- On the one hand, the company’s one-year 700 percent stockincrease seems justified by its impressive 2010 revenue growth based onwhat the company claims are the most efficient and cheapest LED products on the market.
- On the other hand, the company’s net losses have been erraticand larger than revenues. And a bulletin board listing always saps acertain amount of confidence.
An important positive for the Lighting Science story is the financial backing of its 82.5-percent owner Pegasus Partners IV, an affiliate of Pegasus Capital Advisors, LP, a private equity firm that manages close to $2 billion in assetsthrough several private equity funds. Among Pegasus Capital Advisorsother portfolio investments is California rare earth elements (REEs)miner Molycorp, Inc. (NYSE: MCP).
Richard Weinberg, co-managing director of Pegasus CapitalAdvisors, was appointed chairman of Lighting Science January 3 afterZachary S. Gibler, the company’s chairman and CEO, died in a cyclingaccident. Until a new CEO is named, Weinberg and two other directors,will lead the management team.
Pegasus Partners IV has been injecting equity as needed tobolster operating capital and also to support the company’s plan forhelping companies “invest” in its LED lighting products as they make the transition from much cheaper, shorter-lived, and less efficientproducts.
This plan allows customers to purchase Lighting Scienceproducts for an upfront cost that is significantly lower than the totalproduct cost and to pay for the remainder over time. Another option is a no-money-down lease through a major bank at the end of which customerscan return their products or purchase them at a pre-determined residualvalue.
Another positive is that the U.S. government is outlawing incandescent lighting over the next three years.
The U.S. Department of Energy says solid-state lighting, which uses LEDs or organic light-emitting diodes (OLEDs)instead of incandescent bulbs, has the potential to be 10 times moreenergy-efficient than incandescent lighting. Lighting accounts forapproximately 24 percent of the total electricity generated in the U.S.today — and solid state lighting could reduce that by one-third.
According to its financial results filed with the U.S.Securities and Exchange Commission, LSCG’s revenues increaseddramatically quarter to quarter in 2010, from $5.4 million in Q1, to $9million in Q2 to $15 million in Q3. On the other hand, losses have beenlarger than revenues: $12 million in Q1, $102 million in Q2, and $39million in Q3.
At the end of Q3 2010, the company had cash of $19.2 millionafter raising $10 million and $25 million in two equity financings andsecuring an $18.8 million federal economic stimulus bond.
Lighting Science has not announced when its year-end Fiscal 2010 results will be disclosed.
The company was founded in 1988 but its early history isglossed over in its latest prospectus filed for the $25 million equityoffering. By 2004, the company billed itself as a new player in thepromising LED sector and in 2005 its shares hit $35 before falling to$10 in a year. Shares fell to less than $4 in late 2006, then rose to$10 before succumbing to the recession in early 2008. The bottom was$0.37 in December of 2008.
The company we know today, based in Satellite Beach, Florida, is the result of the combination in 2008 of the products, patents, intellectualproperty, assets and businesses of four LED lighting companies:
- Lighting Science Group Corporation, an early entrant andleader in the application of LEDs for general illumination with whitelighting,
- LED Effects, Inc., an established LED company specializing in custom and architectural lighting systems,
- Lighting Science Group, B.V. formerly known as LightingPartner B.V., a Netherlands-based manufacturer and marketer of LED shoplighting and other specialty LED lighting devices, and
- Lamina Lighting, Inc., a supplier of LED light engines and LED modules.
Lighting Science designs and manufacturers its products usingbasic LEDs from several major companies, including Philips LumiledsLighting Company, which claims to be the world’s leading LEDmanufacturer. Philips Lumileds is a subsidiary of multi-nationalhealthcare and lighting company Koninklijke Philips Electronics NV (NYSE: PHG), based in the Netherlands.
Philips probably has the lion’s share of shelf pace at yourneighbourhood Home Depot and similar stores, but Lighting Science saidDecember 13, 2010 it became the first U.S. company to manufacture onemillion LED bulbs in less than a year — and these omnidirectional LEDA19 bulbs will be competing on Home Depot shelves in the U.S. thismonth.
The Lighting Science LED A19 will retail below $30, pay foritself after two years in most home applications, and last for more than 20 years. The LED A19 is targeted as a replacement for the commonlyused 50-cent 60-watt A19 incandescent bulb.
Photo credit: Lighting Science Group Corporation
DISCLOSURE: The writer has no positions in, or professional connections with, these companies.