Eguana Technologies Inc V.EGT

RE: MARKETS

[Speedman63]

Going forward looks promising. I think this is what the markets are seeing and not the crap that some are posting!
2nd Quarter Highlights

-- Comprehensive certifications with CSA/UL, CE and VDE certification of
SUNERGY LV (low voltage) and SUNERGY ELV (extra low voltage) products
enabled Sustainable to initiate commercial production of the new SUNERGY
inverters in early April; production had been delayed to ensure that the
same electrical and mechanical platform could be used in both European
and North American markets to maximize inter-changeability between
markets of the sub-assemblies.
-- Agreement with Plexus Corp to manage electronics supply chain and
manufacture electronics sub-assemblies for Ontario production and to
manufacture SUNERGY for European markets enables better access to long
lead time electronics components lowers cost and shortens supply lines.
-- Subcontracted inverter assembly plant in Cambridge Ontario enables
production of "made in Ontario" inverters for Ontario FIT market pending
final site selection for manufacturing engineering and product
development plant.
-- Alliances with Bosch Solar GmbH and Morrison Hershfield enable
Sustainable Energy to co-market "premium" PARALEX thin film package for
Ontario market as turnkey solution for ground based and rooftop micro-
FIT applications and institutional applications where safety of low
voltage systems is a driver: schools, hospitals public buildings and
recreational areas.
-- Distribution agreements and purchase orders from CONERGY - world's
largest solar products distributor - for rooftop system and Innovative
Air for ground based, micro-Fit programs for first deliveries in June
and July.
-- Private labeling partnership with Solar Consult and Changetec will
position SUNERGY platform for entry in German market.

 
Outlook

-- Global solar markets continue to show 30% CAGR with a forecast of 10 GW
to be installed in 2010 up from 7.2 GW in 2009. Increased unit growth
will drive value of solar inverter market to more than US$4B in 2010. A
global shortage in solar inverters provides better pricing and
opportunity to build brand and momentum over the next 18 months.
-- Planned production of SUNERGY for the balance of 2010 calendar year is
32 MW with a goal to exit calendar 2010 with 8 MW per month and capacity
to increase to 16 MW per month in calendar Q1, 2011 with demand growth
in Ontario during 2011.
-- First production in China is underway and the first deliveries were made
to Salicru in Spain and to the Cambridge facility in May. Over the next
70 - 90 days about 7MW of inverters and sub-assemblies is being
manufactured in China and shipped to Europe and Ontario before shifting
production to Plexus. Demand for product will likely be greater than the
Company's production capacity until a production ramp later in the year.
-- Product sales revenues will depend on the mix of demand between Europe
and North America and between PARALEX systems vs. SUNERGY inverters
only. This is undeterminable at this juncture. With PARALEX systems, the
Company is targeting revenues in the $3.0/watt range; with SUNERGY
inverters the Company is expects revenues to range between
.38 -
.50/watt range depending on geographic markets and channels and upon
foreign exchange.
-- Demand for SUNERGY is gaining traction in Europe with strategic private
label relationships in Spain Germany and Greece. In Spain Salicru - with
40% market share in power supplies and energy management business - has
recently begun increasing deliveries under previously announced 15 MW
blanket purchase order. Going forward the Company will focus resources
in Spain marketing to supporting its two lead distribution channels -
Salicru and Techno-Sun. The Company has terminated a previously
announced supply contract with Tejados Industriales Fotovoltaico and is
redirecting products to other higher value customers.
-- In Germany, the Company will partner with compatible solar module
suppliers and system integrators to market the PARALEX "compatible"
solution. With the drive for suppliers to meet June 30 deadline for
Germany's feed in tariff changes the Company expects to see only limited
sales before September 2010
-- The Greek solar PV market has begun growing very rapidly in the past few
months, with no shortage of debt or equity capital for projects. Growth
is expected to accelerate as Greece directs more investment to the
renewable energy sector under the European bailout package. The Company
is marketing an easily replicable PARLEX style package of components
(panels inverters wiring and racking) for smaller (less than 150kW)
ground based and rooftop systems and is targeting an average selling
price of 3 Euros per watt. With more than 11 MW at various stages in the
sales pipeline, Greece could represent the largest share of European
revenues in 2010 calendar year.
-- Ontario Feed in Tariffs will make Ontario one of the largest in North
America Domestic content levels (60%) in 2011 will require "made in
Ontario" panels and inverters for all installations Within Ontario the
Company will target rooftop and ground based micro-Fit (less than 10kW)
market and mid-size (less than 150kW) institutional/commercial rooftop
applications for PARALEX systems. Based on announced contracts the
Company estimates a 225 MW opportunity.
-- Bureaucratic growing pains in Ontario, near term component supply issues
and the absence of coherent financing packages will likely delay demand
growth in Ontario until the last Quarter of 2010 and into 2011.
-- The Company is developing targeted strategic relationships in the US to
test the market for market entry in the second half of 2011.

 
Operations

-- Operating results for Q2, 2010 are in line with expectations. With no
second generation SUNERGY products for sale during the Quarter, product
sales revenues were limited to test market orders for the second
generation SUNERGY product. Production of second generation SUNERGY in
China got underway in April and first deliveries in Europe were made in
May. Approximately 7.5 MW of inverters and sub-assemblies will be
shipped from China over the next 70 - 90 days before shifting production
to Plexus.
-- The Net Loss for the three months ended March 31, 2010 of ($2,303,193),
compared with ($1,102,535) for the three months ended March 31, 2009, an
increase of ($1,200,658). Excluding adjustments to non-cash working
capital, cash flow from operations for the period was ($1,553,331)
($517,777 per month) by comparison to ($1,032,586) for the same period
in 2009 an increase $173,582 per month.
-- Working capital at the end of the Quarter was $6,004, 393 down
$1,296,552 from $7,300,945 at the end of December 2009 and $5,395,996 at
the end of September 2009.
-- Cash and cash equivalents declined by $889,633 during the 2nd Quarter
from $5, 809, 689 to $4,920,056. Investment in inventory increased from
$723,865 on December 31, 2009 to $1,271,063 on March 31, 2010.