SOURCE: EnSync Energy Systems

EnSync Energy Systems

February 16, 2016 16:01 ET

EnSync Reports Second Quarter 2016 Results

Management to Host Conference Call at 4:30p.m. EST (3:30 p.m. CST)

MILWAUKEE, WI--(Marketwired - Feb 16, 2016) - 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 second quarter 2016 results, ended December 31, 2015. 

Key Projects Status

The Company made significant progress on many of its key projects during, and subsequent to the end of the second quarter of fiscal year 2016, including:

  • University of the Nations: Phase I is complete and supplying power to the University. Phase II will be complete by early March.
  • Century West: The project is on schedule to be commissioned by May.
  • OATI: The Agile Hybrid batteries have shipped and installation and commissioning will be complete by May.
  • Cayman Islands: Our equipment has shipped to the Cayman Islands and the installation and commissioning will be complete by May.

Other Key Recent Developments and Accomplishments

  • Production Release and Technology Transfer from EnSync to Meineng Energy: Fourteen Agile Flow Batteries were shipped from Meineng Energy to EnSync customers since the beginning of Q2. Thirteen Matrix Energy Management Systems have either been shipped from Meineng Energy to EnSync, or are in process of assembly and test in China. Meineng is now qualified to build and test our advanced Matrix systems and modules.
  • Matrix ETL Listing to UL 1741: Our Matrix Energy Management platform is now listed by ETL to UL1741 specification.
  • Hawaii "Smart Inverter" Compliance Achieved: Our inverters are among the first to achieve this designation.
  • Installed Base Performance: The V3-Series Installed Base Upgrade Program is complete. All candidate systems have been upgraded, with significant improvement to performance. The program has been finished under budget.
  • Hybrid Storage System Success: We achieved the milestone of 1.0MWh of Hybrid Flow-Li Ion batteries shipped for C&I / Microgrid applications less than a year from announcement. EnSync remains the premier supplier of hybridized commercial energy storage solutions.

Management Discussion

Brad Hansen, president and chief executive officer of EnSync, commented, "I am pleased with the progress we are making and the accomplishments during, and subsequent to the end of the quarter. The capabilities of our differentiated technology and systems solutions allow our customers to prioritize their electricity use from the grid, renewables and storage, synchronizing each of these sources in real time and leveraging their respective values. These capabilities will be a driving factor in moving the economy from a focus on coal-generated power to one utilizing renewable energy sources. These solutions, coupled with our expertise and credibility for economic modeling, system design and project development are a competitive differentiator in the PV + Storage systems market." 

Mr. Hansen continued, "The University of the Nations project is on schedule and Phase I is performing well. Five other contracted power purchase agreement (PPA) projects are in varying degrees of construction and commissioning. Our near term efforts have transitioned from closing PPA contracts to marketing our existing projects. In December, we hired Fred Vaske as Vice President of Structured Finance to drive the development of an investor base and in turn, sell these projects. Fred brings a great deal of knowledge from his 20 years of project financing experience including major players in renewable energy, such as SunPower, Recurrent Energy, HanWa Q-Cells and Scatec Solar." 

Fred Vaske, Vice President of Structured Finance for EnSync, added, "There is a great deal of interest in the EnSync PPA projects from both banks and corporate investors that have previously been investors in solar projects. They have recognized that there are new and variable services attributable to solar + storage installations that are lacking with solar only projects. Investors also recognize, based on regulatory and policy changes such as what recently occurred in Nevada's retroactive application of net metering reductions, that storage offers a degree of insurance against unanticipated change. Investors will also be very pleased with EnSync's industry leading control, communications and monitoring of the value generated by the project over the contract life."

Mr. Hansen concluded, "Recent developments validate our strategy. The President signed the budget bill, which extends the solar/storage investment tax credit an unprecedented five years, providing a strong foundation for future growth. The Supreme Court endorsed FERC jurisdiction over demand side management. This ruling will become important as we introduce our capability to perform supply response on-demand applications for commercial buildings. Additionally, state commissions continue to make changes in Net Metering programs and rate structures that enhance the value of storage in self-generation systems. Finally, we've put together a great executive team, with the right products and a robust strategy to address these developing opportunities."

Financial Results

Total revenue for three months ended December 31, 2015 was $382,261 compared to $300,654 for the three months ended December 31, 2014. Total costs and expenses were $4,889,717 compared to $3,575,886. Loss from operations was $4,507,456 compared to $3,275,232. Net loss attributable to common shareholders was $4,515,762 compared to $3,446,642. Loss per share was ($0.10) compared to ($0.09). 

Current backlog for components, systems and engineering services is approximately $2.5 million. Additionally, the Company has acquired PPA contracts valued at approximately $11.2 million.

Financial Position

The Company ended the second quarter of fiscal 2016 with total assets of $44.8 million, including $28.1 million in cash. As of December 31, 2015, we have cumulative project costs of $5.8 million related to PPA contracts. We plan to recover substantially all of these costs before the end of our fiscal year as we sell or finance these projects. 

Conference call - Today, February 16, 2016 - 4:30p.m. EST (3:30 p.m. CST)

Date: Tuesday, February 16, 2016
Time: 4:30 p.m. EST (3:30 p.m. CST)
Domestic participant dial in #: 888-471-3843
Participant passcode #: 9519944

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 April 16, 2016.

Domestic replay #: 888-203-1112
Replay passcode #: 9519944

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)        
    December 31, 2015     June 30, 2015  
Assets                
Current assets:                
  Cash and cash equivalents   $ 28,171,129     $ 10,757,461  
  Restricted cash on deposit     60,223       60,193  
  Accounts receivable, net     85,708       113,093  
  Inventories, net     2,673,598       1,198,117  
  Prepaid expenses and other current assets     596,498       441,537  
  Deferred financing costs     -       545,825  
  Customer intangible assets     154,875       -  
  Note receivable     165,156       159,107  
  Deferred project costs     159,978       -  
  Project assets     5,790,256       -  
    Total current assets     37,857,421       13,275,333  
Long-term assets:                
  Property, plant and equipment, net     3,794,418       4,164,912  
  Investment in investee company     2,339,931       2,408,528  
  Goodwill     803,079       803,079  
    Total assets   $ 44,794,849     $ 20,651,852  
                 
Liabilities and Equity                
Current liabilities:                
  Current maturities of bank loans and notes payable   $ 328,744     $ 324,626  
  Accounts payable     1,411,045       1,056,744  
  Accrued expenses     415,291       1,129,166  
  Customer deposits     1,064,797       1,177,155  
  Accrued compensation and benefits     273,088       235,351  
    Total current liabilities     3,492,965       3,923,042  
Long-term liabilities:                
  Bank loans and notes payable, net of current maturities     888,451       1,053,581  
  Deferred revenue     13,290,000       -  
    Total liabilities     17,671,416       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, 2,300 and 2,575 shares outstanding, preference in liquidation of $5,172,385 and $5,635,866 as of December 31, 2015 and June 30, 2015, respectively     23       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 $21,951,048 and $0 as of December 31, 2015 and June 30, 2015, respectively     280       -  
  Common stock ($0.01 par value); 300,000,000 and 150,000,000 authorized, 47,608,821 and 39,129,334 shares issued and outstanding as of December 31, 2015 and June 30, 2015, respectively     1,184,403       1,099,608  
  Additional paid-in capital     136,775,596       117,104,936  
  Accumulated deficit     (110,877,163 )     (102,674,049 )
  Accumulated other comprehensive loss     (1,589,759 )     (1,589,486 )
    Total EnSync, Inc. equity     25,493,380       13,941,035  
  Noncontrolling interest     1,630,053       1,734,194  
    Total equity     27,123,433       15,675,229  
    Total liabilities and equity   $ 44,794,849     $ 20,651,852  
                 
See accompanying notes to condensed consolidated financial statements.  
   
   
   
EnSync, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited)  
                         
    Three months ended December 31,     Six months ended December 31,  
    2015     2014     2015     2014  
Revenues                                
  Product sales   $ 335,694     $ 114,177     $ 486,230     $ 663,518  
  Engineering and development     46,567       186,477       169,007       201,997  
  Service                     -       -  
    Total Revenues     382,261       300,654       655,237       865,515  
                                 
Costs and Expenses                                
  Cost of product sales     323,289       171,683       304,608       507,646  
  Cost of engineering and development     82,020       59,982       136,167       169,145  
  Advanced engineering and development     2,015,364       1,480,813       3,691,652       2,778,396  
  Selling, general, and administrative     2,287,978       1,704,234       4,514,952       3,763,787  
  Depreciation and amortization     181,066       159,174       359,656       313,690  
    Total Costs and Expenses     4,889,717       3,575,886       9,007,035       7,532,664  
                                 
Loss from Operations     (4,507,456 )     (3,275,232 )     (8,351,798 )     (6,667,149 )
                                 
Other Income (Expense)                                
  Equity in loss of investee company     (20,889 )     (225,471 )     (68,597 )     (307,973 )
  Gain on investment in investee company     -       -       -       1,257,407  
  Interest income     14,094       7,879       18,710       11,490  
  Interest expense     (12,517 )     (26,270 )     (27,647 )     (53,850 )
  Other income     -       -       76,437       -  
    Total Other Income (Expense)     (19,312 )     (243,862 )     (1,097 )     907,074  
                                 
Loss before benefit for Income Taxes     (4,526,768 )     (3,519,094 )     (8,352,895 )     (5,760,075 )
                                 
Benefit for Income Taxes     (640 )     -       (640 )     -  
  Net loss     (4,526,128 )     (3,519,094 )     (8,352,255 )     (5,760,075 )
  Net loss attributable to noncontrolling interest     80,424       143,508       149,141       226,010  
  Gain attributable to noncontrolling interest     -       -       -       (481,870 )
Net Loss Attributable to EnSync, Inc.     (4,445,704 )     (3,375,586 )     (8,203,114 )     (6,015,935 )
Preferred Stock Dividend     (70,058 )     (71,056 )     (146,580 )     (118,865 )
Net Loss Attributable to Common Shareholders   $ (4,515,762 )   $ (3,446,642 )   $ (8,349,694 )   $ (6,134,800 )
                                 
Net loss per share                                
  Basic and diluted   $ (0.10 )   $ (0.09 )   $ (0.18 )   $ (0.18 )
                                 
Weighted average shares-basic and diluted     47,348,603       39,051,379       46,673,751       34,835,949  
                                 
See accompanying notes to condensed consolidated financial statements.  
   
   
   
EnSync, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
    Six months ended December 31,  
    2015     2014  
Cash flows from operating activities                
Net loss   $ (8,352,255 )   $ (5,760,075 )
Adjustments to reconcile net loss to net cash used in operating activities:                
  Depreciation of property, plant and equipment     345,209       313,690  
  Amortization of intangible asset     14,447       -  
  Customer intangible asset     -       -  
  Stock-based compensation, net     463,539       853,811  
  Equity in loss of investee company     68,597       307,973  
  Gain on investment in investee company     -       (1,257,407 )
  Interest accreted on note receivable     (6,049 )     (3,156 )
  Gain on bargain purchase     (76,437 )     -  
Changes in assets and liabilities                
  Accounts receivable     27,385       787,867  
  Inventories     (1,475,481 )     (98,328 )
  Prepaids and other current assets     (154,961 )     49,385  
  Deferred financing costs     -       -  
  Refundable income taxes     -       10,908  
  Deferred project costs     (159,978 )     -  
  Project assets     (5,603,034 )     -  
  Accounts payable     354,301       (122,582 )
  Accrued expenses     (731,570 )     (556,073 )
  Customer deposits     (112,358 )     (286,050 )
  Accrued compensation and benefits     37,737       33,610  
  Deferred revenue     13,290,000       -  
Net cash provided by (used in) operating activities     (2,070,908 )     (5,726,427 )
Cash flows from investing activities                
  Cash paid for business combination     (225,829 )     -  
  Change in restricted cash     (30 )     1,149  
  Expenditures for property and equipment     (10,416 )     (303,280 )
  Issuance of note receivable     -       (150,000 )
Net cash used in investing activities     (236,275 )     (452,131 )
Cash flows from financing activities                
  Payment of financing costs     (261,982 )     -  
  Repayments of bank loans and notes payable     (161,012 )     (173,982 )
  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 capital from noncontrolling interest     45,000       7,127  
Net cash provided by financing activities     19,722,006       13,522,882  
Effect of exchange rate changes on cash and cash equivalents     (1,155 )     5,340  
Net increase in cash and cash equivalents     17,413,668       7,349,664  
Cash and cash equivalents - beginning of period     10,757,461       10,360,721  
                 
Cash and cash equivalents - end of period   $ 28,171,129     $ 17,710,385  
                 
                 
Supplemental disclosures of cash flow information:                
  Cash paid for interest   $ 27,795     $ 49,577  
                 
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