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Independent Reviews for Venture Investors

EGT.V - Transformative.


Eguana Technologies Inc. (EGT.V) designs and manufactures s high performance residential and commercial energy storage systems. EGT.V has two decades of experience in grid edge power electronics for fuel cell, photovoltaic and battery applications, and delivers proven, durable, high quality solutions. With thousands of its proprietary energy storage inverters deployed in the European and North American markets, Eguana is one of the leading suppliers of power controls for solar self-consumption, grid services and demand charge applications at the grid edge.


Coverage was initiated July 2017, with subsequent notes issued on January 2018, February 2018, June 2018. December 2018, July 2019. April 2020, December 2020 and September 2021.


News Releases


Sep. 24 -Licenses E-GEAR EMS Cloud Platform: Under the agreement, Eguana will take control of operation and development of the same cloud platform it has been using for several years in the US energy storage market and will also manufacture the site controller hardware. The site controller firmware and IoT network will continue to be developed and maintained by E-Gear LLC. The agreement is effective immediately and the parties have begun collaboration on the transition which is expected to occur over the next several months.


Oct. 8 -Grants Key Employees Stock Options for 2021: Incentive stock options to acquire up to an aggregate of 4,560,000 common shares. Of the options granted, 3,425,000 have been granted to directors and executives of the Company at a strike price of $0.40 per share, with the remainder to employees at a strike price of $0.275 per share.


Nov. 2 - Secures Manufacturing and Licensing Agreements: Under the terms of the agreements, PowerCenter+ has committed to a minimum volume of 10,000 systems over three years. Eguana has committed to certify versions of its existing 5kW/14 kWh expandable residential storage solution and its new 10kW/28 kWh full home backup solution.


Additionally, Eguana has completed a manufacturing agreement with PowerCenter+ parent company Omega EMS to manufacture systems in San Jose, California, including the provision of all non-battery working capital. Omega will produce both product lines with first shipments out of Omega EMS scheduled for the first week of November. Entities will also collaborate on future product development and market opportunities for home energy storage solutions.


The partnership with the Omega entities was critical for us to significantly increase our manufacturing capacity and move towards our objective of 800-1000 units per month for North American markets.” - Eguana CEO Justin Holland.


Nov. 26 -Files for a $150.0 Million Base Shelf Prospectus valid for 24 months


Dec. 1 - AES to Bring Eguana Evolve Solar + Storage Solutions to Georgia: Alternative Energy Southeast (AES), one of Georgia’s top rooftop solar and storage providers, has placed an opening order valued at $2.1M and will promote, sell and install Eguana’s Evolve and Evolve Max throughout the US south east region.


Dec. 17 -Announces Early Conversion of Series A Preferred Shares and Exercise of 4,000,000 Warrants: DHCT II Luxembourg SARL (“DHCT”), the Company’s largest shareholder, has elected to convert all of the Series A preferred shares it holds, being 434,860 Series A Shares, into 18,119,167 common shares of the Company.


In respect of the accretive dividend payable on the Series A Shares, the Company has paid DHCT $500,000 and intends to issue 1,326,986 common shares of the Company to DHCT at a deemed price per share of $0.45 cents.


The Company also announces that DHCT has elected to exercise 4,000,000 common share purchase warrants of the Company at an exercise price of $0.20 per Warrant for gross proceeds of $800,000.


DHCT will own 91M common shares representing approximately 23.3% of the presently issued and outstanding shares.


Dec. 20 - Receives PowerCenter+ Opening Order: Received an opening order of 500 units representing 2.5MW from partner PowerCenter+, a subsidiary of Eguana manufacturing partner Omega EMS. The initial order, valued at approximately $6M, is related to the previously released manufacturing and licensing agreements between the parties to launch a premium line of home energy storage systems (ESS) based on Eguana’s patented energy storage platform.


Jan 6 - Announces Operational Update and 2021 Annual Results: i) Launch of the premium branded Evolve through PowerCenter+ to address the retail dealer market in North America; ii) Increased manufacturing capacity in the US through Omega EMS partnership, including support for working capital growth; iii) Eguana Cloud Services, to participate in and operate future virtual power plants; iv) Battery module and battery management system development, to secure future battery supply, a critical component in energy storage systems; and v)Investment in pre-positioned inventory to mitigate on-going impacts of COVID-19 on Eguana’s supply chain.


Jan. 26 - Filing of Final Base Shelf Prospectus: For up to C$150 million during the 25-month period. The Company has filed the Shelf Prospectus in order to maintain financial flexibility as it continues to scale its business.


Feb. 11 - Receives 5MW from the Omega Group: a follow on order of 1,000 units, representing 5MW, from the Omega Group, which also includes Eguana manufacturing partner Omega EMS. The order, valued over $11 million, is related to the rapid uptake of product primarily through select CED GreenTech branches across the United States.


Feb. 28 -Expands Energy Storage Power Controls Platform to Include the Eguana Enfuse suite of Microinverters: The Eguana Enfuse micro inverter line has been developed to accept higher power than competitive products delivering up to 15% more energy annually. Enfuse will be available in the US for Spring 2022 and we expect quick uptake of our micro inverters beyond our storage market channels. Availability in other global markets will follow.


Mar. 1 - Announces 1st Quarter 2022 Financial Results: Business Highlights: i) Entered into definitive agreements to launch a premium line of home energy storage systems into North American and Caribbean markets with the Omega Group; ii) Increased order book to +$17M CAD in the first 8 weeks since product launch.


Apr. 4 - Enters into a US$10 million Loan Agreement with Western Technology Investment: Terms: The Loan has first priority over all assets of the Company and its material subsidiaries. During the week of April 4, 2022, the Company intends to draw US$5M under the terms of the Loan. An additional US$5M is available through August 31, 2022 upon the achieving revenue of at least C$14M between May 1, 2022 and July 31, 2022 and having unrestricted cash of C$10M.


Each draw will bear interest at a rate of 12% per annum, with interest-only payments being paid during the first six months, followed by both principal and interest payments being paid in equal installments over a period of 30 months commencing on the 6-month anniversary of the relevant draw.


As consideration for the advance of the Loan, the Company has issued common share purchase warrants (the “Warrants”), entitling the Lender to purchase up to an aggregate of up to 4.9M common shares of the Company at a price of $0.355 per common share for a period of five (5) years from the date of the Loan, with 50% of the Warrants immediately vesting and 50% of the Warrants vesting rateably on subsequent draws made under the Loan.


May 25 - Omega EMS San Jose Production Facility Fully Commissioned for Eguana Products: Full turnkey production and supply chain management is now underway at the Omega EMS facility in San Jose, California. Every stage of energy storage system production is active including circuit board, inverter and system assembly, and final functional testing with multiple Omega personnel trained at each station. The Company, along with key Omega personnel, continue to collaborate on throughput optimization within the manufacturing process.


Shipments of Omega produced product have begun with current production capacity sitting at 400 units per month. Additional test equipment is on order and expected to be installed and commissioned within the next two quarters providing an 800 unit per month production capacity.


May 30 - Announces 2nd Quarter 2022 Financial Results: Eguana initiated and expedited a full manufacturing transition to its contract manufacturing partner Omega EMS to de-risk future sales and open additional capacity and supply chain bandwidth. They also confirmed future system testing equipment has been ordered and will be installed and commissioned this year, doubling production capacity from 400 to 800 systems per month.


Summary


Partnerships/Licensing

The major highlights of period were the two licensing aggreements; i) E-Gear EMS and ii) PowerCenter+.


The E-Gear EMS Cloud Platform (September 2021) has EGT.V taking control of operations, development, and manufacture of site controller hardware. E-Gear will continue to develop firmware and IoT network. As per MD&A:


Additionally, the EMS platform development will open recurring and SaaS revenue models for the Company. White label partner APP development and fleet aggregation software will be key focus areas for the Eguana Cloud team


The manufacturing and licensing aggreement with PowerCenter+ (an Omega EMS Subsidiary) outlined a minimum of 10,000 systems over three years with the goal of launching a premium line of home energy storage systems in North American and Caribbean markets. Inclusive to the deal is a manufacturing agreement with Omega EMS to build systems in San Jose, California, including the provision of all non-battery working capital. Under the aggreement, both companies will also collaborate on future product development and market opportunities.


“The partnership with the Omega entities was critical for us to significantly increase our manufacturing capacity and move towards our objective of 800-1000 units per month for North American markets. We also expect to see a step up with respect to product quality which inherently simplifies the installer and customer experience,” - Eguana CEO.


By May 2022, Omega EMS San Jose Production Facility was reported to be fully commissioned for EGT.V


Financing

Three major events took place; i) $150M base Shelf Prospectus, ii) DHCT sales conversions and iii) $10M WTI Loan.


A $150M Intial Base Shelf Prospectus was filed in November 2021; The final one was submitted January 2022.


The Company has filed the Shelf Prospectus in order to maintain financial flexibility as it continues to scale its business. There is no certainty that any Securities will be offered or sold under the final Shelf Prospectus within the 25-month.


December 2021, DHCT II Luxembourg SARL (DHCT), Eguana's largest shareholder elected to convert all of the Series A preferred shares; 434,860 Series A Shares into 18,119,167 common shares of the Company. DHCT also exercised 4M warrants (at an exercise price of $0.20 per Warrant) for gross proceeds of $800,000.


At the time of the announcement DHCT owned 91M common shares representing approximately 23.3% of the total shares.


Recently (April 2022) a US$10M Loan aggreement with Western Technology Investment (WTI) was made. An authorized first draw of US$5M with an additional US$5M subject of achieving revenue of at least C$14M between May 1, 2022 and July 31, 2022 and having unrestricted cash of C$10M .As consideration; EGT.V issued 4.9M shares at $0.355 cents,


Earnings

Year to Date (YTD) revenues for FY 2022 are significantly lower than FY 2021. However, net losses are flat.

EGT.V also plans to change the fiscal year-end from September 30 to December 31 to align with the calendar year end.


Orders

Three major orders were released; one with Alternative Energy Southeast (AES) and two with PowerCenter+. AES placed a $2.1M initial order in December 2021. Also that month, a First PowerCenter+ Opening order of $6M (500 units) was initiated. Finally, an additional order from PowerCenter+ $11M (1000 units) was received February 2022.


At Q1 2022 - Eguana reported an Order Book at $17M.


Options

4.5M incentive stock options; 3.45M at $0.40 cents and 1.14M at $0.275 cents.


In short

In the last nine months EGT.V was valued as high as $0.62 cents and as low as $0.24 cents.


Instrumental to the current valuation were the agreements with E-Gear EMS, PowerCenter+ and Omega EMS. The subsequent conversion of Series A Prefered Shared into common shares by DHCT II Luxembourg SARL (DHCT) - the largest shareholder - was also a confirmation that those agreements were significant for Eguana.


WTI continued financing also points to potential imminent catalysts in light of weak earnings YTD in 2022. Note. EGT.V has 30M exercisable warrant that it can draw upon in addition to the $150M Shelf Based Prospectus if needs be.

Within the past nine months at least Raymond James and Stifel GMP have been active in issuing price targets. Raymond James predicted $0.75 cents (Feb. 2021) while Stifel-GMP lowered its targets to $0.60 cents (May 2022) on revenue of $22M for FY2022. Specifically Stifel-GMP predicted FY 2022 Q3 at $6.4M and Q4 at $14M.


Should Eguana achieve these numbers, it will be a departure from current revenue trends (roughly $7M in FY 2021).


As such, the next two earning reports could be transformative.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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