Beacon Power Corp. (BCON, Financial) filed Quarterly Report for the period ended 2011-06-30.
Beacon Power Corp. has a market cap of $22.7 million; its shares were traded at around $0.9298 with and P/S ratio of 25.3.
In September 2010, we finalized a contract with the DOEs Advanced Research Projects Agency Energy (ARPA-E) to develop critical components of a highly-advanced flying ring flywheel energy storage system over a two year period. ARPA-E is an agency within DOE that provides R&D funding for transformational new energy technologies and systems. The award is valued at a total of $2.8 million. ARPA-E grant recipients share a portion of the program cost, and we would contribute a minimum of $560,000, or 20%, of the $2.8 million program total. The actual contract net cost is expected to be higher due to the difference between the contract and our GAAP overhead rates. Our proposal calls for initiating development of a next-generation flywheel energy storage module with a size of 100kWh and 100kW, capable of storing four times the energy at one-eighth the cost-per-energy-unit, as compared to our current Gen 4 flywheel. The new flywheel would be capable of more than 40,000 full charge/discharge cycles in its lifetime, thereby achieving a cost per storage cycle below ARPA-Es goal of $0.025/kWh. If we are successful in developing the initial design, additional effort would be required before this new flywheel could be commercialized.
On May 24, 2010, we announced that we signed a contract with the New York State Energy Research and Development Authority (NYSERDA) relating to a $2 million grant. This grant will provide $1.5 million to pay for a portion of the interconnection and other aspects of the Stephentown facility, which is being accounted for as a reduction of eligible project costs on a percentage-of-completion basis; $100,000 for a visitor information center at the Stephentown site; and $400,000 for other project tasks not specifically related to SRS project costs, which is being accounted for as grant revenue, also on a percentage-of-completion basis.
On December 23, 2010, we sold 10,000 units of the Company for net proceeds of approximately $8.7 million. Each Unit sold consisted of (i) one share of our Series B mandatorily redeemable convertible preferred stock, par value $0.01 per share (the preferred stock), (ii) a warrant to purchase 0.5 of a share of preferred stock (the preferred warrant) and (iii) a warrant to purchase 445.827 shares of common stock, together with any associated rights (the common warrant, and together with the preferred warrants, the warrants), at a price to the public of $1,000 per unit, less issuance costs. The shares of preferred stock, the preferred warrants and the common warrants were immediately exercisable and were issued separately. During the first half of 2011, all of the preferred warrants were exercised (providing cash proceeds of $5 million), and a substantial number of the preferred shares were voluntarily converted to common stock by the investors or redeemed as scheduled. We have accounted for these securities as liabilities at fair value. Consequently, as a result of these conversion/redemption activities, we have recorded significant non-cash losses, which are partially offset by non-cash interest income related to these securities during the first half of 2011.
In November 2009, the DOE announced that it had awarded us a Smart Grid Stimulus Grant valued at $24 million, for use in construction of a second 20 MW flywheel energy storage plant. The award provides funds to design, build, test, commission and operate a 20 MW flywheel energy storage frequency regulation plant in the PJM Interconnection region. We are planning to build this facility on a property in Hazle Township, Pennsylvania, for which we have entered into an option agreement with an economic development agency in the state. Under the terms of this two-year option, we are paying $2,500 for each of four six-month option periods, or until the option is converted to a lease. The option allows us to lease the property for 21 years at the rate of $3,250 per month. The site covered by this option is located in an economic development zone, which provides an exemption from the payment of state sales tax on equipment used to build the plant and an exemption from property taxes through 2017. We have filed for interconnection, and have completed the system impact study and an environmental assessment for this site.
Since our inception in 1997, we have funded our development primarily through the sale of common stock. In November 2000, we completed our initial public offering, raising approximately $49.3 million net of offering expenses. Since our initial public offering, we have raised approximately $125.0 million as of June 30, 2011, through the sale of our stock and exercise of warrants related to those stock sales. In December 2010, we raised approximately $8.7 million, net of offering costs, from the sale of mandatorily redeemable convertible preferred stock and associated preferred and common warrants. During the first half of 2011, we raised $6.5 million from the exercise of preferred and common warrants. We estimate that we will need to raise approximately $5 to $10 million in order to fund operations into the second quarter of 2012. In addition to the DOE grant, we will need to raise an additional $29 million from a combination of project finance and equity to be able to order long-lead items and begin construction of our second merchant plant in Hazle Township. In December 2010, the prior administration submitted for final approval a $5 million Redevelopment Assistance Capital Program (RACP) grant from the Commonwealth of Pennsylvania for the construction of a 20 MW frequency regulation plant. However, this grant has not been finalized, and may not be finalized, due to budgetary considerations. If it is finalized, it will reduce the funds we need to raise to complete this project by $5 million. The DOE grant will provide $24 million of the estimated $53 million cost of the Hazle Township plant.
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Beacon Power Corp. has a market cap of $22.7 million; its shares were traded at around $0.9298 with and P/S ratio of 25.3.
Highlight of Business Operations:
On February 28, 2011, we announced we had signed a lease agreement with NorthWestern Corporation d/b/a NorthWestern Energy for a one-megawatt (1MW) Beacon Smart Energy Matrix flywheel energy storage system. The system will be installed by us and operated in conjunction with the Dave Gates Generating Station (formerly known as the Mill Creek Generating Station), a gas-fired regulating reserve plant recently commissioned in Montana and owned by NorthWestern Energy. The system is expected to be operational by the end of 2011. The initial term of the lease will be 15 months, which at NorthWestern Energys option, can be extended up to two additional 12-month terms. NorthWestern Energy will pay us $500,000 for the first 15-month term and $500,000 for each subsequent term should it choose to extend the lease to a second or third term. At any point NorthWestern Energy can opt to purchase the 1 MW system outright for approximately $4 million. A portion of the lease payments made under the agreement would be applied to the purchase, depending on when the purchase was made.In September 2010, we finalized a contract with the DOEs Advanced Research Projects Agency Energy (ARPA-E) to develop critical components of a highly-advanced flying ring flywheel energy storage system over a two year period. ARPA-E is an agency within DOE that provides R&D funding for transformational new energy technologies and systems. The award is valued at a total of $2.8 million. ARPA-E grant recipients share a portion of the program cost, and we would contribute a minimum of $560,000, or 20%, of the $2.8 million program total. The actual contract net cost is expected to be higher due to the difference between the contract and our GAAP overhead rates. Our proposal calls for initiating development of a next-generation flywheel energy storage module with a size of 100kWh and 100kW, capable of storing four times the energy at one-eighth the cost-per-energy-unit, as compared to our current Gen 4 flywheel. The new flywheel would be capable of more than 40,000 full charge/discharge cycles in its lifetime, thereby achieving a cost per storage cycle below ARPA-Es goal of $0.025/kWh. If we are successful in developing the initial design, additional effort would be required before this new flywheel could be commercialized.
On May 24, 2010, we announced that we signed a contract with the New York State Energy Research and Development Authority (NYSERDA) relating to a $2 million grant. This grant will provide $1.5 million to pay for a portion of the interconnection and other aspects of the Stephentown facility, which is being accounted for as a reduction of eligible project costs on a percentage-of-completion basis; $100,000 for a visitor information center at the Stephentown site; and $400,000 for other project tasks not specifically related to SRS project costs, which is being accounted for as grant revenue, also on a percentage-of-completion basis.
On December 23, 2010, we sold 10,000 units of the Company for net proceeds of approximately $8.7 million. Each Unit sold consisted of (i) one share of our Series B mandatorily redeemable convertible preferred stock, par value $0.01 per share (the preferred stock), (ii) a warrant to purchase 0.5 of a share of preferred stock (the preferred warrant) and (iii) a warrant to purchase 445.827 shares of common stock, together with any associated rights (the common warrant, and together with the preferred warrants, the warrants), at a price to the public of $1,000 per unit, less issuance costs. The shares of preferred stock, the preferred warrants and the common warrants were immediately exercisable and were issued separately. During the first half of 2011, all of the preferred warrants were exercised (providing cash proceeds of $5 million), and a substantial number of the preferred shares were voluntarily converted to common stock by the investors or redeemed as scheduled. We have accounted for these securities as liabilities at fair value. Consequently, as a result of these conversion/redemption activities, we have recorded significant non-cash losses, which are partially offset by non-cash interest income related to these securities during the first half of 2011.
In November 2009, the DOE announced that it had awarded us a Smart Grid Stimulus Grant valued at $24 million, for use in construction of a second 20 MW flywheel energy storage plant. The award provides funds to design, build, test, commission and operate a 20 MW flywheel energy storage frequency regulation plant in the PJM Interconnection region. We are planning to build this facility on a property in Hazle Township, Pennsylvania, for which we have entered into an option agreement with an economic development agency in the state. Under the terms of this two-year option, we are paying $2,500 for each of four six-month option periods, or until the option is converted to a lease. The option allows us to lease the property for 21 years at the rate of $3,250 per month. The site covered by this option is located in an economic development zone, which provides an exemption from the payment of state sales tax on equipment used to build the plant and an exemption from property taxes through 2017. We have filed for interconnection, and have completed the system impact study and an environmental assessment for this site.
Since our inception in 1997, we have funded our development primarily through the sale of common stock. In November 2000, we completed our initial public offering, raising approximately $49.3 million net of offering expenses. Since our initial public offering, we have raised approximately $125.0 million as of June 30, 2011, through the sale of our stock and exercise of warrants related to those stock sales. In December 2010, we raised approximately $8.7 million, net of offering costs, from the sale of mandatorily redeemable convertible preferred stock and associated preferred and common warrants. During the first half of 2011, we raised $6.5 million from the exercise of preferred and common warrants. We estimate that we will need to raise approximately $5 to $10 million in order to fund operations into the second quarter of 2012. In addition to the DOE grant, we will need to raise an additional $29 million from a combination of project finance and equity to be able to order long-lead items and begin construction of our second merchant plant in Hazle Township. In December 2010, the prior administration submitted for final approval a $5 million Redevelopment Assistance Capital Program (RACP) grant from the Commonwealth of Pennsylvania for the construction of a 20 MW frequency regulation plant. However, this grant has not been finalized, and may not be finalized, due to budgetary considerations. If it is finalized, it will reduce the funds we need to raise to complete this project by $5 million. The DOE grant will provide $24 million of the estimated $53 million cost of the Hazle Township plant.
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