WILSONVILLE, OR — (Marketwired) — 10/16/14 — (OTCQB: XPWR), a global clean energy solutions company, reported results for the fiscal second quarter ended August 31, 2014.
Expanded small wind turbine product line with the addition of XZERES 50kW, joining the Skystream 2.4kW and XZERES 10kW.
Deployed first commercial XZERES 10kW in Japan and Vietnam.
Completed pilot program on potentially large telecom project for Skystream 2.4kW — now working to finalize contract and rollout schedule.
Completed $19.9 million financing with Wells Fargo Bank and strategic equity investors.
Appointed David Hofflich as CEO, succeeding Frank Greco who remains president. Hofflich is a seasoned financial executive with more than 20 years of experience across multiple industries, including energy, manufacturing and distribution.
“During the second quarter, we made strong progress in further developing our international market opportunities, and particularly Japan,” said XZERES CEO David Hofflich. “We recently received certification approval for our 10kW system in Japan, a major new market opportunity that we have been actively cultivating throughout the year. Equally important, we continue to see expanding opportunities in other key international markets as a result of our larger global footprint and expanded product line.”
The company–s project financing partner, Gale Force, is also expanding its support of the feed-in-tariff co-operation (FITCO) model into Japan and other areas, similar to the activities it has been pursuing in the UK. Whether it is in the UK, Japan, or elsewhere, attractive project financing solutions are critical to driving higher volumes. XZERES is uniquely positioned in this regard with Gale Force and its established investment portfolio available to fund projects.
XZERES has been advancing a substantial pipeline of global opportunities with its broad product offerings. Some of the company–s active, near-term initiatives include:
Japan – XZERES Wind Japan Limited, XZERES– wholly-owned subsidiary, has been developing strong inroads in Japan and recently deployed its first 10kW small-wind turbine system in the country. Japan–s strong wind resources, growing demand for power alternatives and an attractive FIT rate (at 20kW or below) for wind power provide a substantial opportunity. Further, the country–s small-wind market is at the incipient stage, with a very limited number of small-wind turbine installations to date.
With Class NK certification and the ability to connect to the grid, XZERES 10kW turbine is now the largest rated system (and only one rated at 10.4kW) in the marketplace to capitalize on the targeted FIT rate, which provides an extraordinary opportunity to become the dominant player in the market for years to come. The company anticipates its next Japan deployments to occur in the current quarter, followed by additional orders throughout next year.
Middle East – XZERES is in advanced discussions for a significant multi-site project in the region.
Vietnam – The company deployed an initial two 10kW systems in the region, representing the start of a larger project that it expects to be deployed in 2015.
India – XZERES is in advanced discussions regarding deployments for remote telecom tower solutions in multiple regions and multiple carriers throughout the country.
Caribbean region – XZERES is in the final stages of concluding a number of specific opportunities in multiple areas of the Caribbean, with initial projects expected to come to fruition this fiscal year.
Continental Europe – XZERES is pursuing specific project opportunities in Italy, Greece, Romania, Poland, the Baltic countries and elsewhere where its 50kW system is ideally designed for existing low-voltage utility grids. This provides a cost advantage over other slightly larger turbines that attempt to “de-rate” in an effort to fit within grid limits.
UK FITCO – The company has been actively promoting the FITCO program in the UK since last year. It has contributed to revenues over the last several quarters, although at a moderate level. The program enables a landowner to receive a turbine and the power it generates for free while the investor partner (Gale Force) collects the available feed-in-tariff payouts. Gale Force committed significant funding resources for the UK and now Japan efforts, with the focus on purchasing the XZERES 10kW turbine. XZERES is working with project partners who assist in identifying quality sites, meeting with the landowner, and securing a lease contract for Gale Force. Once the site has planning and connection approval, Gale Force then purchases the system from XZERES who then assists in arranging for installation. In the UK, there are a number of sites awaiting permit approvals.
Domestic Sales and Lease – XZERES launched a leasing program earlier this year for the domestic market that is similar in concept to popular domestic solar leasing models. It complements the company–s existing sales efforts. The program is focused on specific regions where customer economics are the most attractive.
Total revenues for the second quarter of 2015 totaled $655,000, as compared to $1.0 million in the same year-ago quarter. “Our topline was lower than anticipated in the second quarter primarily due to a quality issue on a critical system component where the manufacturer did not conform to XZERES specifications,” said XZERES CEO David Hofflich. “However, we resolved the quality issue in August and are actively working to bring our production levels of the component back up to target levels.”
During the quarter, the company elected to take a one-time addition to its warranty reserve related to the quality issue, which negatively impacted gross margins.
Operating expenses totaled $2.1 million as compared to $2.5 million in the same year-ago quarter. The increase is due to increased sales expense and marketing costs, partially offset by a decrease in engineering and R&D expenses, as well as general and administrative expenses.
Comprehensive net loss totaled $3.0 million as compared to comprehensive net loss of $2.0 million in the same year-ago quarter. The loss in the fiscal Q2 2015 included non-cash charges totaling $1.0 million related to debt discount amortization and equity compensation expenses (see the company–s SEC filling on Form 10-Q for further details).
Cash and cash equivalents increased to $5.0 million at August 31, 2014, from $0.1 million at May 31, 2014. The increase is primarily attributed to a $19.9 million financing with Wells Fargo Bank and strategic equity investors.
XZERES expects its fiscal third quarter ending November 30, 2014 to record total gross revenues between $1.7 million and $2.5 million, which would represent an increase over the same year-ago quarter. The company also expects strong sequential growth following the fiscal third quarter.
XZERES– Skystream 2.4, XZERES 10, and XZERES 50 wind turbines are the best-in-class small scale wind turbines for agricultural, residential, small business and microgrid applications. XZERES turbines are the leading, small-scale wind energy solutions, with more than 9,300 installations worldwide.
XZERES Corp. is a global renewable energy company. The company designs and manufactures on- and off-grid wind turbine systems as well as energy efficiency solutions for commercial, light industrial and residential markets. XZERES products reduce energy costs and carbon footprints. Headquartered in Wilsonville, Oregon, the company–s international distribution network supports the deployment of its products in 110 countries and on all seven continents. For more information please visit .
The information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under “Risk Factors” in the Company–s filings made with the Securities Exchange Commission. Actual results may differ materially from those contemplated by these forward-looking statements and the Company does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this press release.
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