SATC Satcon Technology Corp. (MM)

SatCon Technology Corporation(C) (Nasdaq NM: SATC), a developer and manufacturer of power electronics and motors, today reported financial results for its fiscal 2005 third quarter, which ended July 2, 2005. "Our revenue for the quarter was $8.2 million dollars compared to $8.6 million in 2004," said David Eisenhaure, SatCon Chairman and Chief Executive Officer. "However, we have an additional $1.3 million in deferred revenue related to the shipment of a Rotary UPS made during the quarter, and $1.5 million in revenue deferred from Q2 for the EDO program. Our operating loss for the third quarter was $2.2 million, compared to $0.7 million in 2004. That loss was primarily due to higher costs of manufacturing as we ramp up our support in the Power Systems Division for planned increased production in the Alternative Energy, HEV and Grid Support market sector." "Our first nine months of fiscal 2005 showed revenue increasing from $25.0 million to $25.6 million, excluding $2.8 million in deferrals noted above. The operating loss for the first nine months of fiscal 2005 was $5.6 million, which was an increase over 2004's operating loss of $2.5 million, primarily due to manufacturing costs, as noted above, and corporate legal and other costs." On August 15, 2005, the Company consummated an equity financing transaction with several unrelated accredited investors involving the sale of approximately 4.7 million shares of common stock and warrants to purchase 1.2 million additional shares of common stock. The Company received proceeds from the sale of these shares and warrants equal to approximately $5.8 million less the Company's expenses relating to the sale. The stated use of proceeds is to expand the Company's sales and marketing efforts to exploit the opportunity for significant growth within the Solar, Hybrid Electric Vehicles, Wind, Stationary Power and Grid Support sectors. SatCon President and Chief Operating Officer, Millard Firebaugh stated, "The proceeds from this sale of common stock and warrants will allow SatCon to continue aggressive growth in the Alternative Energy, Hybrid-Electric Vehicle and Grid Support markets. These markets are growing at accelerating rates. The Energy Policy Act further reinforces the future market potential. SatCon already has successful products in these markets from which we are experiencing our most rapid growth in product revenue. We are positioning for success with appropriate investment." Ardour Capital Investments, LLC has been retained to act as the Company's financial advisor in connection with these capital raising activities, including introducing potential investors and negotiations regarding pricing and structure of the shares of common stock and warrants issued in the financing transaction. The shares of common stock and warrants issued in the equity financing transaction have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. However, as part of the transaction, the Company has agreed to use its best efforts to prepare and file a registration statement with the Securities and Exchange Commission to enable the resale of the shares issued and sold in the transaction. About SatCon Technology Corporation SatCon Technology Corporation is a developer and manufacturer of electronics and motors for the Alternative Energy, Hybrid-Electric Vehicle, Grid Support, High Reliability Electronics and Advanced Power Technology markets. For further information, please visit the SatCon website at www.satcon.com. Statements made in this document that are not historical facts or which apply prospectively are forward-looking statements that involve risks and uncertainties. These forward-looking statements are identified by the use of terms and phrases such as "believes," "expects," "plans," "anticipates" and similar expressions. Investors should not rely on forward looking statements because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from the Company's expectation. There can be no assurance that the company will be successful in achieving any of the objectives that are stated within the release, and such failure to achieve those objectives could have a material, adverse effect on the future of the Company. Additional information concerning risk factors is contained from time to time in the Company's SEC filings. The Company expressly disclaims any obligation to update the information contained in this release. -0- *T SATCON TECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS July 2, September 30, 2005 2004 ------------- ------------- (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $2,513,834 $1,171,152 Restricted cash and cash equivalents 84,000 1,011,900 Accounts receivable, net of allowance of $671,867 and $848,565 at July 2, 2005 and September 30, 2004, respectively 6,470,410 6,274,178 Unbilled contract costs and fees 144,024 447,405 Funded research and development expenses in excess of billings -- 292,111 Inventory 7,591,308 6,184,672 Prepaid expenses and other current assets 1,077,962 687,083 ------------- ------------- Total current assets 17,881,538 16,068,501 Warrants to purchase common stock -- 7,036 Property and equipment, net 5,156,361 5,913,211 Goodwill, net 704,362 704,362 Intangibles, net 1,998,090 2,391,193 Other long-term assets 523,509 501,634 ------------- ------------- Total assets $26,263,860 $25,585,937 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $344,387 $184,177 Accounts payable 3,509,485 3,823,249 Accrued payroll and payroll related expenses 1,490,690 1,449,349 Other accrued expenses 1,849,498 2,412,409 Accrued contract losses 84,779 514,489 Deferred revenue 2,341,004 2,048,442 Accrued restructuring costs -- 495,612 ------------- ------------- Total current liabilities 9,619,843 10,927,727 Redeemable convertible Series B preferred stock (425 shares issued and outstanding; face value: $5,000 per share; liquidation preference: 100%) 2,125,000 2,125,000 Long-term debt, net of current portion -- 311,178 Other long-term liabilities 512,048 563,372 Commitments and contingencies Stockholders' equity: Common stock; $0.01 par value, 50,000,000 shares authorized; 33,407,662 and 28,226,010 shares issued and outstanding at July 2, 2005 and September 30, 2004, respectively 334,078 282,261 Additional paid-in capital 147,588,254 139,208,000 Accumulated deficit (133,732,614) (127,659,993) Accumulated other comprehensive loss (182,749) (171,608) ------------- ------------- Total stockholders' equity 14,006,969 11,658,660 ------------- ------------- Total liabilities and stockholders' equity $26,263,860 $25,585,937 ============= ============= SATCON TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended ------------------------- ------------------------- July 2, June 26, July 2, June 26, 2005 2004 2005 2004 ------------- ----------- ------------ ------------ Revenue: Product revenue $6,971,627 $6,840,972 $22,373,422 $19,254,617 Funded research and development and other revenue 1,186,141 1,771,056 3,240,763 5,703,626 ------------- ----------- ------------ ------------ Total revenue $8,157,768 8,612,028 25,614,185 24,958,243 ------------- ----------- ------------ ------------ Operating costs and expenses: Cost of product revenue 6,325,023 5,483,030 20,136,564 15,845,447 Research and development and other revenue expenses: Funded research and development and other revenue expenses 1,205,756 1,415,758 2,899,449 4,210,900 Unfunded research and development expenses 2,397 4,188 10,901 5,489 ------------- ----------- ------------ ------------ Total research and development and other revenue expenses 1,208,153 1,419,946 2,910,350 4,216,389 Selling, general and administrative expenses 2,723,064 2,248,449 8,044,945 7,055,127 Restructuring costs -- -- (255,612) -- Amortization of intangibles 111,671 111,671 335,013 335,014 ------------- ----------- ------------ ------------ Total operating costs and expenses 10,367,911 9,263,096 31,171,260 27,451,977 ------------- ----------- ------------ ------------ Operating loss (2,210,143) (651,068) (5,557,075) (2,493,734) Net unrealized loss on warrants to purchase common stock -- (77,200) (7,036) (80,766) Net unrealized gain on Series B warrants -- -- -- 35,442 Other income/(expense) (22,867) 2,479 (152,289) 2,479 Interest income 16,392 2,545 27,497 9,069 Interest expense (57,283) (71,865) (383,718) (6,831,712) ------------- ----------- ------------ ------------ Net loss $(2,273,901) $(795,109) $(6,072,621) $(9,359,222) ============= =========== ============ ============ Net loss per weighted average share, basic and diluted $(0.07) $(0.03) $(0.19) $(0.35) ============= =========== ============ ============ Weighted average number of common shares, basic and diluted 33,364,094 28,078,113 31,909,163 26,378,830 *T