Exhibit 99.1

 

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

 

In Re:	Chapter 11
B456 SYSTEMS, INC., et al. (1)	Case Number: 12-12859 (KJC)
Debtors	Jointly Administered
	Hon. Kevin J. Carey

 

Monthly Operating Report

For the Period February 1, 2013 through February 28, 2013

 

Required Documents		Form No.		Documents Complete		Explanation Attached		Debtors’ Statement
Schedule of Operating Cash Flow		MOR-1		X
Schedule of Disbursements by Legal Entity		MOR- 1a		X
Schedule of Professional Fees and Expenses Paid		MOR- 1b		X
Bank Account Reconciliations, Bank Statements and Cash Disbursements Journal								X
Statements of Operations		MOR-2		X
Balance Sheets		MOR-3		X
Status of Post Petition Taxes								X
Summary of Unpaid Post Petition Accounts Payable		MOR-4		X
Trade Accounts Receivable and Aging		MOR-5		X
Debtor Questionnaire		MOR-6		X

 

I declare under penalty of perjury (28 U.S.C. Section 1746) that the information contained in this monthly operating report (including attached schedules) is true and correct to the best of my knowledge, information and belief.

 

 

/s/ David Prystash		April 2, 2013
David Prystash		April 2, 2013

 

Notes:

The Debtors in these Chapter 11 Cases, along with the last four digits of each Debtor’s federal tax identification number, are: B456 Systems, Inc. (f/k/a A123 Systems, Inc.) (3876); B456 Securities Corporation (f/k/a/ A123 Securities Corporation) (5388); and Grid Storage Holdings LLC (N/A).  The above-captioned Debtors’ mailing address is c/o A123 Systems, Inc., 200 West Street, Waltham, Massachusetts 02451.

 

The information contained herein is provided to fulfill the requirements of the Office of the United States Trustee. The financial statements provided here include consolidated results for B456 Systems, Inc (the “Company”) as the Company has several non-debtor subsidiaries.  All information contained herein is unaudited and subject to future adjustment.  The Company maintains its books and records on a business unit reporting level and those units do not in all cases correspond to legal entities. Certain assumptions have been made as noted herein.  In addition, the Company maintains certain liabilities on its balance sheet (such as benefits and tax related liabilities) that may relate to one or more of the Company’s subsidiaries and no conclusion as to the legal obligation is made by the presentation herein.

 

 

General Notes

 

Condensed Combined Debtor-in-Possession Financial Statements — The condensed combined financial statements and supplemental information contained herein are unaudited, preliminary, and may not comply with generally accepted accounting principles in the United States of America (“U.S. GAAP”) in all material respects. In addition, the financial statements and supplemental information contained herein represent the condensed combined financial information for Debtors only. Non-debtor subsidiaries are not included in the condensed combined income statement or condensed combined balance sheet.

 

American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”), which is applicable to companies in chapter 11, generally does not change the manner in which financial statements are prepared. It does require, however, that the financial statements for periods subsequent to the filing of the chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. The Debtors’ condensed combined financial statements contained herein have been prepared in accordance with the guidance in SOP 90-7. The unaudited condensed combined financial statements have been derived from the books and records of the Debtors. This information, however, has not been subject to procedures that would typically be applied to financial information presented in accordance with U.S. GAAP, and upon the application of such procedures, the Debtors believe that the financial information could be subject to changes, and these changes could be material. The information furnished in this report includes primarily normal recurring adjustments, but does not include all of the adjustments that would typically be made in accordance with U.S. GAAP.

 

The results of operations contained herein are not necessarily indicative of results which may be expected from any other period or for the full year and may not necessarily reflect the combined results of operations, financial position, and cash flows of the Debtors in the future.

 

Intercompany Transactions — Receivables and payables between the Debtors have been eliminated; however, intercompany transactions between the Debtors and non-debtor affiliates have not been eliminated in the financial statements contained herein. No conclusion as to the legal obligation related to these intercompany transactions is made by the presentation herein.

 

Liabilities Subject to Compromise — As a result of the chapter 11 filings, the payment of prepetition indebtedness is subject to compromise or other treatment under a plan of reorganization. The determination of how liabilities will ultimately be settled and treated cannot be made until the Court approves a chapter 11 plan of reorganization. Accordingly, the ultimate amount of such liabilities is not determinable at this time. SOP 90-7 requires prepetition liabilities that are subject to compromise to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. The amounts currently classified as liabilities subject to compromise are preliminary and may be subject to future adjustments depending on Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, rejection of executory contracts, continued reconciliation or other events.

 

2

 

MOR-1
Debtors Combined Schedule of Operating Cash Flow
For the Period February 1, 2013 through February 28, 2013

(USD 000s)

 

 

Notes:

(1)         Cash balances do not tie exactly to balance sheet as these do not include unavailable funds, outstanding checks, de-minimis bank account balances and other timing related differences.

(2)         Disbursements reflect when the relevant disbursement accounts are funded via check or wire rather than when clearing the bank.

(3)         Payment on account of invoices related to material procured from non-debtor subsidiaries.

(4)         Sale transaction related payments & cash transfers that occurred since closing:

 

Sale Related Payments/Transfers
KEIP - Tax Remittances		$	1,505
Cure Payments		1,272
		$	2,776

 

3

 

MOR-1a
Schedule of Disbursements by Legal Entity
For the Period February 1, 2013 through February 28, 2013

(USD 000s)

 

				Total
Filing Enities:		Case No:		Disbursements (1)
1 A123 Systems, Inc.		12-12859		$	11,250
2 A123 Securities Corporation		12-12860		$	—
3 Grid Storage Holdings LLC		12-12861		$	—
				$	11,250

 

Notes:

 

(1)         Disbursements includes payments to third party vendors, suppliers, employees, professionals, interest, disbursements in accordance with various 1st day motions and transfers of cash from the Debtors’ to the Non-Debtors all in accordance with the Approved Budget, as defined in DIP Loan Agreement. Excludes disbursements related to the January 29, 2013 asset sale transactions including cure payments.

 

4

 

MOR-1b
Schedule of Professional Fees and Expenses Paid (1),(2)
For the Period February 1, 2013 through February 28, 2013

 

		Amount Paid this Period						Cumulative Amount Since Petition date
Professional		Fees		Expenses		Total		Fees		Expenses		Total
Alvarez & Marsal North America LLC		369,048		24,667		393,715		1,296,022		75,716		1,371,738
Blackstone Advisory Partners L.P.		100,000		2,982		102,982		1,904,613		6,024		1,910,637
Brown Rudnick LLP		194,920		12,785		207,705		1,036,023		30,996		1,067,018
Latham & Watkins LLP		1,348,898		51,631		1,400,529		3,935,670		91,219		4,026,889
Lazard Frères & Co. LLC		—		—		—		4,340,000		524		4,340,524
Richards, Layton & Finger, P.A		424,459		59,985		484,444		424,459		59,985		484,444
Logan & Company, Inc.		9,936		—		9,936		9,936		352,527		362,463
Saul Ewing LLP		26,512		4,724		31,236		62,624		4,974		67,597
TOTAL		2,473,773		156,774		2,630,547		13,009,347		621,965		13,631,311

 

Professional		Role
Alvarez & Marsal North America LLC		Debtors’ Financial Advisors
Blackstone Advisory Partners L.P.		Financial Advisor to UCC
Brown Rudnick LLP		UCC Counsel
Latham & Watkins LLP		Debtors’ Bankruptcy Co-Counsel
Lazard Frères & Co. LLC		Debtors’ Investment Banker
Richards, Layton & Finger, P.A		Debtors’ Bankruptcy Co-Counsel
Logan & Company, Inc.		Debtors’ Administrative Advisor
Saul Ewing LLP		UCC Co-Counsel

 

Notes:

 

(1)         Debtors’ & UCC retained financial professionals as approved by the Court.

(2)         Fees for Blackstone and Lazard include fees paid upon closing in connection with the sale transactions as approved by the Court.

 

5

 

Debtors Statement with respect to Bank Account Reconciliations, Bank Statements
and Cash Disbursements Journal
For the Period February 1, 2013 through February 28, 2013

 

Bank Account Reconciliations & Cash Disbursements Journals

 

The Debtors affirm that bank reconciliations are prepared for all open and active bank accounts on a monthly basis.  The Debtors affirm that within its financial accounting systems, check registers and/or disbursements journals are maintained for each disbursement account.

 

Bank statements

 

The Debtors affirm that bank statements for all open and active bank accounts are retained by the Debtors.

 

Closed Bank Accounts

 

The Debtors affirm that no bank account(s) were closed during the current reporting period.

 

·                  None

 

Opened Bank Accounts

 

The Debtors affirm that no bank account(s) was opened during the current reporting period.

 

·                  None

 

6

 

MOR-2
Debtors Condensed Combined Statements of Operations

For the Period October 16, 2013 through February 28, 2013, and
February 1, 2013 through February 28, 2013
(USD 000s -Unaudited)

 

 

Notes:

(1) Net Gain on Asset Adjustment is comprised of the following asset write offs during the month of February:

 

General Accruals		$	322
Accrued Legal General		2,312
Accrued Interest		3,130
Accrued Payroll		1,673
Accrued Severance		187
Accrued 401K		292
		$	7,916

 

7

 

MOR-3
Debtors Condensed Combined Balance Sheets

As of the Petition Date and February 28, 2013
 (USD 000s- Unaudited)

 

 

See Notes to Debtors Condensed Combined Balance Sheets on the following page

 

8

 

MOR-3
Notes to Debtors Condensed Combined Balance Sheets

As of the Petition Date and February 28, 2013
 (USD 000s - Unaudited)

 

1.              Debt is comprised of the following:

 

		10/15/2012		1/31/2013
Senior Secured Bridge Loan Facility		12,500		—
Less discount related to fair value of associated warrants		(11,287	)	—
Net Senior Secured Bridge Loan Facility		1,213		—
Mass clean energy loan		2,822		—
Interim Debtor In Possession Loan		—		—
Total		4,035		—
Less amounts classified as current		—		—
Long Term Debt		4,035		—

 

2.              Liabilities subject to compromise consist of the following:

 

Liabilities Subject to Compromise		15-Oct-12			28-Feb-13
2015 Convertible Notes		$	2,748		$	2,759
3.75% 2016 Convertible Notes		140,744			143,750
Accounts Payable		29,131			10,332
Accrued Expenses		7,601			45,162
Non -Debtor Intercompany Payables		20,439			4,743
Deferred Revenue		130			—
Other Liabilities		12,388			—
Preferred Stock Warrant Liability		14,323			—
TOTAL		$	227,504		$	206,745

 

9

 

Declaration Regarding the Status of Post Petition Taxes of the Debtors

As of February 28, 2013

 

COMMONWEALTH OF MASSACHUSETTS,

 

MIDDLESEX COUNTY

 

David Prystash hereby declares and states:

 

1. I am Chief Financial Officer for B456 Systems, Inc., a corporation organized under the laws of the State of Delaware and the Debtor in the above-captioned chapter 11 cases (the “Debtors”).  I am familiar with the Debtors’ day-to-day operations, business affairs and books and records.

 

2. All statements in this Declaration are based on my personal knowledge, my review of the relevant documents, my discussions with other employees of the Debtors, or my opinion based upon my experience and knowledge of the Debtors’ operations and financial condition. If I were called upon to testify, I could and would testify to each of the facts set forth herein based on such personal knowledge, review of documents or opinion. I am authorized to submit this Declaration on behalf of the Debtors.

 

3. To the best of my knowledge, the Debtors have filed all necessary federal, state and local tax returns and made all required post petition tax payments in connection therewith on a timely basis or have promptly remediated any late filings or payments that may have occurred due to unintentional oversights. (1)

 

 

Dated: April 2, 2013	Respectfully submitted,
Waltham, Massachusetts
		/s/ David Prystash
		David Prystash

 

(1) The Debtors use ADP for the remittance of all payroll taxes.

 

10

 

MOR-4

Combined Debtors Summary of Unpaid Post Petition Accounts Payable

February 28, 2013

(USD 000s - Unaudited)

 

		Days Past Due (1)
		Current			1-30 Days			31-60 Days			61-90 Days			> 90 Days			Total
Trade Debt		$	387		$	383		$	103		$	25		$	2		$	901
		43		%	43		%	11		%	3		%	0		%	100		%
								Other Payables
								Uninvoiced Receipts									$	317
								Total Post - Petition Accounts Payable									$	1,218

 

Notes:

 

(1)         Days since date of invoice.

 

11

 

MOR-5
Combined Debtors Accounts Receivable and Aging
February 28, 2013
(USD 000s - Unaudited)

 

		Days Aged (net)
		Current		1-30 Days		31-60 Days		61-90 Days		> 90 Days		Total
Customer Receivables		—		—		(1	)	—		100		$	98
		0	%	0	%	-1	%	0	%	101	%	100		%
						Adjustments
					Prepetition LC Cash Collateral							$	3,340
						Total Accounts Receivable						$	3,438

 

12

 

MOR-6
Debtor Questionnaire
For the Period February 1, 2013 through February 28, 2013

 

				Yes		No
1.		Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below.				X
2.		Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation.				X
3.		Have all post petition tax returns been timely filed? If no, provide an explanation.		X
4.		Are workers compensation, general liability and other necessary insurance coverage’s in effect? If no, provide an explanation.		X
5.		Have any bank accounts been opened during the reporting period? If yes, provide documentation identifying the opened account(s). If an investment account has been opened provide the required documentation pursuant to the Delaware Local Rule 4001-3.				X

 

13