Mr. Justin Holland reports

EGUANA ANNOUNCES 2024 ANNUAL FINANCIAL RESULTS

Eguana Technologies Inc. has released its annual financial results for the year ended Dec. 31, 2024.

Many of the strategic initiatives and activities throughout 2024 were driven by the company's transition away from consumer-driven rooftop solar channels into utility-driven grid infrastructure channels. The company targeted both utility and DERMS (distributed energy resource management systems) partnerships ahead of advanced batteries becoming integral to the power grid transformation to a distributed grid.

Advanced battery solutions, particularly behind the meter, will be key to expanding capacity and reliability of current grid infrastructure, enabling utilities to better manage edge of grid-generating assets and renewables like wind and solar, while providing consumers with backup power capability during grid outages.

Eguana's hardware and software solutions were designed for power grid management at the utility level and come with a full suite of virtual power plant capability, including demand response, voltage and frequency control, backup power, fleet aggregation, and spinning reserve, plus real-time grid edge visibility and analytics.

Strategic summary:

• The company partnered and fully integrated hardware and software solutions, with five leading North American DERMS providers;
• Completed pilot demonstrations for feeder voltage control in end-of-line and high-photovoltaic penetration conditions with a Western Canadian utility;
• Delivered exclusive megawatt feeder peak management project with a Western Canadian utility;
• Completed demand response testing with single system and aggregated fleet with a California-based DERMS partner and community choice aggregator to bid into the California demand response market;
• Completed system integration with Itron Intelliflex smart meter 2.0, delivering first smart battery/smart meter combination, which will be co-marketed to North American utilities;
• Invited to participate four-megawatt feeder support RFP from largest Ontario LDC;
• Planned feeder pilot with an Alberta-based utility to demonstrate delivery of stacked services from residential storage in a competitive electricity market.

"Two thousand twenty-four saw the continued collapse of consumer-driven rooftop solar markets and ignited a strategic shift for Eguana into utility-driven channels with focus on power grid transition and a distributed grid," commented Eguana chief executive officer Justin Holland. "Eguana hardware and software solutions were designed to deliver grid services at the grid edge; however, it is only now with increasing peak loads and an absence of widespread consumer adoption that utilities are directly investing in deployments where they are needed most. Our technology really stands apart at the utility level, delivering much needed capacity and reliability to grid infrastructure already in place."

Eguana's Evolve hardware and Eguana cloud and edge software platforms provide utilities with grid edge solutions with real-time management and visibility to utility and DERMS partners. As the power grid transitions to a distributed grid, energy storage assets will be a key and critical component of power grid management.

Fiscal 2024 summary results

The company's year-end financial statements for the 12-month period ended Dec. 31, 2024, are being presented with comparative information for the 12-month year ended Dec. 31, 2023:

• Operating costs, excluding amortization and share-based compensation, for the year ended Dec. 31, 2024, were $5.25-million, down from $10.6-million for the year ended Dec. 31, 2023, representing a 51-per-cent decrease year over year. Large overall cost reductions were achieved with lower head count, a short summer period of reduced work weeks and payroll, and decreased spending in all categories.
• The company recognized a credit loss recovery for the year ended Dec. 31, 2024, of $1.6-million, as opposed to the credit loss provision of $10.0-million for the year ended Dec. 31, 2023. The large ECL provision in 2023 negatively impacted the net loss for that year. The company originally recognized a credit loss provision at the year ended Dec. 31, 2022, and has been adjusting the provision on a quarterly basis.
• Sales decreased 92.3 per cent to $751,869 in fiscal 2024 in comparison with $9,761,892 in fiscal 2023. In 2024, the solar industry remained extremely volatile driven by economic uncertainty through consumer channels and a reorganizing of global supply chains. Among other macroeconomic factors, fiscal 2024 sales declined, after the first quarter, due to this demand shift. Liquidity issues of a major customer, also impacted by the underperforming solar market, negatively impacted fiscal 2024 sales.
• Overall gross margin remains low as the industry slowed and consumer-driven markets became more price sensitive, with rising interest and high inflation. Gross margin decreased to negative 29 per cent, or negative $200,000 for the year ended Dec. 31, 2024, compared with the period ended Dec. 31, 2023, wherein gross margin was negative $2.2-million or 22 per cent. Margins have also been negatively impacted by inventory impairments.
• Net loss before tax from continuing operations for the year ended Dec. 31, 2024, was $15.2-million, as compared with $32.4-million for the year ended Dec. 31, 2023. The decrease in net loss can primarily be attributed to decreased total operating expenses by $6.0-million, due to lower costs in all categories, as the company continued cost-saving measures across the company.
• In response to market constraints, the company made the decision to close its German business and to liquidate the operations during third quarter 2024. The company also made the decision to close its Australian subsidiary by formal liquidation. Net loss from discontinued operations for the three months ended Dec. 31, 2024, was $380,000, and, when the comparative presentation is presented, the net loss from discontinued operations for the three months ended Dec. 31, 2023, was $1.6-million.

The consolidated financial statements and management's discussion and analysis thereof are available on SEDAR+ and the company's website.

About Eguana Technologies Inc.

Eguana's vision is to accelerate grid modernization and resilience by delivering flexible, modular and cost-effective alternatives to traditional grid upgrades. Its technology provides value to all key stakeholders -- from the consumer, to the electricity retailer, the distribution utility and the system operator.

Eguana Technologies connects utilities with consumers, through its high performance commercial and residential energy storage solutions. Eguana's vertically integrated product suite has been designed from the ground up, with both the end-user and the utility in mind, to transition the power grid seamlessly.

Manufactured in local facilities across the globe to ensure compliance and quality, Eguana's standardized platform allows the flexibility to ensure each product solution is optimized for use in major grid modernization markets.

We seek Safe Harbor.