Mr. Justin Holland reports

EGUANA ANNOUNCES OPERATIONAL UPDATE AND 2022 ANNUAL RESULTS

Eguana Technologies Inc. has released the results for its fiscal year ended Dec. 31, 2022. Eguana notes that due to a change to the company's year-end from Sept. 30 to Dec. 31, an additional fifth quarter was added to the fiscal 2022 results. Dec. 31, 2022 (Q5 2022), will be compared with Dec. 31, 2021 (Q1 2022), for the purposes below to account for seasonality trends within the industry.

Fiscal year 2022 marked the completion of a number of significant milestones for Eguana related to demonstrating production capacity and scale, national distribution channel management, procurement and inventory management, and robust working capital.

"Increased working capital positioned Eguana to rapidly build and maintain product availability through expanding distribution channels and to invest in our supply chain to meet delivery capacity growth expectations throughout 2023," commented Eguana chief executive officer Justin Holland. "These key accomplishments enable Eguana to expand focus on building demand and increasing sell-through within the dealer partner installation network with an ambitious training and service program that commenced late in fiscal 2022, which we continue to accelerate."

Fiscal 2022 financial highlights:

• Record quarterly revenue in Q5 2022 of $10.36-million, a 719-per-cent increase from $1.26-million in the same period in the previous year and surpassing previous record annual 12-month revenue in any year;
• Gross profits of $399,932 or 3.86 per cent of revenue in Q5 2022 product sales, compared with a gross margin of $10,411 or 0.8 per cent in Q1 2022;
• Record annual revenue in fiscal 2022 of $16.83-million, a 135-per-cent increase compared with fiscal 2021;
• Q5 2022 operating loss was $3.05-million, an increase from a $2.66-million operating loss for Q1 2022l
• Robust working capital of $33.7-million at Dec. 31, 2022.

Business highlights and outlook

Operations:

• Met key manufacturing capacity goal of approximately 24,000 five-kilowatt-equivalent systems in annualized production volume;
• Relocated Eguana headquarters, delivering an increase of five times in development lab capacity;
• Launched Eguana University, an on-line partner training, installation, commissioning and dealer support site to build dealer loyalty and promote product sell-through;
• Launched microinverter line, received multiple orders totalling $22-million;
• Vertically integrated in South Australia via the Solarlab acquisition to streamline sales and consumer experience with immediate uptick in sales quotes and orders.

Supply chain:

• Strategic investments into battery module, microinverter and key components to reduce supply chain risk related to growth objectives;
• Diversified supply chain for key components to reduce reliance on China-based sourcing;
• Completed software licence agreement, with E-Gear giving the company full control of Eguana cloud development and customer specific revisions.

Sales, channel management and distribution:

• Partnered with five design and system modelling software companies for installer engagement;
• Added four additional national distribution partnerships through DPC to increase national and regional product availability to installers and consumers;
• Added multiple consumer financing options for United States and Australian markets;
• Built North American sales teams focused on distributor channel management, dealer/installer training and loyalty to accelerate sell-through with expanded boots on the ground for sales and technical sales teams.

Development:

• Completed Eguana cloud platform integration to increase participation in virtual power plant applications, recurring and SaaS (software-as-a-service) revenue models;
• Designed and completed API (application programming interface) interface to communicate with DERMS (distributed energy resources management system) platforms for VPP (volume purchase program) applications;
• Developed next-generation Eguana ESS products to increase power and capacity while simplifying installation and commissioning;
• Completed product certifications for 10-kilowatt Max, Eguana Hub, Australia NMC and LFP Evolves, European Enduro, and 9540A fire propagation for five-kilowatt and 10-kilowatt Evolve;
• Completed CSA and Intertek self-certification accreditation to simplify product certification processes reducing new products time to market;
• Developed alternative parts program to manage component risk through the COVID-19 pandemic.

Finance:

• Closed $33-million investment with strategic partner Itochu;
• Closed $10-million (U.S.) with lending partner Western Technology Investment (WTI).

Channel management and demand generation will be a key Eguana focus through 2023. Kitchen table sales are generally executed by installation companies, which, depending on their size and scale, will procure products through distribution or directly. The installer base drives sell through within the sales value stream using the on-line training and support platform Eguana has created to support both installer and distributor partners.

"In November, we turned our attention to building out Eguana University, an on-line training and tools platform to support our distribution and installation partners; these are the boots on the ground and where we need to continue building loyalty within our product suite," added Mr. Holland. "Leading indicators can now be managed by our software metrics on user and training completion data, giving the sales teams additional engagement and touch points with our partners."

The consolidated financial statements and the management discussion and analysis thereof are available on SEDAR.

About Eguana Technologies Inc.

Based in Calgary, Alta., Canada, Eguana designs and manufactures high performance residential and commercial energy storage systems. Eguana has two decades of experience delivering grid edge power electronics for fuel cell, photovoltaic and battery applications, and delivers proven, durable, high-quality solutions from its high capacity manufacturing facilities in Europe and North America.

With thousands of its proprietary energy storage inverters deployed in the European and North American markets, Eguana is one of the leading suppliers of power controls for solar self-consumption, grid services and demand charge applications at the grid edge.

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