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A123 Systems financial troubles and bankruptcy

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[December 23, 2011] A123 Systems finds problems in batteries for the Fisker Karma

Problem found in coolant system for battery packs A123 Systems is supplying for the FIsker Karma. (www.torquenews.com) http://www.torquenews.com/1075/a123-systems-finds-problems-batteries-fisker-karma

Battery manufacturer A123 Systems disclosed today flaws in the battery packs they've supplied to Fisker for the Karma plug-in hybrid luxury sedan. A123's engineers have identified the nature of the flaw in the coolant system which could lead to a coolant leak. Repair efforts are already underway. The nature of the flaw is similar to the one GM says was behind the battery pack fire in a crash tested Chevy Volt.

[December 29, 2011] Fisker announces recall of the Karma following A123's disclosure of battery pack mistake

The companies identified a manufacturing flaw, and are of course issuing a recall. (www.torquenews.com) http://www.torquenews.com/1075/fisker-announces-recall-karma-following-a123s-disclosure-battery-pack-mistake

Late last week A123 Systems disclosed they'd found some mechanical problems in the battery packs they supplied to Fisker for the Karma plug-in hybrid luxury sedan. It's now been learned from a report today in the Boston Business Journal that Fisker, of course, issued a recall last week citing the potential for coolant leaks and the potential for a fire.

Fisker recalls Karma electric vehicle over A123 battery defect (www.bizjournals.com) http://www.bizjournals.com/boston/news/2011/12/29/fisker-recall-karma-ev-over-a123-battery.html

Fisker Karma announces recall of battery packs (open letter) (blog.greentransportation.info) http://blog.greentransportation.info/2011/12/fisker-karma-announces-recall-of.html

[March 2, 2012] A123 Systems on roller coaster ride between Fisker, Tata and SAIC

Startup lithium battery manufacturer A123 Systems is in a rocky period, between troubles at Fisker Automotive, and new deals with Tata and SAIC, the largest automakers in India and China respectively. (www.torquenews.com) http://www.torquenews.com/1075/a123-systems-roller-coaster-ride-between-fisker-tata-and-saic

A123 also announced the company would be late filing financial results for 2011. Net loss for the fourth quarter is expected to be $85 million on revenue of $40 million, and in 2012 the company expect significant revenue growth. The company is seeking to diversify more strongly into grid energy storage systems, with significant revenue growth in that market. A123 has also set a strategic goal that "no single customer is expected to represent more than 15% of revenue in 2012" presumably so that the corporate fate is not dictated by the fate of their largest customer.

[March 26, 2012] A123 Systems to spend $55 million replacing defective battery packs

A123 Systems announced today company engineers had found a manufacturing flaw requiring the company replace, costing the company $55 million, a large number of nanophosphate lithium ion battery packs manufactured by the company for five electric vehicle manufacturers. (www.torquenews.com) http://www.torquenews.com/1075/a123-systems-spend-55-million-replacing-defective-battery-packs

A123 Systems announced this morning the company had discovered a manufacturing flaw in prismatic format nanophosphate lithium battery cells. The flaw affects electric vehicles from five unnamed manufacturers, and the company is starting a "field campaign" to replace affected battery packs. The campaign is expected to cost the company $55 million in warranty charges and affects five unnamed electric vehicle manufacturers.

Fisker Automotive announced it was one of the automakers affected by the A123 Systems battery pack replacement program. A123 Systems will be replacing all affected battery packs in Fisker Karma automobiles. Additionally Karma owners in North American will receive a full vehicle warranty extension from 50 months/50,000 miles to 60 months/60,000 miles. Additionally, European Karma owners will receive a full vehicle warranty extension from from 48 months/100,000 km to 60 months/100,000 km.

[June 6, 2012] A123 Systems warns of financial danger, and is selling more stock

The financial woes befalling A123 Systems led management to issue a "going concern" warning, to tighten up expenses, and sell more stock, as the company faces steep losses due to defective battery packs and slow ramp up of production at partners including Fisker Automotive. (www.torquenews.com) http://www.torquenews.com/1075/a123-systems-warns-financial-danger-and-selling-more-stock

Battery maker A123 Systems warned this week that its current financial status raises "substantial doubt on the Company�s ability to continue as a going concern," which lead some misguided theorizing that this is the "next Solyndra." This move is unsurprising given the recent history of A123 Systems, a company that has had a mixed bag of problems stemming not only from failures of the company, but slow production ramp-up in the company's partners. The company is taking steps to shore up its finances, and may well navigate its way to a safe shore.

There was a significant falloff in revenue between the first quarters of 2011 ($18,097) and 2012 ($10,889), or a $7,208 decrease (-39.8%) in revenue. Management attributes this primarily to a decrease in demand, as well as "revenue recognition being precluded on shipments of prismatic packs that may be defective in relation to the field campaign launched in March 2012." The decrease in sales is attributed to "variations in demand from existing customers."

The cost of the field campaign to replace potentially defective battery packs shows up on the company's balance sheet as an increasing "cost of revenue." In the first quarter of 2011, the $18,097 million cost the company $33,574 million, for a loss of $ 15,477 million. In 2012 the $10,889 million in revenue cost the company $101,707 million, again because of costs due to replacing defective battery packs, for a loss of $90,818 million.

[June 12, 2012] A123 Systems announces cold/hot weather battery breakthrough amid financial woes

A123's new Nanophosphate EXT technology offers better performance in cold and hot weather, reduces the need for thermal management systems, and is a breath of good news following months of difficult times at A123 Systems. (www.torquenews.com) http://www.torquenews.com/1075/a123-systems-announces-coldhot-weather-battery-breakthrough-amid-financial-woes

Amid worries that A123 Systems might be unable to continue as a going concern, the company announced today a battery technology breakthrough, which the company calls Nanophosphate EXT, allowing batteries to "operate at extreme temperatures without requiring thermal management." The breakthrough would "significantly reduce or eliminate the need for heating or cooling systems," reducing complexity of products utilizing A123 cells, and improving the effective energy density of those products. By itself the breakthrough would enable electric vehicles to be usable in a wider range of temperature zones, and a few percentage points increase in effective energy density, but this comes at a time when the company desperately needs some good news to counter-act the bad news circling around A123.

[August 8, 2012] A123 Systems 10Q

(www.sec.gov) http://www.sec.gov/Archives/edgar/data/1167178/000104746912008052/a2210570z10-q.htm

This 10Q outlined the serious financial problems at A123 Systems. Essentially the company was going to go bankrupt if it weren't for the rescue from Wanxiang.

[August 16, 2012] It's Wanxiang or bankruptcy for A123 Systems as the companies sign agreement

Struggling battery maker A123 Systems has been unable to recover from the series of missteps beginning last Christmas, and running low on cash has turned to the largest autoparts maker in China for a rescue package. (www.torquenews.com) http://www.torquenews.com/1075/its-wanxiang-or-bankruptcy-a123-systems-companies-sign-agreement

[August 17, 2012] Investment From China Places A123 Systems on the Defensive

(wheels.blogs.nytimes.com) http://wheels.blogs.nytimes.com/2012/08/17/investment-from-china-places-a123-systems-on-the-defensive/

A123 Systems reached a final agreement with the Wanxiang Group Corporation, a supplier of automotive parts and systems based in China, for an investment of up to $465 million.

The prospect of Chinese control of an American battery maker that benefited substantially from taxpayer dollars set off a blowback in Congress. But Dan Borgasano, a spokesman for A123, said no more than four of nine board seats would be allotted to Wanxiang, were the company to gain a controlling share in A123.

Mr. Borgasano said roughly $120 million of its federal financing through the Energy Department had not been drawn down. A123, which reported second-quarter losses of more than $80 million, said last month it could be left with only enough cash for four or five months of operation.

[August 23, 2012] No American plan, no American CEO

No American plan, no American CEO (prestowitz.foreignpolicy.com) http://prestowitz.foreignpolicy.com/posts/2012/08/23/no_american_plan_no_american_ceo

(A123 Systems) is an entrepreneurial U.S.-based effort to develop the advanced lithium ion batteries that are expected to power much of our future. Over the years, the U.S. government has made loans to the company of about $200 million, but now has approved the sale of the company and its leading edge technology to Wangxiang corp., one of China's largest auto parts makers.

I didn't find this deal in the least surprising. Indeed, I predicted something like it three years ago at a White House meeting called to deliberate ways of revitalizing U.S. manufacturing as a means of improving the lot of the American middle class. Some administration officials were urging that loans and other incentives be given to development of clean energy technologies like batteries, wind turbines, and solar cells. I pointed out that other countries like Germany, China, South Korea, and Japan were already doing that and that if we were serious we'd have to at least match their incentives. I doubted that we would do so because many of the White House economists were opposed to any such "industrial policy" action of "picking winners and losers." So, it turns out that my premonition was correct. The U.S. government may have made some loans available to A123, but they were a pittance compared to what other countries have made available to their producers.

Unlike most Asian countries, the United States has no Five-Year Plan and unlike Germany it has no national level consultative mechanism among labor, industry, and government for achieving consensus on national economic performance. America's professional economics community has, for the most part, embraced an extreme laissez faire doctrine that eschews concern for the structure or the economy and what it produces.

Aug 23, 2012: A123 Systems warned of delisting

A123 Systems warned of delisting (www.freep.com) http://www.freep.com/article/20120823/BUSINESS01/308230253/A123-Systems-warned-of-delisting

The NASDAQ stock market has warned battery-maker A123 Systems it may be removed from the exchange if its stock price doesn't improve, according to an SEC filing. A delisting notification is standard when a stock trades below $1 for 30 consecutive business days.

A123 gets delisting notice from Nasdaq (in.reuters.com) http://in.reuters.com/article/2012/08/22/a123-delistingnotice-idINL4E8JM6EE20120822

Lithium-ion battery maker A123 Systems Inc said it received a delisting notice from the Nasdaq on Tuesday to get its stock price above $1 in the next 6 months. A123's shares, which have dropped more than 90 percent since touching a year-high in September last year, closed at a lifetime-low of 37 cents on the Nasdaq on Wednesday.

A123 Systems in danger of delisting (www.bostonherald.com) http://www.bostonherald.com/jobfind/news/technology/view/20220823a123_systems_in_danger_of_delisting/srvc=home&position=also

Waltham-based lithium-ion battery maker A123 Systems, which is trading today between $0.35 and $0.38 a share, said it is subject to being delisted from the Nasdaq Global Select Market if the price of its common stock remains below $1 for 30 straight days. �Subject to a 180-day compliance period, upon delisting from the Nasdaq Global Select Market, our stock would be traded on the Nasdaq Capital Market until we maintain a minimum bid price of $1 for 30 consecutive days, at which time we regain our listing on the Nasdaq Global Select Market,� the company said in a regulatory filing. �If our stock fails to maintain a minimum bid price of $1 for 30 consecutive days during a further 180-day grace period on the Nasdaq Capital Market, subject to compliance with certain core listing standards, we would receive a delisting notice from the Nasdaq Capital Market.�

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