B456 SYSTEMS, INC.

CIK:0001167178|SEC Filings

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue:
Products	$ 21,377	$ 59,603	$ 40,164	$ 104,625
Services	4,083	4,716	13,170	14,144
Total revenue	25,460	64,319	53,334	118,769
Cost of revenue:
Products	43,189	78,014	183,161	157,928
Services	9,738	5,878	17,628	13,422
Total cost of revenue	52,927	83,892	200,789	171,350
Gross loss	(27,467)	(19,573)	(147,455)	(52,581)
Operating expenses:
Research, development and engineering	18,612	19,181	63,576	56,974
Sales and marketing	3,753	4,515	12,358	13,667
General and administrative	14,392	16,289	37,671	34,799
Production start-up		1,097		9,215
Goodwill impairment loss	9,581		9,581
Total operating expenses	46,338	41,082	123,186	114,655
Operating loss	(73,805)	(60,655)	(270,641)	(167,236)
Other income (expense):
Interest expense, net	(15,585)	(2,227)	(22,537)	(4,973)
Gain (loss) on foreign exchange	419	(98)	373	(19)
Gain on change in fair value of warrant derivative liability	25,248		25,429
Impairment of long-term investment	(5,943)		(8,873)
Loss on debt and warrant issuance and conversion	(12,544)		(12,544)
Other (expense) income, net	(220)	(143)	(1,015)	530
Total other expense, net	(8,625)	(2,468)	(19,167)	(4,462)
Loss from operations, before tax	(82,430)	(63,123)	(289,808)	(171,698)
Provision for income taxes	106	594	656	1,082
Net loss	(82,536)	(63,717)	(290,464)	(172,780)
Less: loss attributable to the noncontrolling interest				27
Net loss attributable to B456 Systems, Inc.	$ (82,536)	$ (63,717)	$ (290,464)	$ (172,753)
Net loss per share attributable to B456 Systems, Inc.-basic and diluted: (in dollars per share)	$ (0.40)	$ (0.51)	$ (1.76)	$ (1.45)
Weighted average number of common shares outstanding - basic and diluted (in shares)	204,667	126,049	165,283	118,767

Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss	$ (290,464)	$ (172,780)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	21,424	18,230
Noncash rent	(136)	(150)
Noncash loss on equity investments	1,025	768
Impairment of long-lived and intangible asset	13,352	2,645
Impairment of long term investment	8,873
Gain on change in fair value of warrant derivative liability	(25,429)
Loss on debt and warrant issuance and conversion	12,544
Gain on asset transfer and subsequent deconsolidation of variable interest entity (VIE)		(1,255)
Loss on disposal of property and equipment		28
Amortization of debt issuance costs and noncash interest expense	15,791	1,892
Stock-based compensation	10,348	10,411
Changes in operating assets and liabilities, excluding the effect of deconsolidation of VIE:
Accounts receivable	22,857	(33,392)
Inventory	4,424	(52,047)
Deferred cost	(3,178)	(12,422)
Prepaid expenses and other assets	(6,413)	(2,839)
Accounts payable	(4,367)	26,718
Accrued expenses	36,985	14,294
Deferred revenue	7,149	(2,046)
Other liabilities	(1,401)	3,967
Net cash used in operating activities	(176,616)	(197,978)
Cash flows from investing activities:
Decrease (increase) in restricted cash	(1,621)	10,536
Purchases of and deposits on property, plant and equipment	(24,305)	(113,729)
Proceeds from government grant	4,459	32,022
Purchase of investments		(3,288)
Net cash used in investing activities	(21,467)	(74,459)
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants, net of offering costs	32,793	115,187
Proceeds from government grant	1,000	900
Proceeds from exercise of stock options	12	2,002
Proceeds from issuance of debt, net of offering costs	58,989	138,824
Proceeds from revolving credit lines		38,094
Payments on settlement of warrants	(2,164)
Principal payments on revolving credit line	(38,094)	(8,000)
Principal payments on long term debt	(7,817)	(4,028)
Payments on capital lease obligations	(2,180)	(2,148)
Contributions from noncontrolling interest		600
Net cash provided by financing activities	42,539	281,431
Effect of foreign exchange rates on cash and cash equivalents		(17)
Net decrease in cash and cash equivalents	(155,544)	8,977
Cash and cash equivalents at beginning of period	186,893	216,841
Cash and cash equivalents at end of period	31,349	225,818
Supplemental cash flow information-cash paid for interest	2,863	531
Noncash investing and financing activities:
Purchase of equipment under capital leases		153
Increase in accounts payable and accrued expenses for property, plant and equipment	3,613	26,996
Deferred financing costs included in accounts payable and accrued expenses for property, plant and equipment		342
Fulfillment of government grants with advance proceeds	$ 757	$ 1,046

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 31,349	$ 186,893
Restricted cash and cash equivalents	2,289	668
Accounts receivable, net	22,460	47,200
Inventory	98,970	103,394
Deferred cost	9,434	6,256
Prepaid expenses and other current assets	11,085	8,011
Total current assets	175,587	352,422
Property, plant and equipment, net	134,055	145,203
Goodwill		9,581
Long-term grants receivable	101,804	101,054
Deposits and other assets	7,586	5,745
Investments	2,000	11,897
Total assets	421,032	625,902
Current liabilities:
Revolving credit lines		38,094
Current portion of long-term debt	4,505	2,069
Current portion of capital lease obligations	1,485	1,740
Accounts payable	20,829	27,220
Accrued expenses	65,085	31,910
Other current liabilities	7,998	8,329
Deferred revenue	14,377	9,577
Deferred rent	181	181
Total current liabilities	114,460	119,120
Long-term debt, net of current portion	144,311	142,755
Capital lease obligations, net of current portion	16,254	17,336
Deferred revenue, net of current portion	35,768	35,303
Deferred rent, net of current portion	1,067	1,203
Warrant and derivative liabilities	15,769
Other long-term liabilities	13,482	13,820
Total liabilities	341,111	329,537
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock, $0.001 par value-5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2011 and September 30, 2012
Common stock, $0.001 par value-250,000,000 shares authorized; 134,342,974 and 305,699,542 shares issued and outstanding at December 31, 2011 and September 30, 2012, respectively	306	134
Additional paid-in capital	1,020,354	946,506
Accumulated deficit	(939,422)	(648,958)
Accumulated other comprehensive loss	(1,317)	(1,317)
Total stockholders' equity	79,921	296,365
Total liabilities and stockholders' equity	$ 421,032	$ 625,902