Beacon Power Announces First Quarter 2008 Results

TYNGSBORO, Mass. - (Business Wire) Beacon Power Corporation (NASDAQ: BCON), a 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 first quarter ended March 31, 2008.

For the first quarter of 2008, Beacon Power reported revenue of $20,000 and a net loss of $5,287,000, or ($0.06) per share, compared to revenue of $393,000 and a net loss of $3,090,000, or ($0.05) per share, in the first quarter of 2007. The decrease in revenue is the result of completion of development contracts with both California and New York as well as the Department of Energy in 2007. Beacon Power is now entering the production phase and expects to have commercial revenues from its frequency regulation facilities in the fourth quarter of 2008.

During the first quarter of 2008, Beacon Power incurred costs of $3,032,000 for research and development expense, compared to $1,660,000 in the first quarter of 2007, an increase of $1,372,000 or 83%. Research and development expense increased primarily due to the expensing of development costs that had been allocated to government contracts in the prior year, increased headcount-related costs, development and design costs for our frequency regulation facilities, and increased expenses for legal and professional services. Selling, general and administrative expense was $2,176,000 during the first quarter of 2008, compared to $1,414,000 in the first quarter of 2007, an increase of $762,000, or approximately 54%. This increase is due primarily to increased headcount-related costs as well as increased external fees related to consulting, legal, marketing and other services to facilitate penetration into the frequency regulation markets. Additionally, depreciation expense increased by $254,000 compared to the first quarter of 2007. This increase is primarily related to our new facility in Tyngsboro, Massachusetts.

At March 31, 2008, the Company had $25.0 million in cash and cash equivalents, with working capital of $23.1 million. In the fourth quarter of 2008, the Company anticipates receiving revenue from its first commercial frequency regulation facility, which will likely be in New York, as well as from a second plant either in New England (at its Tyngsboro site) or the PJM Interconnection. The Company has an option to purchase approximately seven acres of land in Stephentown, NY, and is awaiting the expected approval of a land-use permit it has applied for from that town, as well the approval of an active interconnection request by NYISO. As referenced above, Beacon has initiated the process of establishing up to five megawatts of frequency regulation capacity on its Tyngsboro site, and two more potential locations are being actively pursued in the PJM region.

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, now entering production following approval for use in three of the country’s five open-bid regulation markets, is designed to be a non-polluting, megawatt-level, utility-grade flywheel-based solution that would 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:

This 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 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; the complexity and other challenges of arranging project financing and resources for one or more frequency regulation power plants, including uncertainty in the ability to obtain DOE loan guarantee support for its New York facility; conditions in target markets, including the fact that some ISOs have been slow to comply with the FERC’s requirement to update market rules to include new technology such as the Company’s; the ability to obtain site interconnection or other zoning and construction approvals in a timely manner; 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 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, including the effect of the patent litigation recently initiated against the Company; retaining key executives and the possible need in the future to hire and retain key executives; the historical volatility of Beacon’s stock price, as well as the volatility of the stock price of other companies in the energy 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 expressly does not undertake any duty to update forward-looking statements.

BEACON POWER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
					Three months ended March 31,
					2008				2007
Revenue					$	20,203			$	392,706
Cost of goods sold						57				392,246
Gross profit						20,146				460
Operating expenses:
	Selling, general and administrative					2,175,661				1,414,359
	Research and development					3,032,342				1,659,558
	Depreciation and amortization					279,741				25,968
	Casualty loss (recovery)					-				107,943
			Total operating expenses			5,487,744				3,207,828
Loss from operations						(5,467,598	)			(3,207,368	)
Other income, net						180,262				117,750
Loss to common shareholders					$	(5,287,336	)		$	(3,089,618	)
Loss per share, basic and diluted					$	(0.06	)		$	(0.05	)
Weighted-average common shares outstanding						88,668,383				65,432,694

BEACON POWER CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
				March 31,				December 31,
				2008			2007
				(unaudited)			(audited)
Assets
Current assets:
	Cash and cash equivalents			$	25,037,320			$	30,417,095
	Accounts receivable, trade				71,915				424,788
	Unbilled costs on government contracts				82,139				82,195
	Prepaid expenses and other current assets				1,610,454				1,475,084
		Total current assets			26,801,828				32,399,162
Property and equipment, net					9,333,734				7,004,021
Restricted cash					200,000				374,346
Total assets				$	36,335,562			$	39,777,529
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable			$	673,222			$	296,463
	Accrued compensation and benefits				804,022				1,024,874
	Other accrued expenses				2,124,904				2,183,217
	Advance billings on contracts				7,166				7,222
	Accrued contract loss				66,921				67,419
	Lease liability - current				7,370				--
		Total current liabilities			3,683,605				3,579,195
Lease liability - long term					971,292				--
Stockholders' equity:
	Common stock				886,685				886,590
	Additional paid-in-capital				200,120,999				199,351,427
	Deficit accumulated during the development stage				(168,614,180	)			(163,326,844	)
	Less: treasury stock, at cost				(712,839	)			(712,839	)
		Total stockholders' equity			31,680,665				36,198,334
Total liabilities and stockholders' equity				$	36,335,562			$	39,777,529

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