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1. Nature of the Business A123 Systems, Inc. (the "Company") was incorporated in Delaware on October 19, 2001 and has its corporate offices in Waltham, Massachusetts. The Company designs, develops, manufactures and sells advanced rechargeable lithium-ion batteries and energy storage systems and provides research and development services to government agencies and commercial customers. Management Plan Note—The Company's available sources of cash primarily include cash and cash equivalents, proceeds from government grants, and available borrowings under the revolving line of credit. To fund the Company's growth and expansion plans, including anticipated future losses, purchase commitments, capital expenditures, and principal and interest payments on borrowing, the Company will need to raise additional capital in the next twelve months. The Company believes that it will be able to raise the capital necessary to implement its business plan through 2012 and into 2013 through strategic and independent investors. On January 25th, the Company raised $23.5 million from an institutional investor in a registered direct offering (see footnote 20). In addition, the Company is also taking actions to improve cash flow by reducing manufacturing costs and operating expenses, as well as by managing inventory levels based on improved forecasting of customer demand and manufacturing lead times. However, if the Company is unable to raise enough capital and improve operating performance, the Company's growth potential may be adversely affected and the Company will have to modify its growth plans to conserve available cash. Management believes that the available cash and cash equivalents should be sufficient to fund operations for the next twelve months. |