MILWAUKEE, Sept. 20, 2017 /PRNewswire/ -- EnSync, Inc.
(NYSE American: ESNC), dba EnSync Energy Systems, a leading
developer of innovative distributed energy resources (DERs), today
announced results for the fiscal year 2017, ended June 30, 2017.
Recent Highlights
- Fiscal 2017 revenues of $12.5
million increased by 6 times that of fiscal 2016
revenues of $2.1 million;
- In fiscal year 2017, EnSync Energy sold 12 power purchase
agreements (PPAs) across both commercial and industrial (C&I),
as well as residential, applications including Spectrum (formerly
Time Warner), University of the Nations, Easter Seals, and the Villages of Kapolei;
- 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;
- Non-PPA deployments of the Matrix Energy Management platform
and DER Flex Internet of Energy software occurred with key
customers, including Schneider Electric, ENMAX, a major utility in
Calgary, Alberta, the Chemehuevi
Native American tribe's community center in San Bernardino County,
and the Alliance for Sustainable Colorado in Denver;
- Signed collaboration agreement with Schneider Electric to
explore distributed energy resource technology and market
opportunities;
- Announced an expanded focus on the utility market segment
through the creation of a utility market vertical in the
company;
- Designed and managed the Smart Energy Microgrid Marketplace
on-site microgrid demonstration system at Solar Power International
(SPI), one of North America's
biggest solar trade conferences;
- Initial deployment of the EnSync Energy SuperModule™, 20-foot
containers that can quickly be placed and connected at the site,
containing both power controls and energy storage;
- Acquired DCfusion, a direct-current (DC) system consulting,
engineering and policy expertise firm which strategically aligns
with EnSync Energy's technologies and target markets;
- The Company's backlog as of today totals approximately
$13.0 million in estimated value at
time of sale, up 125% from the Q4 2016 earnings call; and
- Cash balance at the end of June
2017 was $11.8 million.
Management Discussion
"Our commercialization strategy of selling custom designed
distributed energy resource systems or DERs, is fundamentally
solid. We have outstanding project development and sales
capabilities, innovative and differentiated products like the
Matrix Energy Management System and DER Flex, our Internet of
Energy platform, and an assortment of storage alternatives that
meet virtually any combination of applications you would ever need
to perform," commented Brad Hansen,
President and Chief Executive Officer of EnSync Energy Systems. "We
continue to see an expanding market for our DER systems for
commercial and industrial, and microgrid installations, whether
financed, owned and operated through power purchase agreements, or
directly sold to an end customer. We are pleased with the
progress made in such a short period of time, including an
expanding pipeline in both Hawaii
and California, collaborations in
place with industry leaders such as Schneider Electric, and the
launch of products to address the utility market. We look forward
to continued growth in fiscal 2018 and beyond."
Mr. Hansen continued, "The expansion and success of our business
model during fiscal 2017 helped drive a six time increase in
revenues, as we successfully sold 12 PPA projects that we had
developed in Hawaii. These
projects included key collaborations with Spectrum (formerly Time
Warner), University of Nations, Easter
Seals, and Villages of Kapolei, and supported key Hawaiian industries
such as agriculture, food processing, telecommunications,
hospitality, education, real estate and nonprofit. The market for
our solutions continues to remain robust within Hawaii, with current backlog as of today up
more than 125% from the Q4 2016 earnings call."
Mr. Hansen concluded, "Fiscal 2017 was a year of many records
and accomplishments, while also positioning EnSync for continued
growth into the future. In particular, we believe our collaboration
with Schneider Electric to deploy systems to address the changing
grid landscape through DER deployments provides an exciting
opportunity to work with one of the largest companies in the
industry. Additionally, we are also enthusiastic about our entry
into the utility vertical. Our goal for the year is to penetrate
more utilities and ISOs for asset management, utilizing our DER
Flex technology, and leverage that success to other products and
services in fiscal 2019 and beyond. Overall, our project pipeline
is robust and with our addition of the California market and contribution from our
efforts with the utility market vertical, we are well positioned to
meet our growth initiatives."
Financial Results
Total revenue for the fourth
quarter was $3.1 million compared to
$1.3 million in the year ago period.
Total revenue for the fiscal year ended June
30, 2017 was $12.5 million
compared to $2.1 million in fiscal
2016. The increase in revenue this year is primarily attributable
to the company's shift to a PPA-based sales model where the company
successfully sold 12 PPA projects for a total of $17.2 million, 11 of which had at least partial
revenue recognition during fiscal 2017 as we progressed on
constructing and commissioning those projects. In addition to the
PPA sales, revenue was also recognized from system sales of the
Company's Matrix Energy Management System and DER Flex
platform.
Total costs and expenses for the fourth quarter were
$7.1 million compared to $7.0 million in the year ago period. Total costs
and expenses during fiscal 2017 were $30.0
million, compared to $20.1
million for the fiscal year 2016. The cost of product sales,
which includes the cost of goods sold for the revenue recognized on
PPA projects as they are constructed, was $2.9 million for the quarter and $12.6 million for fiscal 2017. In the fourth
quarter our gross margin on product sales revenue was 5.5%.
Advanced Engineering and Development costs decreased to
$4.8 million in the fiscal 2017,
compared to $6.2 million in the year
ago period. Selling, General and Administrative costs totaled
$11.1 million in fiscal 2017,
compared to $9.0 million during
fiscal 2016. The Company intends to hold at or below these levels
going forward.
The Company derecognized a deferred revenue liability of
$13.3 million tied to the
now-terminated SPI supply agreement and recognized non-operating
gain of $13.3 million pertaining to
the same event.
Net loss attributable to common shareholders was $(4.4) million, or $(0.09) per basic and diluted share, for fiscal
2017, compared to $(18.2) million, or
$(0.39) per basic and diluted share,
in fiscal 2016.
Cash balance at June 30, 2017 was
$11.8 million compared to
$17.2 million at June 30, 2016.
Estimated backlog value for PPA projects, components and systems
as of the date of this announcement is approximately $13.0 million.
Conference Call Information
Date: Wednesday, September 20,
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 #: 10112129
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 10112129, through
September 27, 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 American: ESNC), dba EnSync Energy Systems
(EnSync Energy), 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," "goal," "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 project completion timelines, our ability to
monetize our PPA assets, statements regarding the sufficiency of
our capital resources, expected operating losses, expected
revenues, expected expenses and our expectations concerning 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 following: our historical and
anticipated future operation losses and our ability to continue as
a going concern; our ability to raise the necessary capital to fund
our operations and the risk of dilution to shareholders from
capital raising transactions; our ability to successfully
commercialize new products, including our Matrix TM Energy
Management, DER Flex TM, DER Supermodule TM, and Agile TM Hybrid
Storage Systems; our ability to lower our costs and increase our
margins; our product, customer and geographic concentration, and
lack of revenue diversification; the length and variability of our
sales cycle; our dependence on governmental mandates and the
availability of rebates, tax credits and other economic incentives
related to alternative energy resources and the regulatory
treatment of third-party owned solar energy systems; and the other
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 recently filed 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.
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
Year ended
June 30,
|
|
2017
|
|
2016
|
Revenues
|
|
|
|
Product
sales
|
$
12,319,184
|
|
$
1,730,851
|
Engineering and
development
|
175,000
|
|
369,172
|
Total
revenues
|
12,494,184
|
|
2,100,023
|
|
|
|
|
Costs and
expenses
|
|
|
|
Cost of product
sales
|
12,586,458
|
|
3,486,542
|
Cost of engineering
and development
|
937,725
|
|
583,137
|
Advanced engineering
and development
|
4,829,840
|
|
6,234,083
|
Selling, general and
administrative
|
11,109,038
|
|
9,038,602
|
Depreciation and
amortization
|
551,680
|
|
772,332
|
Total costs and
expenses
|
30,014,741
|
|
20,114,696
|
|
|
|
|
Loss from
operations
|
(17,520,557)
|
|
(18,014,673)
|
|
|
|
|
Other income
(expense)
|
|
|
|
Equity in loss of
investee company
|
(217,898)
|
|
(242,902)
|
Interest
income
|
41,661
|
|
46,438
|
Interest
expense
|
(50,474)
|
|
(51,825)
|
Other
income
|
15,405
|
|
-
|
Gain on termination
of SPI Supply Agreement
|
13,290,000
|
|
-
|
Total other income
(expense)
|
13,078,694
|
|
(248,289)
|
|
|
|
|
Loss before benefit
for income taxes
|
(4,441,863)
|
|
(18,262,962)
|
|
|
|
|
Benefit for income
taxes
|
-
|
|
(468)
|
Net loss
|
(4,441,863)
|
|
(18,262,494)
|
Net loss attributable
to noncontrolling interest
|
352,327
|
|
386,436
|
Net loss
attributable to EnSync, Inc.
|
(4,089,536)
|
|
(17,876,058)
|
Preferred stock
dividend
|
(313,286)
|
|
(291,995)
|
Net loss
attributable to common shareholders
|
$
(4,402,822)
|
|
$
(18,168,053)
|
|
|
|
|
Net loss per
share
|
|
|
|
Basic and
diluted
|
$
(0.09)
|
|
$
(0.39)
|
|
|
|
|
Weighted average
shares - basic and diluted
|
48,070,993
|
|
47,156,928
|
EnSync,
Inc.
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
June 30,
2017
|
|
June 30,
2016
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
11,782,962
|
|
$
17,189,089
|
Accounts receivable,
net
|
469,906
|
|
172,633
|
Inventories,
net
|
2,482,013
|
|
1,869,942
|
Prepaid expenses and
other current assets
|
239,340
|
|
600,591
|
Customer intangible
assets
|
8,249
|
|
76,293
|
Note
receivable
|
171,140
|
|
171,140
|
Costs and estimated
earnings in excess of billings
|
87,318
|
|
-
|
Deferred PPA project
costs
|
-
|
|
5,690,307
|
Deferred customer
project costs
|
104,800
|
|
419,765
|
Project
assets
|
114,971
|
|
1,190,853
|
Total current
assets
|
15,460,699
|
|
27,380,613
|
Long-term
assets:
|
|
|
|
Property, plant and
equipment, net
|
3,446,253
|
|
3,889,106
|
Investment in
investee company
|
1,947,728
|
|
2,165,626
|
Goodwill
|
809,363
|
|
809,363
|
Right of use
assets-operating leases
|
150,214
|
|
27,264
|
Total
assets
|
$
21,814,257
|
|
$
34,271,972
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
317,497
|
|
$
332,707
|
Accounts
payable
|
487,185
|
|
569,226
|
Billings in excess of
costs and estimated earnings
|
456,950
|
|
-
|
Accrued
expenses
|
743,948
|
|
501,031
|
Customer
deposits
|
90,876
|
|
201,352
|
Accrued compensation
and benefits
|
396,890
|
|
257,087
|
Total current
liabilities
|
2,493,346
|
|
1,861,403
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net
of current maturities
|
740,586
|
|
1,057,720
|
Deferred
revenue
|
422,638
|
|
13,290,000
|
Other long-term
liabilities
|
249,920
|
|
25,789
|
Total
liabilities
|
3,906,490
|
|
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$5,631,086 and $5,317,800 as of June
30, 2017 and June 30, 2016, respectively
|
23
|
|
23
|
Series C convertible
preferred stock ($0.01 par value, $1,000 face value),
28,048shares authorized, issued, and outstanding, preference in
liquidation of$12,276,682 and $12,719,260 as of June 30, 2017 and
June 30, 2016, respectively
|
280
|
|
280
|
Common stock ($0.01
par value),300,000,000 authorized, 55,200,963 and 47,752,821
shares issued and outstanding as of June 30, 2017 and June 30,
2016, respectively
|
1,260,324
|
|
1,185,843
|
Additional paid-in
capital
|
141,822,317
|
|
137,585,233
|
Accumulated
deficit
|
(124,639,644)
|
|
(120,550,108)
|
Accumulated other
comprehensive loss
|
(1,584,578)
|
|
(1,585,583)
|
Total EnSync, Inc.
equity
|
16,858,722
|
|
16,635,688
|
Noncontrolling
interest
|
1,049,045
|
|
1,401,372
|
Total
equity
|
17,907,767
|
|
18,037,060
|
Total liabilities
and equity
|
$
21,814,257
|
|
$
34,271,972
|
|
|
|
|
EnSync,
Inc.
|
Consolidated
Statements of Cash Flows
|
|
|
Year ended June
30,
|
|
2017
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(4,441,863)
|
|
$(18,262,494)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation of
property, plant and equipment
|
483,636
|
|
679,303
|
Amortization of
customer intangible assets
|
68,044
|
|
93,029
|
Stock-based
compensation, net
|
2,145,765
|
|
1,274,616
|
Impairment of PPA
project costs
|
-
|
|
1,890,357
|
Equity in loss of
investee company
|
217,898
|
|
242,902
|
Provision for
inventory reserve
|
182,647
|
|
(102,651)
|
Gain on sale of
property and equipment
|
(1,911)
|
|
-
|
Interest accreted on
note receivable
|
(12,000)
|
|
(12,033)
|
Gain on termination
of SPI Supply Agreement
|
(13,290,000)
|
|
-
|
Changes in assets and
liabilities
|
|
|
|
Accounts
receivable
|
(297,273)
|
|
(59,540)
|
Inventories
|
(794,718)
|
|
(569,174)
|
Prepaids and other
current assets
|
361,405
|
|
(154,470)
|
Costs and estimated
earnings in excess of billings
|
(87,318)
|
|
-
|
Deferred PPA project
costs
|
5,690,307
|
|
(7,580,664)
|
Deferred customer
project costs
|
314,965
|
|
(419,765)
|
Project
assets
|
1,075,882
|
|
(1,003,631)
|
Accounts
payable
|
(82,041)
|
|
(487,518)
|
Billings in excess of
costs and estimated earnings
|
456,950
|
|
-
|
Accrued
expenses
|
198,147
|
|
(749,667)
|
Customer
deposits
|
(110,476)
|
|
(975,803)
|
Accrued compensation
and benefits
|
139,803
|
|
21,736
|
Deferred
revenue
|
422,638
|
|
13,290,000
|
Other long-term
liabilities
|
145,013
|
|
-
|
Net cash used in
operating activities
|
(7,214,500)
|
|
(12,885,467)
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
business combination
|
-
|
|
(225,829)
|
Change in restricted
cash
|
-
|
|
60,193
|
Expenditures for
property and equipment
|
(46,366)
|
|
(406,917)
|
Proceeds from sale of
property and equipment
|
8,432
|
|
-
|
Payments from note
receivable
|
12,000
|
|
-
|
Net cash used in
investing activities
|
(25,934)
|
|
(572,553)
|
Cash flows from
financing activities
|
|
|
|
Payment of financing
costs
|
-
|
|
(261,982)
|
Repayments of long
term debt
|
(332,344)
|
|
(319,607)
|
Proceeds from
equipment financing
|
-
|
|
331,827
|
Payments for finance
leases
|
-
|
|
(13,521)
|
Proceeds from
issuance of preferred stock
|
-
|
|
13,300,000
|
Proceeds from
issuance of common stock
|
2,095,840
|
|
6,800,000
|
Proceeds from the
exercise of stock options
|
69,960
|
|
-
|
Contributions of
capital from noncontrolling interest
|
-
|
|
53,614
|
Net cash provided by
financing activities
|
1,833,456
|
|
19,890,331
|
Effect of exchange
rate changes on cash and cash equivalents
|
851
|
|
(683)
|
Net increase
(decrease) in cash and cash equivalents
|
(5,406,127)
|
|
6,431,628
|
Cash and cash
equivalents - beginning of year
|
17,189,089
|
|
10,757,461
|
|
|
|
|
Cash and cash
equivalents - end of year
|
$11,782,962
|
|
$
17,189,089
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash paid for
interest
|
$
51,134
|
|
$
47,568
|
Supplemental noncash
information:
|
|
|
|
Right of use asset
obtained in exchange for new operating lease
|
122,950
|
|
41,048
|
Asset retirement
obligation
|
-
|
|
18,527
|
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SOURCE EnSync, Inc.