Financial Report Summary and Analysis

Overview

During the three months ended September 30, 2024, Heliogen (the “Company”) recognized total revenue of $1.1 million, a decrease of $1.2 million compared to the same period in 2023. This decrease was primarily driven by a reduction in revenue recognized on the Capella Project, a 5 MWe concentrated solar energy facility being built in Mojave, California, as well as a decrease in grant revenue related to the project.

The Company recognized a gross loss of $0.1 million during the three-month period, a change of $0.5 million compared to a gross profit of $0.4 million in the prior year period. This was mainly due to the recognition of a reduction in the contract loss provision during the three months ended September 30, 2023.

Revenue and Profit Trends

For the nine months ended September 30, 2024, the Company recognized total revenue of $4.8 million, a decrease of $0.8 million compared to the same period in 2023. Services revenue decreased by $0.7 million, primarily due to lower revenue recognized on the Capella Project, partially offset by an increase in engineering services. Grant revenue decreased by $0.1 million due to lower reimbursable costs on the Capella Project, partially offset by a more favorable cost sharing ratio.

The Company recognized a gross loss of $1.7 million during the nine-month period, a change of $1.5 million compared to a gross loss of $0.2 million in the prior year period. This was primarily driven by a $1.7 million inventory reserve recorded to adjust for excess and obsolete inventories.

Strengths and Weaknesses

Strengths:

• The Company has a strong focus on reducing costs, including headcount reductions and lower third-party spending, which has led to a decrease in selling, general and administrative (SG&A) and research and development (R&D) expenses.
• The Company has seen an increase in interest income due to the rising interest rate environment, which has helped offset some of the financial challenges.

Weaknesses:

• The Company has experienced a significant decrease in revenue, particularly on the Capella Project, which has led to gross losses.
• The Company has recognized substantial impairment and other charges, including $4.4 million during the nine-month period, related to the closure of its Manufacturing Facility and other restructuring activities.
• The Company’s liquidity position is a concern, with $44.6 million in cash and cash equivalents as of September 30, 2024. Based on the current forecast, the Company may not have sufficient resources to fund its cash obligations for the next 12 months.

Outlook

The Company is taking various steps to address the challenges it is facing, including exploring cost-saving opportunities, seeking to generate additional revenue through the commercialization of engineering services, and actively assessing various avenues to secure additional capital. However, the Company has stated that if it is unable to effectively implement these measures, it may be forced to delay, reduce or eliminate some or all of its commercialization efforts, product expansion or R&D programs, which could have a material adverse effect on its business, financial condition and results of operations.

Assuming no additional funding and based on the current operating and development plans, the Company expects that its existing liquidity as of the date of this filing will be sufficient to fund currently anticipated operating expenses into the second half of 2025.