Balqon’s Latest Financial Report Hints at Possible Bankruptcy; Interview With Balqon CEO Balwinder Samra (video)
SEC Filings News recently interviewed Balqon Corporation CEO Balwinder Samra (see video below).
The California start-up (founded in 2005) focuses mainly on the heavy duty commercial EV market segment where it expects to see growth, but over the last few years, revenues remain relatively flat with $20 million of net loss in 2009-2012 alone and another $2 million in first half of this year.
Sadly, when we look at the latest 10-Q filling, the situation isn’t easy for Balqon Corporation:
“Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We do not currently have sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs in the very near-term. We believe that we have sufficient working capital to continue operations only until approximately next three months, at the latest unless we successfully restructure our debt, experience a significant improvement in sales and obtain other sources of liquidity.”
“We are in default of $3,361,500 in principal amount of our convertible notes and $556,677 of accrued interest on these notes. Although we are actively pursuing a number of alternatives, including seeking to restructure our debt and seeking to raise additional debt or equity financing, or both, there can be no assurance that we will be successful. If we cannot restructure our debt and obtain sufficient liquidity in the very near term, we may need to seek to protection under the U.S. Bankruptcy Code.“
In the second quarter, as much as 73% of sales came from lithium batteries sales (Balqon Corporation is the exclusive distributor of lithium batteries manufactured by China company Winston Battery Limited). But reduced drive system sales means lower revenues.
“Our total revenues decreased by $586,440, or 62%, to $366,759 for the three months ended June 30, 2013 as compared to $953,199 for the three months ended June 30, 2012. The decrease in revenues was as a result of lower drive system sales. Gross profits (loss) during the three months ended June 30, 2013 was ($6892), down $191,180, or 104%, from the same period in 2012. This decrease is primarily due to a change in the product mix from drive systems to retail sales of lithium batteries and accessories. We reported a net loss of $635,981 for the three months ended June 30, 2013 as compared to a net loss of $831,850 for the three months ended June 30, 2012. Losses from operations as a percentage of sales during the three months ended June 30, 2013 was 124%, as compared to losses from operations as a percentage of sales of 67% during the three months ended June 30, 2012. The decrease in losses during the three months ended June 30, 2013 is primarily attributable to decreases in general and administrative expenses and research and development costs. An $87,086 loss on the change in the fair value of the derivative liability was realized during the three months ended June 30, 2013 while a $396,749 gain on the change in the fair value of the derivative liability was realized during the three months ended June 30, 2012.”
What is good is that Balqon will have some big orders for batteries on the horizon, but time will show if the heavy duty commercial EV market is big enough for Balqon to succeed.
“In June 2013, we started shipment of a 700 lithium battery purchase order to a large electric bus manufacturer. This order is a result of over a twelve month demonstration of our lithium batteries in an inner city bus application.”
“In August 2013, we received a purchase order for approximately 500 lithium batteries from a large telecommunication storage battery provider. This purchase order is a result of a one year successful demonstration of lithium battery storage at a number of telecommunication sites. We anticipate continued growth of this market during the next twelve months.”
In August 2013, we received a purchase order for our drive system and battery system for electric yard tractors from our European OEM partner. This order is a result of successful demonstration of electric yard tractors in Europe by our OEM partner.”