Beacon Power Corp. (fka BCONQ)

[Ecomike]

Something still does not wash. If I spend 20 million dollars on a new plant it becomes an asset, and is depreciated over the useful life of the plant. A ten year life plant would be a 2 million dollar depreciation cost against revenues. It is not expensed all at once as a loss. What I want to know is how they lost about 20 million a year on average for the last 2 years. Where did it all go? This company was not born yesterday, It has been around a while.

Looking at the latest report I see:

Since our inception in 1997, we have funded our development and operations primarily through the sale of 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 $123.5 million as of December 31, 2010, through the sale of common stock and the 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. We estimate that to continue to implement our business plan we will need to raise approximately $15 to $20 million during 2011 in order to fund operations, $5 million of which is anticipated from the callable preferred stock warrants issued in December 2010.

Research and development expenses, including engineering expenses, were approximately $6,689,000 in 2010, $6,796,000 in 2009 and $15,398,000 in 2008.

At December 31, 2010, our headcount was 73 full-time employees, five part-time employees and a number of independent contractors and temporary employees. Our staff included 29 technical employees made up of engineers and technicians involved in research and development activities and 24 manufacturing and materials handling workers involved in production and research and development activities. We also had nine employees in sales, marketing, business development, compliance and customer service. The remaining 11 people were involved in administrative tasks.

We had approximately $10,866,000 in cash and cash equivalents on hand at December 31, 2010. We believe that our December 2010 cash balances, combined with anticipated funds from the exercise of preferred stock warrants issued in December 2010, are sufficient to fund operations into the third quarter of 2011. We have incurred significant losses from operations since our inception. As shown in our consolidated financial statements, we incurred losses from operations of approximately $22,308,000, $18,944,000 and $23,838,000, and operating cash decreases of approximately $15,613,000, $16,698,000 and $18,182,000 during the years ended December 31, 2010, 2009 and 2008, respectively. Our business model is based on owning and operating a number of 20 MW frequency regulation merchant plants, and the sale of turnkey systems. Our goal is to reduce the cost to complete these plants, and we believe we are on target to do so. However, to fund our merchant plants, we will need to sell turnkey plants to utilities or raise capital in both 2011 and 2012. In the event that we are not successful in selling turnkey plants and are unable to raise capital or the timing is delayed, it will have a material adverse effect on our ability to execute our business plan and could impact our ability to continue as a going concern.

Looking at the numbers briefly, it looks to me like they need a 100X increase in revenue just to break even. Any idea how much revenue the 20MW New York plant will bring in?