MILWAUKEE, May 11, 2017 /PRNewswire/ -- EnSync, Inc.
(NYSE MKT: ESNC), dba EnSync Energy Systems, a leading
developer of innovative distributed energy resource (DER) systems
and internet of energy (IOE) control platforms for the utility,
commercial, industrial and multi-tenant building markets, today
announced results for the third quarter of fiscal year 2017, ended
March 31, 2017.
Recent Highlights
- Year-to-date, revenues of $9.4
million through the third quarter establishes record fiscal
year revenues and compares to $0.8
million in the year ago period;
- Sold the Oceanic Time Warner solar-plus-storage power purchase
agreement (PPA) project to a leading U.S. infrastructure
investor;
- Entered into a PPA with a Hawaii-based food processing company,
providing sustainability and electrical resiliency by adding solar
plus storage at the processor's site, while also supporting
expansion of grid service capabilities with the local utility;
- Introduced DER Flex™, EnSync Energy's proprietary technology
that enables aggregation and monetization of distributed energy
resources, such as solar and energy storage, in utility and ISO
markets;
- Demonstrated live simultaneous energy discharge at three
commercial sites utilizing its DER Flex™ technology during the Maui
Energy Conference, showcasing its ability to aggregate distributed
resources into a virtual power plant, through utility specified
hardware and communication protocol;
- Signed three additional power purchase agreements with an
estimated value of more than $6
million;
- Sold its Matrix Energy Management and DER Flex™
IOE technologies to serve as the platform for immediate and
long-term energy and sustainability goals of the Chemehuevi Native
American tribe's community center in San Bernardino County,
California;
- Sold its Matrix Energy Management and DER Flex™ IOE
technologies to serve as the electrical system backbone for the
Alliance for Sustainable Colorado building's retrofit from AC
(alternating current) to DC (direct current) and showcase the DC
system's commercial advantages;
- Shipped and is commissioning its solar-plus-storage system,
including the DER Flex™ IOE software, at ENMAX, its first Canadian
market penetration, and first utility solar-plus-storage
project;
- Acquired DCfusion, a direct-current (DC) system consulting,
engineering and policy expertise firm which strategically aligns
with EnSync Energy's technologies and target markets;
- Terminated the Supply Agreement with SPI, ending SPI's
continuing non-compliance with the terms of the Agreement; the net
effect to EnSync Energy's capital structure is the elimination of
92 million shares of common stock overhang and a balance sheet
adjustment adding $13.29 million to
stockholders equity and a similar reduction to deferred
revenues;
- The Company's backlog now totals approximately $13.4 million in estimated value at time of sale;
and
- Cash balance at the end of March
2016 was $12.4 million
compared to $17.2 million at the end
of the prior fiscal year.
Management Discussion
"Solid progress was made during the quarter to set the stage for
the remainder of the year and the future," commented Brad Hansen, President and Chief Executive
Officer of EnSync Energy Systems. "The estimated value of our
current backlog of projects is approximately $13.4 million, an increase of more than
$9 million from the beginning of the
calendar year. We recently sold our Oceanic Time Warner project,
and have several additional projects now being packaged for sale.
Our Hawaii pipeline still
dominates our project intake, but we are also getting traction on
projects in California and in the
Northeastern United States. The
velocity of our PPA contracts is improving; the signing of the
Kalaeloa Makai PPA this week further strengthens our backlog.
This project will benefit the more than 200 residential units at
the property. The operational success during the quarter was
significant and will be recognized in upcoming quarters."
Mr. Hansen continued, "We recently made the strategic decision
to terminate our supply agreement with SPI due to their failure to
meet their purchase obligations. This was a decision taken after we
had granted multiple cure deadline extensions, and worked in good
faith to give SPI every reasonable chance to meet their
obligations. As noted above, their non-compliance with the terms of
the Supply Agreement results in the elimination of nearly 92
million potential shares of common stock being issued to SPI, which
simplifies our capital structure moving forward."
Mr. Hansen concluded, "EnSync Energy is at the leading edge
of providing distributed energy resource systems and internet
of energy control platforms. We have proven our business model with
multiple successful installations, demonstrating the effectiveness
to customers of solar-plus-storage, and the return on investment
for investors. We believe the traction that we continue to gain
should only accelerate in the quarters and years to come."
Financial Results
Total revenue for the third quarter which ended March 31, 2017 was $0.1
million compared to $0.2
million in the third quarter of fiscal 2016. Several
new system and PPA sales recently signed will begin to be
recognized in the fourth quarter and on into fiscal 2018, and
demonstrate the quarterly fluctuations currently inherent in the
business. Year-to-date, revenues of over $9.4 million through the third quarter
establishes record fiscal year revenues and compares to
$0.8 million in the year ago
period.
Advanced Engineering and Development costs remained consistent
at $1.4 million in the third quarter
of fiscal 2017, compared to $1.4
million in the year ago period. Selling, General and
Administrative costs totaled $2.7
million in the third quarter of fiscal 2017, compared to
$2.2 million during the second
quarter of fiscal 2016. The Company intends to hold at or below
these levels going forward.
Net loss attributable to common shareholders was $(4.5) million, or $(0.09) per basic and diluted share, for the
third quarter of fiscal 2017, compared to $(4.0) million, or $(0.08) per basic and diluted share, in the year
ago third quarter.
Cash balance at March 31, 2017 was
$12.4 million dollars compared to
$17.2 million at June 30, 2016.
Estimated backlog value for PPA projects, components and systems
at date of this announcement is approximately $13.4 million.
Conference Call Information
Date: Thursday, May 11, 2017
Time: 4:30 p.m. ET (3:30 p.m. CT)
Domestic participant dial in #: (877) 870-4263 or (412)
317-0790
Conference code #: 10106816
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization.
Interested parties can also listen to a live internet webcast
available in the investor section of the Company's website at
www.ensync.com.
A teleconference replay of the call will be available at (877)
344-7529 or (412) 317-0088, confirmation code 10106816, through
May 18, 2017. A webcast replay will
be available in the investor section of the Company's website at
www.ensync.com for 90 days.
About EnSync Energy Systems
EnSync, Inc. (NYSE MKT: ESNC), dba EnSync Energy Systems, is
creating the future of electricity with innovative distributed
energy resource (DER) systems and internet of energy (IOE) control
platforms. EnSync Energy ensures the most cost-effective and
resilient electricity, delivered from an electrical infrastructure
that prioritizes the use of all available resources, such as
renewables, energy storage and the utility grid. As project
developer, EnSync Energy's distinctive engagement methodology
encompasses load analysis, system design consulting, and technical
and financial modeling to ensure energy systems are sized and
optimized to meet our customers' objectives for value and
performance. Proprietary direct current (DC) power control
hardware, energy management software, and extensive experience with
numerous energy storage technologies uniquely positions EnSync
Energy to deliver fully integrated systems that provide for
efficient design, procurement, commissioning, and ongoing
operation. EnSync Energy's IOE control platform adapts easily
to ever-changing generation and load variables, as well as changes
in utility prices and programs, ensuring the means to make or save
money behind-the-meter, while concurrently providing utilities the
opportunity to use DERs for an array of grid enhancing services. In
addition to direct system sales, EnSync Energy includes power
purchase agreements (PPAs) in its portfolio of offerings, which
enables electricity savings for customers and provides a stable
financial yield for investors. EnSync Energy is a global
corporation, with joint venture Meineng Energy in AnHui, China, and energy project development
subsidiary Holu Energy LLC in Hawaii, and DCfusion LLC, a power system
engineering and design, consultancy and policy firm. For more
information, visit www.ensync.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that are intended to be covered by the "safe
harbor" created by those sections. Forward-looking
statements, which are based on certain assumptions and describe our
future plans, strategies and expectations, can generally be
identified by the use of forward-looking terms such as "believe,"
"expect," "may," "will," "should," "could," "seek," "intend,"
"plan," "estimate," "anticipate" or other comparable terms.
All statements other than statements of historical facts included
in this press release regarding our strategies, prospects,
financial condition, operations, costs, plans and objectives are
forward-looking statements. Examples of forward-looking statements
include, among others, statements we make regarding our supply
agreement with SPI Solar, Inc., expected future operating results,
expectations concerning our PPA strategy, the anticipated results
of our product development efforts and other expectations regarding
our business strategy. Forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
they are based only on our current beliefs, expectations and
assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements
relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict
and many of which are outside of our control. Our actual results
and financial condition may differ materially from those indicated
in the forward-looking statements. Therefore, you should not rely
on any of these forward-looking statements. Important factors that
could cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the risks and uncertainties described in the
Risk Factors and in Management's Discussion and Analysis of
Financial Condition and Results of Operations sections of our most
recent Annual Report on Form 10-K and our subsequently filed
Quarterly Report(s) on Form 10-Q. We undertake no obligation to
publicly update any forward-looking statement, whether written or
oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
Investor Relations Contact:
Lytham Partners,
LLC
Robert Blum, Joseph Diaz, or Joe Dorame
(602) 889-9700
EnSync Media Contact:
Michelle
Montague
(262) 735-5676
EnSync,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31,
|
|
Nine months
ended March 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
|
|
|
|
|
|
|
Product
sales
|
$
50,505
|
|
$
64,756
|
|
$
9,268,635
|
|
$
550,986
|
Engineering and
development
|
-
|
|
95,382
|
|
175,000
|
|
264,389
|
Total
revenues
|
50,505
|
|
160,138
|
|
9,443,635
|
|
815,375
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of product
sales
|
206,157
|
|
89,794
|
|
9,703,858
|
|
394,402
|
Cost of engineering
and development
|
-
|
|
221,628
|
|
937,725
|
|
357,795
|
Advanced engineering
and development
|
1,414,858
|
|
1,397,645
|
|
3,493,326
|
|
5,089,297
|
Selling, general, and
administrative
|
2,743,618
|
|
2,212,871
|
|
8,331,773
|
|
6,727,823
|
Depreciation and
amortization
|
98,318
|
|
209,991
|
|
454,387
|
|
569,647
|
Total costs and
expenses
|
4,462,951
|
|
4,131,929
|
|
22,921,069
|
|
13,138,964
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(4,412,446)
|
|
(3,971,791)
|
|
(13,477,434)
|
|
(12,323,589)
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Equity in gain (loss)
of investee company
|
(170,084)
|
|
(101,832)
|
|
(171,816)
|
|
(170,429)
|
Interest
income
|
10,809
|
|
14,935
|
|
33,436
|
|
33,645
|
Interest
expense
|
(11,115)
|
|
(12,047)
|
|
(37,219)
|
|
(39,694)
|
Other
income
|
-
|
|
-
|
|
8,432
|
|
76,437
|
Total other income
(expense)
|
(170,390)
|
|
(98,944)
|
|
(167,167)
|
|
(100,041)
|
|
|
|
|
|
|
|
|
Loss before expense
(benefit) for income taxes
|
(4,582,836)
|
|
(4,070,735)
|
|
(13,644,601)
|
|
(12,423,630)
|
|
|
|
|
|
|
|
|
Expense (benefit) for
income taxes
|
-
|
|
172
|
|
-
|
|
(468)
|
Net loss
|
(4,582,836)
|
|
(4,070,907)
|
|
(13,644,601)
|
|
(12,423,162)
|
Net loss attributable
to noncontrolling interest
|
128,722
|
|
123,344
|
|
271,061
|
|
277,589
|
Net loss
attributable to EnSync, Inc.
|
(4,454,114)
|
|
(3,947,563)
|
|
(13,373,540)
|
|
(12,145,573)
|
Preferred stock
dividend
|
(79,264)
|
|
(71,810)
|
|
(232,040)
|
|
(218,390)
|
Net loss
attributable to common shareholders
|
$
(4,533,378)
|
|
$
(4,019,373)
|
|
$
(13,605,580)
|
|
$
(12,363,963)
|
|
|
|
|
|
|
|
|
Net loss per
share
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
(0.09)
|
|
$
(0.08)
|
|
$
(0.28)
|
|
$
(0.26)
|
|
|
|
|
|
|
|
|
Weighted average
shares - basic and diluted
|
48,010,347
|
|
47,608,821
|
|
47,870,082
|
|
46,983,174
|
|
|
|
|
|
|
|
|
See accompanying
notes to condensed consolidated financial
statements.
|
EnSync,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
|
(Unaudited)
|
|
|
|
March 31,
2017
|
|
June 30,
2016
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
12,399,671
|
|
$
17,189,089
|
Accounts receivable,
net
|
237,265
|
|
172,633
|
Inventories,
net
|
1,947,982
|
|
1,869,942
|
Prepaid expenses and
other current assets
|
745,265
|
|
600,591
|
Customer intangible
assets
|
8,249
|
|
76,293
|
Note
receivable
|
174,148
|
|
171,140
|
Deferred PPA project
costs
|
-
|
|
5,690,307
|
Deferred customer
project costs
|
202,548
|
|
419,765
|
Project
assets
|
408,761
|
|
1,190,853
|
Total current
assets
|
16,123,889
|
|
27,380,613
|
Long-term
assets:
|
|
|
|
Property, plant and
equipment, net
|
3,549,822
|
|
3,889,106
|
Investment in
investee company
|
1,993,810
|
|
2,165,626
|
Goodwill
|
809,363
|
|
809,363
|
Right of use
assets-operating leases
|
163,959
|
|
27,264
|
Total
assets
|
$
22,640,843
|
|
$
34,271,972
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
338,942
|
|
$
332,707
|
Accounts
payable
|
630,121
|
|
569,226
|
Accrued
expenses
|
488,067
|
|
501,031
|
Customer
deposits
|
104,577
|
|
201,352
|
Accrued compensation
and benefits
|
286,791
|
|
257,087
|
Total current
liabilities
|
1,848,498
|
|
1,861,403
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net
of current maturities
|
802,952
|
|
1,057,720
|
Deferred
revenue
|
13,712,638
|
|
13,290,000
|
Other long-term
liabilities
|
260,443
|
|
25,789
|
Total
liabilities
|
16,624,531
|
|
16,234,912
|
|
|
|
|
Commitments and
contingencies (Note 15)
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Series B redeemable
convertible preferred stock ($0.01 par value,
|
|
|
|
$1,000 face value)
3,000 shares authorized and issued, 2,300 shares outstanding,
preference in liquidation of$5,549,840 and $5,317,800 as of March
31, 2017 and June 30, 2016, respectively
|
23
|
|
23
|
Series C convertible
preferred stock ($0.01 par value, $1,000 face value),
|
|
|
|
28,048 shares
authorized, issued, and outstanding, preference in liquidation
of$466,472and $12,719,260 as of March 31, 2017 and June 30, 2016,
respectively
|
280
|
|
280
|
Common stock ($0.01
par value); 300,000,000 authorized,
|
|
|
|
48,010,347 and
47,752,821 shares issued and outstanding as of March 31, 2017 and
June 30, 2016, respectively
|
1,188,418
|
|
1,185,843
|
Additional paid-in
capital
|
139,205,625
|
|
137,585,233
|
Accumulated
deficit
|
(133,923,648)
|
|
(120,550,108)
|
Accumulated other
comprehensive loss
|
(1,584,697)
|
|
(1,585,583)
|
Total EnSync, Inc.
equity
|
4,886,001
|
|
16,635,688
|
Noncontrolling
interest
|
1,130,311
|
|
1,401,372
|
Total
equity
|
6,016,312
|
|
18,037,060
|
Total liabilities
and equity
|
$
22,640,843
|
|
$
34,271,972
|
|
|
|
|
See accompanying
notes to condensed consolidated financial
statements.
|
EnSync,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
Nine months ended
March 31,
|
|
2017
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(13,644,601)
|
|
$
(12,423,162)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
Depreciation of
property, plant and equipment
|
379,450
|
|
523,441
|
Amortization of
customer intangible assets
|
68,044
|
|
46,206
|
Stock-based
compensation, net
|
1,554,567
|
|
893,739
|
Equity in (gain) loss
of investee company
|
171,816
|
|
170,429
|
Provision for
inventory reserve
|
234,675
|
|
-
|
Gain on sale of
property and equipment
|
(8,432)
|
|
-
|
Interest accreted on
note receivable
|
(3,008)
|
|
(9,041)
|
Gain on bargain
purchase
|
-
|
|
(76,437)
|
Changes in assets and
liabilities
|
|
|
|
Accounts
receivable
|
(64,632)
|
|
75,567
|
Inventories
|
(312,715)
|
|
(1,010,493)
|
Prepaids and other
current assets
|
(144,366)
|
|
(187,735)
|
Deferred PPA project
costs
|
5,690,307
|
|
(159,978)
|
Deferred customer
project costs
|
217,217
|
|
(1,009,730)
|
Project
assets
|
782,092
|
|
(7,091,533)
|
Accounts
payable
|
60,895
|
|
(470,831)
|
Accrued
expenses
|
(53,683)
|
|
(877,806)
|
Customer
deposits
|
(96,775)
|
|
53,236
|
Accrued compensation
and benefits
|
29,704
|
|
(105,228)
|
Deferred
revenue
|
422,638
|
|
13,290,000
|
Other long-term
liabilities
|
137,983
|
|
-
|
Net cash provided by
(used in) operating activities
|
(4,578,824)
|
|
(8,369,356)
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
business combination
|
-
|
|
(225,829)
|
Change in restricted
cash
|
-
|
|
60,193
|
Expenditures for
property and equipment
|
(46,364)
|
|
(389,266)
|
Proceeds from sale of
property and equipment
|
15,325
|
|
-
|
Net cash provided by
(used in) investing activities
|
(31,039)
|
|
(554,902)
|
Cash flows from
financing activities
|
|
|
|
Payment of financing
costs
|
-
|
|
(261,982)
|
Repayments of
long-term debt
|
(248,533)
|
|
(242,375)
|
Proceeds from
equipment financing
|
-
|
|
331,827
|
Payments for finance
leases
|
-
|
|
(10,077)
|
Proceeds from
issuance of preferred stock
|
-
|
|
13,300,000
|
Proceeds from
issuance of common stock
|
-
|
|
6,800,000
|
Proceeds from the
exercise of stock options
|
68,400
|
|
-
|
Contributions of
capital from noncontrolling interest
|
-
|
|
53,614
|
Net cash (used in)
provided by financing activities
|
(180,133)
|
|
19,971,007
|
Effect of exchange
rate changes on cash and cash equivalents
|
578
|
|
(33)
|
Net increase
(decrease) in cash and cash equivalents
|
(4,789,418)
|
|
11,046,716
|
Cash and cash
equivalents - beginning of period
|
17,189,089
|
|
10,757,461
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
12,399,671
|
|
$
21,804,177
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash paid for
interest
|
$
37,612
|
|
$
39,994
|
Supplemental noncash
information:
|
|
|
|
Right of use asset
obtained in exchange for new finance lease
|
$
-
|
|
$
13,521
|
Right of use asset
obtained in exchange for new operating lease
|
178,124
|
|
41,048
|
Asset retirement
obligation
|
19,454
|
|
18,527
|
|
|
|
|
See accompanying
notes to condensed consolidated financial
statements.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ensync-energy-reports-third-quarter-fiscal-year-2017-results-300456378.html
SOURCE EnSync, Inc.