MD&A, Q3 2017 positives:1. In September 2017, the U.S. will also introduce more stringent interconnection requirements in the form of UL1741SA. The Company believes this will be a significant technological barrier to entry within the competitive field for grid connected energy storage systems, and will disqualify previously used power control solutions. Eguana’s AC Battery has internally passed all new interconnection requirements and been submitted to CSA for final certification. The Company expects a seamless transition to the new standard.
2. As planned, the Company began shipping PCS units in June to fulfill backlogged Hawaiian orders, however due to a short delay in battery module shipments, missed its internal revenue expectation. An immediate backorder of battery modules valued at $875,000 resulted. Battery module constraints have been resolved by our partner and new shipments are expected to commence in September, with increasing PCS and additional battery modules throughout the balance of year. The Company expects the resolution of its battery supply constraints to drive material growth in revenue for the rest of the calendar year, and increasing volume will begin to drive improved product gross margins
3. The Company continues to build additional sales channels within the U.S. market, with our business development focus in New York along with California. Recent policy changes in New York State have been favorable for renewable energy and the Company is in advanced discussions with a prominent real estate developer, with the expectation of both residential and commercial system pilot installations this year