Mr. Michael Carten reports

EGUANA FILES INTERIM FINANCIAL STATEMENTS & PROVIDES MARKET UPDATE

Eguana Technologies Inc. has filed its interim consolidated financial statements for the nine-month period ending June 30, 2014, along with management's discussion and analysis thereof. The consolidated financial statements and the management discussion and analysis thereof are available on SEDAR and on the company's website.

Highlights:

• Key changes in the U.S. residential market driving strong demand for Bi-Direx technology in 2015;
• Continued revenue and demand growth for Bi-Direx inverter in European solar self consumption market;
• Multiyear deal to supply Bi-Direx power control system in high-growth Hawaiian solar storage market.

Significant new developments

Key market changes in the United States

The demand profile for the U.S. residential market changed materially in the first half of 2014. Although relatively modest demand for backup power systems had previously been forecast for this market, it is now clear that grid stabilization and control solutions needed to sustain continued growth in renewable generation -- including real-time load balancing, voltage control on residential feeders, and frequency regulation -- is driving demand for storage deployed alongside rooftop solar PV to supply these services.

Eguana's Bi-Direx smart grid energy storage inverter is one of only a very small handful of energy storage inverters suited for U.S. grid-tied application, and the only energy storage inverter with the advantage of having a deployed base of over 1,000 networked systems.

Eguana is seeing demand for Bi-Direx from multiple sources. This month the company signed a non-binding letter of intent with a Hawaiian company to supply value-added power control systems for residential storage solutions. Customer-indicated demand is for several thousand units annually beginning in 2015. The company also has business at the table with integrators in California and on the Eastern Seaboard which have ordered Bi-Direx products and/or currently have Bi-Direx inverters for acceptance testing with customer indicated demand for several thousand units in 2015 and the potential to grow significantly in following years.

Trends in German solar self-consumption market

EUPD, the leading German research institute for solar energy storage, has forecast continued growth in energy storage for solar self-consumption. EUPD is forecasting 20,000 units in 2015, doubling to 40,000 units in 2016, with rapid escalation thereafter due to a combination of increasing electricity prices and declining battery costs. Significantly for Eguana, EUPD sees the retrofit market in Germany opening next year as early solar feed in tariff contracts expire and pricing drops to current levels. By 2016, the retrofit application in Germany will represent 50 per cent of the market with 20,000 units installed annually. EUPD estimates that this will grow to more than 100,000 installations in 2018, of which more than 70,000 units will be for retrofits of existing installations.

Unlike most European products, which are suitable for new installations, Eguana's patented Bi-Direx design enables a highly efficient and very flexible AC coupled topology which works equally well with new installations and retrofits.

Operations

The company continues to grow product sales revenues for solar self-consumption markets in Europe. Product sales revenues for the nine months ended June 30, 2014, were $1,363,125 compared with $132,748 for same period in 2013. Third-quarter revenues were $477,410, up 20 per cent from $396,357 in the second quarter of 2014, but below expectations, and below contractually committed volumes for the period. The lower revenues were due to reduced throughput at Sonnenbatterie's facility in June during transition to the new ECO product, which, in turn, required the company to significantly reduce deliveries from its Durach facility during the month.

In June, Sonnenbatterie launched the market-leading ECO residential product reducing the selling price point per kilowatt hour by almost 40 per cent. Demand for the ECO has been very positive and the company's production levels are back up to two shifts at the facility in Durach. Estimated revenues for July and August currently total more than $680,000 as of the date hereof. Customer demand forecasts for Bi-Direx for the next three months beginning Sept. 1, 2014, are for volumes valued at approximately $1.8-million with contractually committed take or pay orders Bi-Direx units valued today at approximately $1.4-million.

Outlook and priorities

The company sees continued growth in demand in Europe for the balance of the calendar year and into 2015. The company sees demand in the United States picking up significantly in the first half of the year and growing from that point. Eguana's priorities remain unchanged: to build volumes and revenues in Europe and the United States; and to position Bi-Direx as the technology leader for grid edge energy storage globally. Investors should look for Eguana to:

• Convert business at the table in the U.S. residential market to longer-term multiyear deals to supply smart power control systems for edge of grid utility support;
• Continue and expand its relationship with Sonnenbatterie in Europe and in the United States;
• Secure strategic partnerships to deliver a fully integrated three-phase AC battery for demand charge and energy management services in the U.S. commercial and institutional markets.

We seek Safe Harbor.