Beacon Power Announces Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091104006363/en

TYNGSBORO, Mass.--(Business Wire)--
Beacon Power Corporation (NASDAQ: BCON)

Recent Highlights

* In July, the Company began operating a second megawatt (MW) of flywheel-based
frequency regulation capacity at its facility in Tyngsboro, Massachusetts. This
is in addition to its first MW, which has been in operation since November,
2008.
* In 2009, $11.9 million net of expenses was raised from the sale of stock.
* The New York State Public Service Commission granted the Company a Certificate
of Public Convenience and Necessity (CPCN) for its proposed 20 MW flywheel
frequency regulation plant in Stephentown, NY, and approved the project`s
overall financing.
* Net loss from operations for the third quarter of 2009 was 27% lower than in
the third quarter of 2008.

Beacon Power Corporation, a development-stage company that designs and develops
advanced products and services to support more stable, reliable and efficient
electricity grid operation, announced its financial results for the third
quarter ended September 30, 2009.

Financial Results

For the third quarter of 2009, Beacon Power reported revenue of $273,000 and a
net loss of $4,092,000, or ($0.03) per share, compared to revenue of $4,000 and
a net loss of $5,621,000, or ($0.06) per share, in the third quarter of 2008.
For the nine months ended September 30, 2009, the Company reported revenue of
$666,000 and a net loss of $14,399,000, or ($0.12) per share, compared to
revenue of $53,000 and a net loss of $16,340,000, or ($0.18) per share, for the
same period ended September 30, 2008.

During the first nine months of 2009, Beacon earned revenue from frequency
regulation service provided through an ISO New England pilot program that began
in November 2008, and from its research and development contracts. Revenue
earned during the equivalent period of 2008 was primarily derived from the sale
of solar inverters and related products and from its research and development
contracts. Cost of goods sold increased from approximately $10,000 in the first
nine months of 2008 to approximately $705,000 during the equivalent period of
2009. Beacon`s average gross margin for frequency regulation services during the
third quarter of 2009 was 22.2% on revenue of $63,000. Cost of energy during
that period totaled $49,000, of which $35,000, or 71%, represents retail
transmission and distribution charges. Pro forma gross margin calculated without
transmission or distribution charges would be approximately 80%. Because the
Company`s proposed Stephentown facility will be connected to the grid at the
transmission level, it will not incur such charges.

During the first quarter of 2009, Beacon began to classify as "Operations and
Maintenance" on its income statement expenses related to the manufacturing,
materials handling and procurement functions, Smart Energy Matrix operations,
and expensed non-fungible costs associated with its flywheel installations.
Prior to 2009, such expenses were included under "Research and Development." On
a combined basis, Operations and Maintenance and Research and Development
expenses for the quarter ended September 30, 2009, were $2,247,000, compared to
$3,535,000 in the third quarter of 2008, a decrease of $1,288,000 or 36.4%. For
the nine months ended September 30, 2009, Operations and Maintenance and
Research and Development costs were $7,470,000, as compared to $9,571,000 in the
comparable period in 2008. This represents a decrease of $2,101,000, or 22%, on
a year-to-date basis. The reduction in costs was attributable to greater
absorption of overhead, lower legal and occupancy and other costs, as well as
lower stock-based compensation expense, partially offset by higher labor and
contractor costs in certain areas.

Selling, general and administrative expenses were $1,463,000 during the third
quarter of 2009, compared to $1,805,000 in the third quarter of 2008, a decrease
of $342,000, or approximately 19%. For the nine month period ended September 30,
2009, selling, general and administrative expenses decreased by $753,000, or
12%, from $6,109,000 in 2008 to $5,356,000 in 2009. This decrease is due
primarily to lower stock-based compensation, legal, consulting and other costs,
partially offset by higher public company expenses and labor costs.
Additionally, depreciation expense in the third quarter of 2009 increased by
$145,000 compared to the third quarter of 2008, and by $419,000 year to date.
This increase is primarily from capital expenditures relating to leasehold
improvements at our new manufacturing and office facility in Tyngsboro, the
purchase of machinery and equipment required to begin commercial production, and
depreciation on the two MW of frequency regulation capacity in service as of the
end of the third quarter of 2009.

At September 30, 2009, the Company had $4.3 million in cash and cash
equivalents.

About Beacon Power

Beacon Power Corporation designs, develops and is taking steps to commercialize
advanced products and services to support stable, reliable and efficient
electricity grid operation. The Company`s primary business strategy is to
commercialize its patented flywheel energy storage technology to perform
frequency regulation services on the grid. Beacon`s Smart Energy Matrix, which
is now in production, 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;
uncertainties relating to the success of Beacon`s DOE grant proposals; 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 successful in finalizing the DOE loan guarantee support for
our New York facility, or complying with the conditions or ongoing covenants of
that support; a need to raise additional equity to fund the project and Beacon`s
other operations in uncertain financial markets; conditions in target markets,
including the fact that some ISOs have been slow to comply with FERC`s
requirement to update market rules to include new technology such as the
Company`s; 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; the uncertainty of
the political and economic climate, and the different electrical grid
characteristics and requirements of any foreign countries into which we hope to
sell or operate, including the uncertainty of enforcing contracts, the different
market structures, and the potential substantial fluctuation in currency
exchange rates in those countries; 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 the current situation 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

September 30, December 31,
2009 2008
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 4,335,289 $ 14,357,475
Accounts receivable, trade 46,320 11,840
Unbilled costs on government contracts 386,705 16,804
Prepaid expenses and other current assets 381,800 880,729
Total current assets 5,150,114 15,266,848

Property and equipment, net 24,119,619 23,027,909
Restricted cash 207,552 205,020
Deferred financing and other assets 1,542,902 96,033
Total assets $ 31,020,187 $ 38,595,810

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,107,711 $ 3,825,520
Accrued compensation and benefits 1,613,506 1,410,038
Other accrued expenses 1,588,963 3,253,407
Advance billings on contracts 34,727 10,811
Accrued contract loss 201,268 132,526
Deferred rent - current 132,121 112,808
Current portion of long term debt 576,283 117,023
Total current liabilities 5,254,579 8,862,133
Long term liabilities:
Lease liability - long term 785,986 885,076
Long term debt, net of discount 2,811,650 3,237,061
Total long term liabilities 3,597,636 4,122,137
Stockholders' equity:
Common stock 1,271,766 1,074,332
Additional paid-in-capital 222,902,960 212,145,254
Deficit accumulated during the development stage (201,293,915 ) (186,895,207 )
Less: treasury stock, at cost (712,839 ) (712,839 )
Total stockholders' equity 22,167,972 25,611,540

Total liabilities and stockholders' equity $ 31,020,187 $ 38,595,810

BEACON POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended September Nine months ended September
30, 30,
2009 2008 2009 2008

Revenue $ 273,096 $ 4,390 $ 665,736 $ 52,782
Cost of goods sold 246,844 5,763 704,520 9,935
Gross profit 26,252 (1,373 ) (38,784 ) 42,847
Operating expenses:
Operations and maintenance 621,109 -- 2,167,203 --
Research and development 1,625,910 3,535,096 5,302,613 9,570,674
Selling, general and administrative 1,463,545 1,804,595 5,356,356 6,108,836
Loss on sales and contract commitments -- -- 132,500 86,601
Depreciation and amortization 479,121 334,236 1,345,539 927,455
Total operating expenses 4,189,685 5,673,927 14,304,211 16,693,566
Loss from operations (4,163,433 ) (5,675,300 ) (14,342,995 ) (16,650,719 )
Other income (expense), net 71,352 54,568 (55,713 ) 310,814
Loss to common shareholders $ (4,092,081 ) $ (5,620,732 ) $ (14,398,708 ) $ (16,339,905 )

Loss per share, basic and diluted $ (0.03 ) $ (0.06 ) $ (0.12 ) $ (0.18 )
Weighted-average common shares outstanding 122,929,999 88,754,642 115,857,585 88,711,837

Beacon Power Corporation
James Spiezio, 978-694-9121
spiezio@beaconpower.com
or
Gene Hunt
hunt@beaconpower.com

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