 54,364,893 | | 43,702,485 | | 47,665,868 | | 43,452,727 |
BEACON POWER CORPORATION AND SUBSIDIARY |
CONSOLIDATED BALANCE SHEETS |
| | | | | | |
| | | | December 31, | | December 31, |
| | | | 2005 | | 2004 |
Assets | | | | |
Current assets: | | | | |
| Cash and cash equivalents | | $ 13,890,162 | | $ 5,097,188 |
| Accounts receivable, trade | | 588,440 | | 52,105 |
| Inventory | | - | | 222,593 |
| Unbilled costs on contracts in process | | 437,759 | | - |
| Prepaid expenses and other current assets | | 777,385 | | 817,396 |
| | Total current assets | | 15,693,746 | | 6,189,282 |
| | | | | | |
Property and equipment, net | | 212,296 | | 258,647 |
Restricted cash | | 219,568 | | 310,011 |
Other assets | | - | | 327,646 |
Total assets | | $ 16,125,610 | | $ 7,085,586 |
| | | | | | |
Liabilities and Stockholders' Equity | | | | |
Current liabilities: | | | | |
| Accounts payable | | $ 137,290 | | $ 389,189 |
| Accrued compensation and benefits | | 151,318 | | 130,609 |
| Other accrued expenses | | 844,742 | | 393,569 |
| Advance billings on contracts | | 74,820 | | - |
| Accrued contract loss | | 548,614 | | - |
| Restructuring reserve | | 713,469 | | 1,062,644 |
| | Total current liabilities | | 2,470,253 | | 1,976,011 |
| | | | | | |
Stockholders' equity: | | | | |
| Common stock | | 587,000 | | 437,888 |
| Deferred stock compensation | | (1,063,145) | | (707,167) |
| Additional paid-in-capital | | 153,089,842 | | 134,411,911 |
| Deficit accumulated during the development stage | (138,245,501) | | (128,933,397) |
| Treasury stock, at cost | | (712,839) | | (99,660) |
| | Total stockholders' equity | | 13,655,357 | | 5,109,575 |
Total liabilities and stockholders' equity | | $ 16,125,610 | | $ 7,085,586 |
