SOURCE: EnSync Energy Systems

EnSync Energy Systems

November 16, 2015 16:01 ET

EnSync Reports First Quarter 2016 Results

MILWAUKEE, WI--(Marketwired - Nov 16, 2015) - EnSync, Inc. (NYSE MKT: ESNC), dba EnSync Energy Systems, a leading developer of innovative energy management systems for the utility, commercial, industrial and multi-tenant building markets, today announced their first quarter 2016 results. 

First Quarter and Subsequent Events Commentary

"All the required pieces are coming together here at EnSync and we have made great progress building the foundation for our future success," said Brad Hansen CEO and President of EnSync. "Early this year we announced the signing of Hawaii's first PPA (Power Purchase Agreement) project integrating PV, storage and intelligent energy management. In July we announced our second PPA at University of the Nations, the second in the State. The groundbreaking for both of these projects was announced in October. To further our momentum in Hawaii we created Holu Energy, a Distributed Generation Project Developer in August. Holu is already making great progress, with additional PPA contract wins occurring over the last few weeks. Our PPAs reduce customers' electricity bills by millions of dollars over the term of the agreement, in addition to reducing their carbon footprint and supplying electricity during outages. In doing so we are also creating an instrument that generates a high financial rate of return over a long duration for investors."

"We have also added key talent to our management team, bringing on board energy industry veterans in the roles of CFO, VP of Sales and VP of Asia Business Operations. Over the course of the last 6 months we've assembled the best products and equipment along with a proven management team, which when combined with a business model that is advantageous for both our customers and shareholders, will enable the company to be successful in the coming years," continued Mr. Hansen.

First Quarter and Subsequent Highlights

The Company's major accomplishments during and subsequent to the end of the first quarter of fiscal year 2016 included:

  • Closed strategic partnership with Solar Power, Inc. (OTCBB: SOPW)- The Company closed a major solar energy and energy storage partnership and received a $33.4 million initial equity investment. Also included was an initial supply agreement valued at $80-$120 million that targets SPI's phenomenal growth as a PV Distributed Generation systems provider.
  • Secured Order with OATI for Matrix Energy Management and Agile Hybrid Energy Storage Systems- Systems will be incorporated into the Microgrid South Campus of Open Access Technology International (OATI) in Bloomington, Minnesota, and establishes a potential Key Channel for EnSync into North American Utilities.
  • Signed Power Purchase Agreement With University of the Nations- Project is valued at approximately $3 Million and the installation will feature the industry's most advanced distributed generation system, comprised of 408kW of photovoltaic panels, Agile Hybrid batteries, and accompanying Matrix Energy Management platform.
  • Changed name from ZBB Energy Corporation to EnSync, Inc., dba EnSync Energy Systems- This new name represents a vision to enable the future of energy networks, synchronizing utility, distributed generation and storage assets.

Financial Results

Total revenue for three months ended September 30, 2015 was $272,976 as compared to $564,861 for the three months ended September 30, 2014. Total costs and expenses was $4,117,318 compared to $3,956,778. Loss from operations was $3,844,342 compared to $3,391,917. Net loss attributable to common shareholders was $3,833,932 compared to $2,688,158. Loss per share was ($0.08) compared to ($0.09). 

Current backlog for components, systems and engineering services is approximately $2.8 million. Additionally, the Company has acquired PPA contracts valued at approximately $11.2 million. EnSync plans to sell all or a portion of these projects for a profit within our fiscal year.

Financial Position

The Company ended the first quarter of fiscal 2016 with total assets of $49.5 million, including $36.3 million in cash. This cash position includes the $33.4 million cash infusion that was received from SPI in July. The cash will be utilized to finance product development and working capital, including our ongoing power purchase agreement projects. 

Conference call - Today, November 16, 2015 - 4:30 p.m. ET (3:30 p.m. CT)

Date: Monday, November 16, 2015
Time: 4:30 p.m. ET (3:30 p.m. CT)
Domestic participant dial in #: 800-967-7188
Participant passcode #: 1964377

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. A replay of the call will be available later on the same day via the investor relations section of the company's web site at www.ensync.com until January 16, 2016.

Domestic replay #: 888-203-1112
Replay passcode #: 1964377

About EnSync Energy Systems

EnSync, Inc. (NYSE MKT: ESNC), dba EnSync Energy Systems, is enabling the future of electricity with advanced energy management systems critical to a global economy becoming increasingly reliant upon the expansion of renewable energy. Whether part of the grid power transmission and distribution network, or behind the meter in commercial, industrial and multi-tenant buildings, EnSync technology brings differentiated power control and energy storage solutions to electricity-challenged environments. Our technologies also serve as the system level intelligence in microgrid applications, by seamlessly integrating multiple generation and storage assets to deliver power in remote and community level environments not served by the grid, or areas electing to use the grid secondary to microgrid assets. In 2015, EnSync incorporated power purchase agreements (PPAs) into its portfolio of offerings, enabling electricity savings for customers and providing a stable financial yield for investors. EnSync is a global corporation, with a joint venture in AnHui, China at Meineng Energy, as well as a strategic partnership with Solar Power, Inc. (SPI). For more information, visit: www.ensync.com.

Safe Harbor Statement

Certain statements made in this press release contain 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. Forward-looking statements in this press release may address the following subjects among others: 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 involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including those 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 Reports on Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

   
   
EnSync, Inc.  
Condensed Consolidated Balance Sheets  
   
    (Unaudited)        
    September 30, 2015     June 30, 2015  
Assets                
Current assets:                
  Cash and cash equivalents   $ 36,328,358     $ 10,757,461  
  Restricted cash on deposit     60,208       60,193  
  Accounts receivable, net     135,019       113,093  
  Inventories, net     2,283,817       1,198,117  
  Prepaid expenses and other current assets     833,944       441,537  
  Deferred financing costs     -       545,825  
  Customer intangible assets     163,321       -  
  Note receivable     162,132       159,107  
  Deferred project costs     137,124       -  
  Project assets     2,350,292       -  
    Total current assets     42,454,215       13,275,333  
Long-term assets:                
  Property, plant and equipment, net     3,956,622       4,164,912  
  Investment in investee company     2,360,820       2,408,528  
  Goodwill     803,079       803,079  
    Total assets   $ 49,574,736     $ 20,651,852  
                 
Liabilities and Equity                
Current liabilities:                
  Current maturities of bank loans and notes payable   $ 326,746     $ 324,626  
  Accounts payable     1,396,439       1,056,744  
  Accrued expenses     730,400       1,129,166  
  Customer deposits     1,213,119       1,177,155  
  Accrued compensation and benefits     305,355       235,351  
    Total current liabilities     3,972,059       3,923,042  
Long-term liabilities:                
  Bank loans and notes payable, net of current maturities     971,239       1,053,581  
  Deferred revenue     13,290,000       -  
    Total liabilities     18,233,298       4,976,623  
                 
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, 2,575 shares outstanding, preference in liquidation of $5,712,387 and $5,635,866 as of September 30, 2015 and June 30, 2015, respectively     26       26  
  Series C convertible preferred stock ($0.01 par value, $1,000 face value), 28,048 and 0 shares authorized, issued, and outstanding, preference in liquidation of $23,918,573 and $0 as of September 30, 2015 and June 30, 2015, respectively     280       -  
  Common stock ($0.01 par value); 150,000,000 authorized, 47,157,459 and 39,129,334 shares issued and outstanding as of September 30, 2015 and June 30, 2015, respectively     1,179,889       1,099,608  
  Additional paid-in capital     136,473,360       117,104,936  
  Accumulated deficit     (106,431,459 )     (102,674,049 )
  Accumulated other comprehensive loss     (1,591,136 )     (1,589,486 )
  Total EnSync, Inc. equity     29,630,960       13,941,035  
  Noncontrolling interest     1,710,478       1,734,194  
    Total equity     31,341,438       15,675,229  
    Total liabilities and equity   $ 49,574,736     $ 20,651,852  
                 
See accompanying notes to condensed consolidated financial statements.  
   
   
   
EnSync, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited)  
             
    Three months ended September 30,  
    2015     2014  
Revenues                
  Product sales   $ 150,536     $ 549,341  
  Engineering and development     122,440       15,520  
    Total Revenues     272,976       564,861  
                 
Costs and Expenses                
  Cost of product sales     (13,835 )     226,800  
  Cost of engineering and development     54,147       109,163  
  Advanced engineering and development     1,671,442       1,406,746  
  Selling, general, and administrative     2,226,974       2,059,553  
  Depreciation and amortization     178,590       154,516  
    Total Costs and Expenses     4,117,318       3,956,778  
                 
Loss from Operations     (3,844,342 )     (3,391,917 )
                 
Other Income (Expense)                
  Equity in loss of investee company     (47,708 )     (82,502 )
  Gain on investment in investee company     -       1,257,407  
  Interest income     4,616       3,611  
  Interest expense     (15,130 )     (27,580 )
  Other income     76,437       -  
    Total Other Income (Expense)     18,215       1,150,936  
                 
Loss before benefit for Income Taxes     (3,826,127 )     (2,240,981 )
                 
Benefit for Income Taxes     -       -  
  Net loss     (3,826,127 )     (2,240,981 )
  Net loss attributable to noncontrolling interest     68,716       82,502  
  Gain attributable to noncontrolling interest     -       (481,870 )
Net Loss Attributable to EnSync, Inc.     (3,757,411 )     (2,640,349 )
Preferred Stock Dividend     (76,521 )     (47,809 )
Net Loss Attributable to Common Shareholders   $ (3,833,932 )   $ (2,688,158 )
                 
Net loss per share                
  Basic and diluted   $ (0.08 )   $ (0.09 )
                 
Weighted average shares-basic and diluted     45,998,899       30,620,518  
                 
See accompanying notes to condensed consolidated financial statements.  
   
   
   
EnSync, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
   
    Three Months Ended September 30,  
    2015     2014  
Cash flows from operating activities                
Net loss   $ (3,826,127 )   $ (2,240,981 )
Adjustments to reconcile net loss to net cash used in operating activities:                
  Depreciation of property, plant and equipment     208,290       154,516  
  Amortization of intangible asset     6,000       -  
  Stock-based compensation, net     156,792       376,392  
  Equity in loss of investee company     47,708       82,502  
  Gain on investment in investee company     -       (1,257,407 )
  Interest accreted on note receivable     (3,025 )     (132 )
  Gain on bargain purchase     (76,437 )     -  
Changes in assets and liabilities                
  Accounts receivable     (21,926 )     739,965  
  Inventories     (1,085,700 )     (47,367 )
  Prepaids and other current assets     (392,407 )     69,596  
  Refundable income taxes     -       6,571  
  Deferred project costs     (137,124 )     -  
  Project assets     (2,198,770 )     -  
  Accounts payable     339,695       (48,719 )
  Accrued expenses     (416,930 )     (238,062 )
  Customer deposits     35,964       (474,572 )
  Accrued compensation and benefits     70,004       149,409  
  Deferred revenue     13,290,000       -  
Net cash provided by (used in) operating activities     5,996,007       (2,728,289 )
Cash flows from investing activities                
  Cash paid for business combination     (225,829 )     -  
  Change in restricted cash     (15 )     700  
  Expenditures for property and equipment     -       (18,313 )
  Issuance of note receivable     -       (150,000 )
Net cash used in investing activities     (225,844 )     (167,613 )
Cash flows from financing activities                
  Payment of financing costs     (261,982 )     -  
  Repayments of bank loans and notes payable     (80,222 )     (86,658 )
  Debt issuance costs     -       -  
  Proceeds from issuance of preferred stock     13,300,000       -  
  Preferred stock issuance costs     -       -  
  Proceeds from issuance of common stock     6,800,000       14,837,760  
  Common stock issuance costs     -       (1,148,023 )
  Contributions of captial from noncontrolling interest     45,000       7,127  
Net cash provided by financing activities     19,802,796       13,610,206  
Effect of exchange rate changes on cash and cash equivalents     (2,062 )     3,216  
Net increase in cash and cash equivalents     25,570,897       10,717,520  
Cash and cash equivalents - beginning of period     10,757,461       10,360,721  
                 
Cash and cash equivalents - end of period   $ 36,328,358     $ 21,078,241  
                 
                 
Supplemental disclosures of cash flow information:                
  Cash paid for interest   $ 15,241     $ 24,912  
                 
See accompanying notes to condensed consolidated financial statements.  
   

Contact Information

  • Investor Relations Contact:
    Three Part Advisors, LLC
    Jeff Elliott
    (972) 423-7070
    Matt Selinger
    (817) 310-8776
    Phillip Kupper
    (817) 778-8339

    EnSync Media Contact:
    Michelle Montague
    (262) 735-5676