EGT.V - Flickering.


Eguana Technologies Inc. (EGT.V) designs and manufactures power controls for energy storage applications. Coverage was initiated on July 2017 with notes on January 2018 , February 2018, June 2018. and December 2018. Here's an update.

Dec. 20 - Announces Private Placement of Up To $1,000,000 Flow-Through Exchangeable LP Units $0.20 per Common Share.

Jan. 2 - Closes Previously Announced Private Placement - for gross proceeds of $715,000 (the “Offering”). The net proceeds of the Offering shall be used for general working capital to expedite the Company’s growth in global markets.

Jan. 2 - Partner with Hannah Solar to Bring Intelligent Energy Storage Systems to Homeowners in Georgia and South Carolina.

Jan. 14- Creative Solar and Eguana Technologies Commission Fleet of Intelligent Energy Storage Systems in Georgia.

Jan. 17 - Partners with Class A Energy Solutions to deliver the Evolve Home Energy Storage System across Australia.

Jan. 28 - Reports 2018 Annual Results and Provides Update. Fiscal 2018 revenue increase of approximately 450%, primarily due to increases in revenue from energy storage system sales from $0.56M in 2017 to $2,8M.

Successful product certifications and launch of Eguana’s fully integrated and market specific product solutions - Evolve, Elevate, and Enduro. Increased key market penetration with +25 new distribution, solar dealer direct, and installer partners covering all key geographical regions.

An additional +$6 million in new orders, which have been planned to ship in the first half of fiscal 2019.

Feb. 1 - Announces Executive Management Changes.

Feb. 7 - Closes $3,0M Private Placement and Announces Debt Settlement. Series A Shares were issued and sold to the Company's largest shareholder DHCT II Luxembourg SARL (the "Investor"), the investment vehicle of funds managed by Doughty Hanson & Co Managers Limited ("Doughty Hanson"), to support working capital requirements for Eguana's growth plan.

Series A Shares are convertible by the Investor at any time into common shares of the Company at a price of $0.24 per common share with options for EGT.V to force conversion once its TSX-V listed share price is equal to or greater than $0.60 for at least 60 consecutive days.

Feb. 11 - Doughty Hanson Acquires 434,860 Series A First Preferred Shares. On February 7, 2019, it acquired ownership of 0.4M shares, 8%, redeemable, series. A first preferred shares at C$10 per Series with convertible option into common shares at a price of C$0.24 per share,

DHCT also entered into a subscription agreement to purchase 300K Series A First Preferred Shares for an aggregate subscription price of $3M. DHCT also converted the existing $1,3M loan plus interest accrued there on into 134,860 Series A First Preferred Shares.

DHCT owned (i) 58,018,920 Common Shares representing approximately 26.1% of the issued and outstanding Common Shares.

Feb. 20 - Exercises Right to Acquire Limited Partnership Units. Exercised its previously announced right to acquire all 715 Class E limited partnership units (the “Units”) in EGT Markets Limited Partnership issued on December 31, 2018 in exchange for 3,5M common shares.

Mar. 1 - Announces Q1 2019 Earnings and Provides Update. Approved for both the South Australia Home Battery Scheme and the Australian government’s Clean Energy Finance Corporation home battery financing, providing direct access to $200M in subsidies. Increased Australian channel partners to eleven, hired sales and technical sales team, initiated channel partner training, shipped initial volume shipments.

Completed product and installation training for +150 channel and installation partners in Puerto Rico along with initial volume shipments. Increased European sales team, opened Eguana GmbH Signed additional distributors in Denmark, Ireland, Spain, and the Netherlands.

Revenue of $0.85M with an additional $0.44M in transit to South Australia at the end of the quarter. Commenced transition to contract manufacturing to manage global growth with a completion target of April 2019.

“Volume shipments have commenced to Puerto Rico and South Australia, with additional shipments to Hawaii and Europe planned in the second quarter.” The Company expects to see significant revenue growth over the next two quarters across all product lines.

Mar. 4 - German Market Leader Hanwha Q CELLS and Eguana Announce European Exclusive Agreement for the Enduro Home Storage System.

Agreement covers European Union, Switzerland, and Norway under the Q CELLS brand which is the current European market leader for residential rooftop PV installations. Home storage systems are included in over 50% of new solar systems currently sold in Germany and standard solar+storage packages support the fastest market penetration potential.

Mar. 4 - Appoints Ms. Sonja Kuehnle as Chief Financial Officer. Greg Pollard, the former Interim Chief Financial Officer of Eguana, will remain with the Company to ensure a proper transition of duties and responsibilities has been completed.

Mar. 18 - CED Greentech Northeast and Eguana Announce April Training Sessions and Immediate Availability of Energy Storage Solutions.

Mar. 21 - Partner with Purepoint Energy to Bring Smart Energy Storage Systems to Homeowners in Connecticut.

Apr. 25 - Joins Australian utility Virtual Power Plant (VPP) Program. Evolve has been approved to participate in the Simply Energy VPP program in South Australia, the first VPP to be announced since the Home Battery Scheme was launched.

Initial volume deliveries of Evolve have also been completed to both of our national distribution partners BayWa and AC Solar Warehouse in late March making the Evolve available throughout the nation. Adoption by our growing dealer network is matching expectations with the first installations completed and repeat orders beginning to flow through distribution. AC Solar Warehouse immediately released an additional $0.25M order to backfill depleted inventory and provided guidance of increasing monthly release quantities in coming quarters.

May 21 - Eguana’s Evolve now an eligible energy storage system for Simply Energy Virtual Power Plant. Customers who purchase an Evolve system through a specified installer including Eguana partner Class A Energy Solutions, can sign up and receive up to $5,100 in credits.

“We believe the Evolve system will become one of our primary energy storage systems as part of our Simply Extra offer in South Australia,”

- Greg Trainor, General Manager Energy Solutions at Simply Energy.

Simply Energy is the Australian-based retail arm of ENGIE, offering competitive electricity, gas and energy solutions to customers in Victoria from 2005 and now across South Australia, New South Wales, Queensland and Western Australia

May 29 - Announces $3 Million Private Placement: 0$.15 cents with Warrant at 0.20 cents. Bayfront Capital Partners Ltd. ("Bayfront" or the "Lead Agent"), to act as sole book-runner and lead agent on behalf of a syndicate of dealers to be named (the "Agents").

Up to 3,000 unsecured convertible debentures that will mature and be repayable on the date that is three (3) years (the "Maturity Date") from the closing date of the Debenture Financing (the "Closing Date"). The Debentures will have a coupon of 10% per annum payable in cash and compounded semi-annually and payable semi-annually.

Use of proceeds from the Debenture Financing will be allocated to fund working capital and general corporate expenditures of the Company.

May 30 - Sharpe Energy Rating Systems Partners with Eguana to Deliver the Evolve into the Simply Energy Virtual Power Plant. Will deliver the Eguana Evolve energy storage system to support Simply Energy’s Simply Extra Virtual Power Plant (VPP) in South Australia.

As a result Sharpe ERS has placed an opening order valued over $2.3M and expects to see immediate order uptake in the region. The first 20 systems have been released for delivery and the Company expects Sharpe ERS to take the balance of the order within the calendar year.

May 30 - Announces Fiscal 2nd Quarter 2019 Financial Results and Provides Update. Revenues for the quarter were negatively impacted due to a short-term global battery module shortage which has since been remedied. The module shortage created a +$600 thousand back-order situation during the quarter, which has since risen to approximately $2.3 million. Total open orders have continued to ramp and now exceed $9 million, including back orders, and are balanced across our three target markets, Australia, United States, and Europe.

June 3 - Confirms Initial Volume Shipment to Hanwha Q CELLS. First volume shipments is enroute to Hanwha Q CELLS under the previously announced supply agreement. Hanwha Q CELLS has 1000 partners in Europe.

May 15 - Based on the positive Q CELLS internal sales and market feedback from the show, Eguana has received a request to increase the quantity on the next shipment occurring in July, and expects Q CELLS to maintain a monthly order cycle.

June 21 - Announces $3 Million First Tranche Closing of Oversubscribed Private Placement: $0.15 cents with warrant at 0.20 cents.

The net proceeds of the Offering will be used for general working capital and corporate expenditures of the Company.

Last six months have been difficult for EGT.V. Valuation was slashed by more than half.

In retrospect, January to April was an active period with 14 news releases issued. Out of those, a total of $3.7M in financing ($3M from DHCT + $0.7M in Flow-through shares) was raised. In addition, the announcement: an exclusive agreement with Hanwha Q Cells was certainly noted by the market as it expands on the Australia and Hawaii initiatives.

Otherwise, Q1 Earnings struck an optimistic tone and Mackie Research reiterated the $0.70 cents target citing: "Q Cells contract could provide about $3 million in revenue potential in the first year alone and more than $20 million over three years".

However, following this news, valuation gradually declined from an estimate baseline of $0.20 to $0.13 cents in two months. The two insiders purchase were not able to reverse the trend. While the news of joining the Simply Energy's Virtual Power Plant (VPP) Program had an impact on the stock price, it was short-lived. The subsequent announcement of another $3M private placement substantiated by a relatively weak Q2 earnings confirmed the trend.

The issue is that while EGT.V continues to expand its potential valuation, its need for cash is even more extensive. For this period alone $6.7M were raised compared to $1.87M in revenue reported. This definitely is weighing on valuation in a negative manner. Hence, EGT.V is trading below R2 ($0.12).

Another way of looking at this can shape a different picture. YTD 2019 numbers are not pretty and the Q2 2019 numbers captures the issue. However, comparing Q2 2019 to Q1 2019 shows some relative improvements. Revenues are up 12%, Expenses down -3%, and Net Loss up by 2%. Changing trend?

Indeed, EGT.V's got re-valuated by the market but not in the manner that was expected by most. Again, any trend reversal in EGT.V's valuation will be related to its ability to lower expense as it scale on revenue. As a result, EGT.V is still very far from our previously cited target of $0.40 cents (which happens to be LTR2 below) let alone $0.70 cents cited by Mackie Research. Hopefully, EGT.V is on its way towards a positive re-rating.

For now, the market is charging and EGT,V is flickering.

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