Beacon Power Corp. announced its financial results for the third quarter ended September 30, 2008. For the third quarter of 2008, Beacon Power reported revenue of $4,000 and a net loss of $5,621,000, or ($0.06) per share, compared to revenue of $373,000 and a net loss of $2,814,000, or ($0.04) per share, in the third quarter of 2007.
For the nine months ended September 30, 2008, the company reported revenue of $53,000 and a net loss of $16,340,000, or ($0.18) per share, compared to revenue of $1,215,000 and a net loss of $8,970,000, or ($0.13) per share, for the same period ended September 30, 2007. The decrease in revenue is the result of completion of scale-power development contracts with energy agencies in California and New York, as well as the U.S. Department of Energy in 2007. Beacon Power is now entering the production phase of its flywheel systems. The company expects to begin generating revenue from frequency regulation services later this month.
During the third quarter of 2008, Beacon Power incurred costs of $3,535,000 for research and development expense, compared to $1,978,000 in the third quarter of 2007, an increase of $1,557,000 or 79%. Research and development expense increased primarily due to legal costs associated with patent litigation, increased headcount-related costs and increases in expensed materials and tooling costs. These were partially offset by capitalized labor and overhead costs associated with the frequency regulation facility being built at the company’s site in Tyngsboro, Massachusetts. Selling, general and administrative expense was $1,805,000 during the third quarter of 2008, compared to $1,388,000 in the third quarter of 2007, an increase of $417,000, or approximately 30%. This increase is attributable to increased activities in regulatory affairs, external fees related to consulting, legal, marketing and other services to facilitate penetration into the frequency regulation markets, and a reduction in the overhead allocated to contracts. Additionally, depreciation expense increased by $291,000 compared to the third quarter of 2007. This increase is primarily related to our manufacturing facility in Tyngsboro, Massachusetts.
At September 30, 2008, the company had $10.6 million in cash and cash equivalents with working capital of $6.5 million. Subsequent to the end of the quarter, the company raised approximately $10.7 million in cash from a combination of a drawdown of a portion of its Mass Development loan and the sale of stock and warrants. There is an additional $1.5 million which can be drawn from the Mass Development loan to offset qualified expenditures for equipment for our manufacturing facility.
On November 18, 2008, Beacon expects to begin earning commercial revenue from its first megawatt of frequency regulation capacity at its site in Tyngsboro, Massachusetts, under ISO New England’s Alternative Technologies Regulation Pilot Program. Beacon had initially expected to have up to 5MW in service as of the end of fiscal 2008. However, in response to uncertainty and volatility in the equity markets, the company decided both to raise less cash in its October sale of shares and warrants than once anticipated, and to raise additional funds during early 2009. Consequently, it also decided to revise its deployment schedule. Beacon now expects to deploy an additional 2MW (for a total of 3MW) in ISO New England by year end, and two additional MW (for a total of 5MW) in the same location during the first quarter of 2009.
