MILWAUKEE, Feb. 14, 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 second quarter of fiscal year 2017, ended
December 31, 2016.
Recent Highlights
- Revenue during the second quarter of fiscal 2017 increased to
$1.7 million compared to $0.4 million in the year ago period, driven by
the sale of two power purchase agreements (PPAs) to investors in
November 2016;
- Fulfilled an initial purchase order for a Matrix Energy
Management system from a major global energy management solutions
provider;
- Recognized final installment from Lotte Chemical R&D
agreement during the quarter, bringing total payments under that
contract to $5,425,000;
- Closed a PPA with Oceanic Time Warner Cable in Hawaii. The EnSync Energy solar plus storage
system will be installed at an office and operations center on the
Island of Hawaii, and will shift
energy from daytime to nighttime hours, in addition to providing
resiliency;
- Closed on EnSync Energy's first residential market penetration,
for a multiple structure decentralized installation in Hawaii. This installation will be covered
under a single PPA;
- Announced the commencement of a project with ENMAX Energy
Corporation at the District Energy Centre site in Calgary, Alberta, to integrate solar and
energy storage with a combined heat and power system using EnSync's
patented Matrix technology;
- Expanded sales presence in North
America with the appointment of 20-year sustainable energy
veteran, David Eisenbud, as Managing
Director of Sales for the Eastern United
States and Canada;
- Showcased the company's Matrix technology at DistribuTECH, a
leading annual electric power transmission and distribution
conference & exhibition event that addresses technologies used
to move electricity from the power plant through the transmission
and distribution systems to the meter and inside the home;
- The Company's second tranche of PPAs now consists of six
projects, totaling approximately $6.3
million estimated value at time of sale; and
- Cash balance at the end of December
2016 was $17.6 million
compared to $17.2 million at the end
of the prior fiscal year.
Management Discussion
"During the second quarter, we successfully completed the sale
of the remaining two PPAs from our first tranche," commented
Brad Hansen, President and Chief
Executive Officer of EnSync Energy Systems. "These sales culminate
the highly unique endeavor EnSync embarked on to become the first
company in the industry to successfully sell PPA agreements for PV
plus storage for the commercial and industrial (C and I) market in
a behind the grid setting. This highly differentiated business
model is made possible by industry leading technologies, including
EnSync's patented Matrix Energy Management System that allows
optimum simultaneous management of multiple sources of electricity,
while also providing the seamless communication and control
required for the utility to enable real-time supply response from
the distributed energy resources."
Mr. Hansen continued, "While we continue to focus our efforts in
the execution of our PPA strategy in Hawaii, we are simultaneously focused on
expanding into other regions, including California, the eastern United States and Canada. We believe there is a tremendous
opportunity to develop solutions for commercial, industrial,
government and selective utility clients seeking fully-integrated
products and services associated with DERs and advanced IOE
grid-interactive communications and controls in these regions. We
recently hired 20-year industry veteran, David Eisenbud, to lead our expansion efforts in
the Eastern U.S. and Canada which
we believe will be a key contributor to our growth in the coming
years."
Mr. Hansen concluded, "We are very pleased with our progress
during the second quarter, and with our ongoing market penetration
for Matrix and our PPA business model. We continue to close
commercial PPAs and contracts, including with some of the top
companies operating in North
America and Hawaii such as
Time Warner Cable, and have successfully signed our first
multi-structure residential solar plus storage system contract. We
also remain focused on releasing products that will radically lower
the cost per function of our distributed energy resource systems.
When combining our differentiation in business model and
intellectual property, we're poised to lead the high growth DERs
market in the coming years."
Second Quarter Financial Results
Total revenue for the second quarter which ended December 31, 2016 was $1.7
million compared to $0.4
million in the second quarter of fiscal 2016. Revenue
growth in the quarter was primarily driven by the sale of the last
two Tranche 1 power purchase agreements (PPAs) to two different
investors in November 2016, as well
as product sales of $239,000 to
Lotte, and others. We also recognized the final installment of
$175,000 under our research and
development contract with Lotte.
Fiscal 2017 revenues of $9.4
million through the second quarter establishes record fiscal
year revenues with two quarters remaining. For the remainder
of the fiscal year, we are continuing to target the contracting of
enough PPA projects to fill two additional tranches.
Total cost of products sold during the second quarter was
$1.7 million. As previously
discussed, the Company incurred certain non-recurring and start-up
costs associated with the initial sale of its PPA projects.
Engineering and development costs were $1.1 million in the second quarter of fiscal
2017, compared to $2.0 million in the
year ago period and in line with the prior period level of
$1.0 million. Selling, General and
Administrative costs totaled $3.0
million in the second quarter of fiscal 2017, compared to
$2.3 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 $(4.4) million, or $(0.09) per basic and diluted share, for the
second quarter of fiscal 2017, compared to $(4.5) million, or $(0.10) per basic and diluted share, in the year
ago second quarter.
Cash balance at December 31, 2016
was $17.6 million dollars compared to
$17.2 million at June 30, 2016.
Backlog for PPA projects, components and systems at the end of
fiscal Q2 2017 stood at approximately $6.3
million as of this announcement.
Conference Call Information
Date: Tuesday, February 14,
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 #: 10101055
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 10101055, through
February 21, 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 in Hawaii.
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 December 31,
|
|
Six months
ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues
|
|
|
|
|
|
|
|
Product
sales
|
$
1,561,569
|
|
$
335,694
|
|
$
9,218,130
|
|
$
486,230
|
Engineering and
development
|
175,000
|
|
46,567
|
|
175,000
|
|
169,007
|
Total
revenues
|
1,736,569
|
|
382,261
|
|
9,393,130
|
|
655,237
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of product
sales
|
1,731,558
|
|
323,289
|
|
9,497,701
|
|
304,608
|
Cost of engineering
and development
|
-
|
|
82,020
|
|
937,725
|
|
136,167
|
Advanced engineering
and development
|
1,077,140
|
|
2,015,364
|
|
2,078,468
|
|
3,691,652
|
Selling, general, and
administrative
|
3,035,704
|
|
2,287,978
|
|
5,588,155
|
|
4,514,952
|
Depreciation and
amortization
|
201,712
|
|
181,066
|
|
356,069
|
|
359,656
|
Total costs and
expenses
|
6,046,114
|
|
4,889,717
|
|
18,458,118
|
|
9,007,035
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(4,309,545)
|
|
(4,507,456)
|
|
(9,064,988)
|
|
(8,351,798)
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Equity in gain (loss)
of investee company
|
(25,387)
|
|
(20,889)
|
|
(1,732)
|
|
(68,597)
|
Interest
income
|
11,269
|
|
14,094
|
|
22,627
|
|
18,710
|
Interest
expense
|
(13,107)
|
|
(12,517)
|
|
(26,104)
|
|
(27,647)
|
Other
income
|
-
|
|
-
|
|
8,432
|
|
76,437
|
Total other income
(expense)
|
(27,225)
|
|
(19,312)
|
|
3,223
|
|
(1,097)
|
|
|
|
|
|
|
|
|
Loss before expense
(benefit) for income taxes
|
(4,336,770)
|
|
(4,526,768)
|
|
(9,061,765)
|
|
(8,352,895)
|
|
|
|
|
|
|
|
|
Expense (benefit) for
income taxes
|
-
|
|
(640)
|
|
-
|
|
(640)
|
Net loss
|
(4,336,770)
|
|
(4,526,128)
|
|
(9,061,765)
|
|
(8,352,255)
|
Net loss attributable
to noncontrolling interest
|
60,065
|
|
80,424
|
|
142,338
|
|
149,141
|
Net loss
attributable to EnSync, Inc.
|
(4,276,705)
|
|
(4,445,704)
|
|
(8,919,427)
|
|
(8,203,114)
|
Preferred stock
dividend
|
(77,331)
|
|
(70,058)
|
|
(152,776)
|
|
(146,580)
|
Net loss
attributable to common shareholders
|
$
(4,354,036)
|
|
$
(4,515,762)
|
|
$
(9,072,203)
|
|
$
(8,349,694)
|
|
|
|
|
|
|
|
|
Net loss per
share
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
(0.09)
|
|
$
(0.10)
|
|
$
(0.19)
|
|
$
(0.18)
|
|
|
|
|
|
|
|
|
Weighted average
shares - basic and diluted
|
47,849,343
|
|
47,348,603
|
|
47,801,474
|
|
46,673,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to condensed consolidated financial
statements.
|
EnSync,
Inc.
|
Condensed
Consolidated Balance Sheets
|
|
|
(Unaudited)
|
|
|
|
December 31,
2016
|
|
June 30,
2016
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
17,566,271
|
|
$
17,189,089
|
Accounts receivable,
net
|
372,843
|
|
172,633
|
Inventories,
net
|
1,839,077
|
|
1,869,942
|
Prepaid expenses and
other current assets
|
250,017
|
|
600,591
|
Customer intangible
assets
|
8,249
|
|
76,293
|
Note
receivable
|
177,189
|
|
171,140
|
Deferred PPA project
costs
|
-
|
|
5,690,307
|
Deferred customer
project costs
|
164,507
|
|
419,765
|
Project
assets
|
11,175
|
|
1,190,853
|
Total current
assets
|
20,389,328
|
|
27,380,613
|
Long-term
assets:
|
|
|
|
Property, plant and
equipment, net
|
3,610,693
|
|
3,889,106
|
Investment in
investee company
|
2,163,894
|
|
2,165,626
|
Goodwill
|
809,363
|
|
809,363
|
Right of use
assets-operating leases
|
103,833
|
|
27,264
|
Total
assets
|
$
27,077,111
|
|
$
34,271,972
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
336,837
|
|
$
332,707
|
Accounts
payable
|
569,338
|
|
569,226
|
Accrued
expenses
|
771,081
|
|
501,031
|
Customer
deposits
|
211,159
|
|
201,352
|
Accrued compensation
and benefits
|
272,137
|
|
257,087
|
Total current
liabilities
|
2,160,552
|
|
1,861,403
|
Long-term
liabilities:
|
|
|
|
Long-term debt, net
of current maturities
|
888,507
|
|
1,057,720
|
Deferred
revenue
|
13,712,638
|
|
13,290,000
|
Other long-term
liabilities
|
217,364
|
|
25,789
|
Total
liabilities
|
16,979,061
|
|
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 $5,470,576 and $5,317,800 as of
December 31, 2016 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$4,627,474and $12,719,260 as of December 31, 2016 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 December 31, 2016
and June 30, 2016, respectively
|
1,188,418
|
|
1,185,843
|
Additional paid-in
capital
|
138,706,163
|
|
137,585,233
|
Accumulated
deficit
|
(129,469,535)
|
|
(120,550,108)
|
Accumulated other
comprehensive loss
|
(1,586,333)
|
|
(1,585,583)
|
Total EnSync, Inc.
equity
|
8,839,016
|
|
16,635,688
|
Noncontrolling
interest
|
1,259,034
|
|
1,401,372
|
Total
equity
|
10,098,050
|
|
18,037,060
|
Total liabilities
and equity
|
$
27,077,111
|
|
$
34,271,972
|
|
|
|
|
|
|
|
|
See accompanying
notes to condensed consolidated financial
statements.
|
EnSync,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
Six months ended
December 31,
|
|
2016
|
|
2015
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(9,061,765)
|
|
$
(8,352,255)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation of
property, plant and equipment
|
290,132
|
|
345,209
|
Amortization of
customer intangible assets
|
68,044
|
|
14,447
|
Stock-based
compensation, net
|
1,055,105
|
|
463,539
|
Equity in (gain) loss
of investee company
|
1,732
|
|
68,597
|
Provision for
inventory reserve
|
181,197
|
|
-
|
Gain on sale of
property and equipment
|
(8,432)
|
|
-
|
Interest accreted on
note receivable
|
(6,049)
|
|
(6,049)
|
Gain on bargain
purchase
|
-
|
|
(76,437)
|
Changes in assets and
liabilities
|
|
|
|
Accounts
receivable
|
(203,639)
|
|
27,385
|
Inventories
|
(150,332)
|
|
(1,475,481)
|
Prepaids and other
current assets
|
350,392
|
|
(154,961)
|
Deferred PPA project
costs
|
5,690,307
|
|
(159,978)
|
Deferred customer
project costs
|
255,258
|
|
-
|
Project
assets
|
1,179,678
|
|
(5,603,034)
|
Accounts
payable
|
112
|
|
354,301
|
Accrued
expenses
|
246,610
|
|
(731,570)
|
Customer
deposits
|
9,807
|
|
(112,358)
|
Accrued compensation
and benefits
|
15,050
|
|
37,737
|
Deferred
revenue
|
422,638
|
|
13,290,000
|
Other long-term
liabilities
|
137,983
|
|
-
|
Net cash provided by
(used in) operating activities
|
473,828
|
|
(2,070,908)
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
business combination
|
-
|
|
(225,829)
|
Change in restricted
cash
|
-
|
|
(30)
|
Expenditures for
property and equipment
|
(9,149)
|
|
(10,416)
|
Proceeds from sale of
property and equipment
|
9,754
|
|
-
|
Net cash provided by
(used in) investing activities
|
605
|
|
(236,275)
|
Cash flows from
financing activities
|
|
|
|
Payment of financing
costs
|
-
|
|
(261,982)
|
Repayments of
long-term debt
|
(165,083)
|
|
(161,012)
|
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
|
-
|
|
45,000
|
Net cash (used in)
provided by financing activities
|
(96,683)
|
|
19,722,006
|
Effect of exchange
rate changes on cash and cash equivalents
|
(568)
|
|
(1,155)
|
Net increase in
cash and cash equivalents
|
377,182
|
|
17,413,668
|
Cash and cash
equivalents - beginning of period
|
17,189,089
|
|
10,757,461
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
17,566,271
|
|
$
28,171,129
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash paid for
interest
|
$
26,332
|
|
$
27,795
|
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
|
102,943
|
|
41,316
|
Asset retirement
obligation
|
19,222
|
|
-
|
|
|
|
|
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-second-quarter-fiscal-year-2017-results-300407317.html
SOURCE EnSync, Inc.