Powin Energy Corporation (OTC:PWON)

TUALATIN, Ore., Dec. 11, 2017 (GLOBE NEWSWIRE) -- Powin Energy Corporation (PWON), a leading manufacturer of fully integrated energy storage solutions, has sold over 110MWh of select project assets and contracted pipeline to esVolta. esVolta recently received a large financial commitment from Blue Sky Alternative Investments LLC to accelerate its growth in the North American utility-scale energy storage market. Powin Energy will be esVolta’s exclusive provider of energy storage systems through 2022.

“Powin Energy’s business plan has long had the vision of transitioning the company out of the project development business and into being a fully dedicated energy storage systems and services provider,” said Geoffrey Brown, President of Powin Energy. “This transaction is the realization of that plan and will enable the company to focus all of its efforts on delivering the best energy storage systems in the industry to our developer and utility customers. esVolta and Blue Sky’s commitment to developing energy storage projects with Powin Energy’s products is strong validation of our technology and the top-tier team we’ve assembled.”

Following are the primary projects included in the transaction:

PPA Grand Johanna is a 2 MW/9 MWh system in Irvine, California, that has been operational since the beginning of 2017 in response to the Aliso Canyon gas leak and is contracted with Southern California Edison (SCE).
Don Lee BESS is a 6.5 MW/26 MWh project that will be located in a historic orange processing facility in Escondido, California. The development-stage project is under contract with San Diego Gas & Electric (SDG&E).
Upon its commercial operation, a 50% stake in Powin Energy Ontario Storage, an 8.8 MW/40.8 MWh system in Stratford, Ontario, that is under contract with Ontario IESO. The system is expected to go online by the end of 2017 and it will be the largest battery storage facility in Canada.
A 10 MW/40 MWh project that will be publicly announced at a later date.
Powin’s Stack products are modular, purpose-built DC strings ranging in size from 106 kWh to 175 kWh that easily and cost-effectively scale from kilowatt to megawatt applications. It is available in both indoor and outdoor models, each of which is engineered to maximize energy density and minimize system footprint. All Stack products are operated by Powin’s proprietary bp-OS software that is patented in both the United States and China. Powin’s supply chain expertise, modular design, and software proficiency streamline installation and bring world class innovation to energy storage applications.

TUALATIN, OR--(Marketwired - Apr 17, 2017) - Powin Energy Corporation ( OTCQB : PWON ), a leading next generation provider of fully integrated energy storage solutions for utilities, C&I, and microgrid applications, announced today that Craig Eastwood and Jan (pronounced Yahn) Jacobson are the newest members of the company's executive leadership team. Eastwood joined the company in March 2017 and is directing all fiscal functions for the company as chief financial officer. Jacobson has been with Powin Energy since January of this year and he is leading the company's commercial team and spearheading the development of new business and strategic partnerships as the vice president of business development.

"We were very meticulous and targeted in our search to fill these roles as it was extremely important to get the right people to join a team that is highly motivated and focused on delivering a best-in-class energy storage system," said Geoffrey Brown, president of Powin Energy. "With Craig and Jan, I think we nailed it. Craig is a seasoned financial executive with a strong background in general accounting, treasury, systems integration, investor relations, and other financial disciplines. Jan brings a wealth of business development experience from the energy storage industry."

Most recently, Eastwood was the corporate controller at Erickson, a leading specialty aviation company. He has also held senior financial leadership positions with ESCO, Daimler Trucks, and Pharmaceutical Product Development. He started his career in public accounting with Deloitte, is a licensed CPA, and earned his accounting degree from the University of South Africa.

Jacobson has an extensive energy industry background as he's delivered cutting-edge energy resources to leading Fortune 500 corporations and some of the world's largest electrical utilities. He developed projects for Acciona Energy and Pacific Gas & Electric Company, then moved on to management roles where he led project development in the Western U.S. and Asia for distributed energy startup Bloom Energy. Prior to joining Powin Energy, Jacobson led all technical business and project development for behind-the-meter energy storage developer Stem. Jacobson holds multiple engineering degrees from the University of Wisconsin.

"Powin Energy is at an important inflection point in the emerging energy storage industry," said Eastwood. "I anticipate that our success with Southern California Edison, combined with other projects we are working on, will set the stage for several exciting opportunities as the industry evolves and matures."

"I've been a part of a couple of energy industry startups, so it's not easy to impress me with flashy-looking technology, but Powin Energy has the most novel and likely disruptive intellectual property I've seen," said Jacobson. "Our project pipeline for 2017 is already very sound, but I look forward to elevating our outlook for the remainder of the year and beyond."

Powin Energy's Stack140 is a modular, purpose-built 140 kWh battery array that easily and cost-effectively scales from 125 kW to multiple megawatt applications. It is available in both indoor and NEMA 3R outdoor models, each of which is engineered to maximize energy density and minimize system footprint. All Stack140 systems are operated by Powin's proprietary bp-OS software that received patents in both the United States and China in 2016 and includes the industry-exclusive Battery Odometer and Warranty Tracker™. Powin's supply chain expertise, modular design, and software proficiency streamline installation and make integrating energy storage into projects pain free.

TUALATIN, OR--(Marketwired - Nov 30, 2016) - Powin Energy Corporation ( OTCQB : PWON ), a leading designer and developer of safe and scalable energy storage solutions for utilities, C&I, and EV fast-charging stations, announced today that the University of Washington has ordered its 30 kW/40 kWh battery energy storage system (BESS). The University's Clean Energy Institute will install the BESS at its new Washington Clean Energy Testbeds facility in Seattle and use it for research, demonstration, grid simulation and educational purposes.

"Powin Energy's battery energy storage system will be a critical tool for research and innovation at our new Washington Clean Energy Testbeds," said University of Washington professor of chemical engineering and clean energy Venkat Subramanian. "We look forward to having our students, faculty, and the cleantech community use the Powin BESS to measure the performance of energy devices and algorithms when integrated into real and simulated system environments."

Subramanian plans to use Powin Energy's BESS to test the limits of battery management systems (BMS) to determine how important a quality BMS is to the longevity of stationary storage. Powin Energy will participate in this Washington Research Foundation-sponsored research by developing the test protocols under which the battery packs will be used and by sharing access to the resulting data.

"Working with partners like Powin Energy allows the Clean Energy Institute to support the development of next-generation clean energy technology," added Subramanian.

"We're excited about this installation at the University of Washington because it will give our technology a more rigorous workout than most real-world installations that don't approach the far ends of usage parameters," said Virgil Beaston, CTO of Powin Energy. "Our Battery Pack Operating System (bp-OS) balances batteries for energy storage systems in a completely unique way compared to the battery management software designed for electric vehicles that most other storage companies use. This project has the potential to return some incredibly interesting data that could confirm our own internal testing."

The Washington Clean Energy Testbeds will open in early 2017 and offer fee-for-use facilities featuring high-tech, high-quality instruments that are normally unavailable to researchers and businesses. These spaces will include workstations, offices, and meeting spaces where university researchers and industry can work and collaborate. An array of instruments, including Powin Energy's BESS, will help University of Washington researchers and other members of the clean energy community accelerate new, innovative technologies to market.

Powin Energy was recently selected by Southern California Edison to build a 2 MW/8 MWh energy storage system in Irvine, California, that will be operational by the beginning of 2017. Powin Energy's unique bp-OS -- that includes the industry-exclusive Battery Odometer and Warranty Tracker™ -- received patents in both the United States and China earlier this year.

TUALATIN, OR--(Marketwired - Nov 9, 2016) - Powin Energy Corporation (OTCQB: PWON), a leading designer and developer of safe and scalable energy storage solutions for utilities, C&I, and electric vehicle (EV) fast-charging stations, is announcing today that it has been awarded a Certificate of Invention Patent by the State Intellectual Property Office of the People's Republic of China for its visionary Battery Pack Operating System (bp-OS). This is the second patent for Powin Energy's bp-OS, which was awarded a United States patent in June of this year.

"Our patented software is the only battery management system engineered specifically for energy storage system use cases and having our intellectual property protected by two of the largest economies in the world creates tremendous market opportunity," said Virgil Beaston, CTO of Powin Energy. "The bp-OS reduces the amount of DC connectors and other components that are required to transfer energy using BMS software that was designed for EVs. This allows us to connect more batteries onto a single string and potentially reduce the number of transformers, inverters, and electrical work on a project, all of which yields massive savings for Powin Energy customers."

The patented bp-OS takes a unique approach to balancing batteries utilized in stationary storage systems. Rather than working to maintain energy equilibrium across an entire array of batteries that transfers energy between packs - like an EV battery management system (BMS) which is also often used for large scale storage systems -- Powin Energy's bp-OS balances individual cells to an optimized level by connecting each battery pack to the network. This industry-first approach minimizes voltage differentials across all battery cells over the system's lifetime and keeps the delta between the highest and lowest charged cells to a max of 10 millivolts. The bp-OS is battery pack technology agnostic and delivers real-time battery monitoring, state-of-charge management, and detailed diagnostics to ensure safety, optimize performance, and extend the operational lifetime of batteries used in stationary storage systems and EV fast-charging systems.

Powin Energy's bp-OS also exclusively features a Battery Odometer and Warranty Tracker™. The Battery Odometer measures capacity degradation and calculates remaining battery lifetime by keeping track of voltage, temperature, state-of-charge, charge and discharge times, and other critical data for every cycle of the battery. The Warranty Tracker™ maximizes operational uptime and prevents potential economic losses by alerting operators to possible issues, isolating problem zones, automatically filing warranty claims, and avoiding full-system shutdowns. These two integral features of Powin Energy's bp-OS make lithium-ion batteries safer and more efficient by preventing them from overcharging or undercharging, avoiding costly unplanned outages, and extending battery life by reducing capacity fade.

Management Discussion and Analysis

Consolidated net sales for the year ended December 31, 2015, decreased approximately $282,000 or 2.5% from the same period of 2014. The decrease was substantially in the Manufacturing segment, which experienced a revenue decrease of approximately $333,000 or 6.6%and in the Energy segment, which experienced a revenue decrease of approximately $440,000 or 70.6% compared to the same period of 2014.
 
For the year ended December 31, 2015, the Company had net loss of approximately $5.6 million or $0.28 per share, compared to net loss of approximately $5.9 million or $0.36 per share for the same period of 2014.

Item 1.01  Entry into Material Definitive Agreement

On December 1, 2015, Powin Corporation (“Powin Corp.”) and its subsidiary, Powin Energy Corporation (“Powin Energy”), entered into an Agreement and Plan of Merger and Liquidation (“Merger Agreement”).

The Merger Agreement provides that, subject to its terms and conditions, Powin Energy will be merged with and into Powin Corp. (“Merger”) with Powin Corp. continuing as the surviving corporation. The name of Powin Corp. will be changed to Powin Energy Corporation. Upon the effective time of the Merger,  each share of Powin Energy common stock will be converted into the right to receive 1,640.78068 shares Powin Corp. common stock (“Powin Shares”) for a total of 3,516,193 Powin Shares representing 17.648% of the fully diluted Powin Shares.

The Merger is subject to approval by the shareholders of Powin Corp. and the other closing conditions of the Merger Agreement. The Merger Agreement has been approved by the board of directors of Powin Corp. and Powin Energy. Powin Corp.’s board of directors has recommended that its shareholders adopt the Merger Agreement. To that end, Powin Corp. will  file an Information Statement with the Securities and Exchange Commission under Regulation 14C. The Merger will not become effective until 21 days after the Information Statement has been mailed to all shareholders of Powin Corp.

POWIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Management Discussion and Analysis

Consolidated net sales for the three months ended September 30, 2015, decreased approximately $704,000 or 21.7% from the same period of 2014. The decrease was substantially in the contract manufacturing segment, which experienced a revenue decrease of approximately $331,000 or 20.7%, in the manufacturing segment, which experienced a revenue decrease of approximately $186,000 or 13.4% compared to the same period of 2014and in the energy segment, which experienced a revenue decrease of approximately $201,000 or 83.1% compared to the same period of 2014. The primary reason for the decrease was related to sales seasonality in the third quarter for several existing customers of Powin Manufacturing.
 
The Energy sales decreased approximately $201,000 or 83% primarily due to pause of our electrical vehicle charge station sales, which is lumpy in nature. Powin Energy has been focusing on the commercialization of its electricity storage products and expects to book orders in 2015.
 
Mexico sales increased approximately $13,000 or 66% as Powin Mexico Starts ramping its contracted manufacturing business for local customers. We expect Powin Mexico continue to sign up more local customers and substantially increase its operating income in 2015.
 
For the three months ended September 30, 2015, the Company had net loss of approximately $1.7 million or $0.09 per share, compared to net loss of approximately $1.2 million or $0.07 per share for the same period of 2014. As reported above the net loss increased is primarily due to lower third quarter sales and continued investment in product development and marketing.

POWIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three months ended June 30,								Six Months ended June 30,
		2015				2014				2015				2014
Net sales		$	3,144,698			$	2,469,668			$	5,854,966			$	5,004,427
Cost of sales			2,808,464				2,435,357				4,980,799				4,454,761
Gross profit			336,234				34,311				874,167				549,666
Operating expenses			1,637,073				1,843,187				3,587,639				3,757,911
Loss from operations			(1,300,839	)			(1,808,876	)			(2,713,472	)			(3,208,245	)
Other income (expense)
Other income			8,433				3,338				41,680				10,582
Interest expense			(111,870	)			(92,181	)			(220,348	)			(171,241	)
Other expenses			125,912				-				125,767				-
Other income (expenses)			22,475				(88,843	)			(52,901	)			(160,659	)
Loss before income taxes			(1,278,364	)			(1,897,719	)			(2,766,373	)			(3,368,904	)
Provision for income taxes			-				7,500				-				7,500
Net loss			(1,278,364	)			(1,905,219	)			(2,766,373	)			(3,376,404	)
Net loss attributable to non-controlling interest			(462,828	)			(48,923	)			(511,511	)			(96,308	)
Net loss attributable to Powin Corporation			(815,536	)			(1,856,296	)		$	(2,254,862	)		$	(3,280,096	)
Loss per share:
Basic		$	(0.05	)		$	(0.12	)		$	(0.14	)		$	(0.21	)
Diluted		$	(0.05	)		$	(0.12	)		$	(0.14	)		$	(0.21	)
Weighted average shares outstanding:
Basic and Diluted			16,246,839				16,235,255				16,245,347				16,234,012

Management Discussion and Analysis

Consolidated net sales for the three months ended June 30, 2015, increased approximately $675,000 or 27.3% from the same period of 2014. The increase was substantially in the contract manufacturing segment, which experienced a revenue increase of approximately $477,000 or 42.5%and in the manufacturing segment, which experienced a revenue increase of approximately $149,000 or 12.3% compared to the same period of 2014. The primary reason for the increase was a stronger seasonality for several existing customers of Powin Manufacturing and favorable economic environment in US.

Manufacturing sales increased approximately $149,000 or 12% as the relationship with the segment’s primary customer, Daimler Trucks North America, improved during the six months ended June 30, 2015 compare to the same period last year.

The Energy sales decreased approximately $73,000 or 53% primarily due to pause of our electrical vehicle charge station sales, which is lumpy in nature. Powin Energy has been focusing on the commercialization of its electricity storage products and expects to book orders in 2015.

Mexico sales increased approximately $123,000 or 2,193% as Powin Mexico Starts ramping its contracted manufacturing business for local customers. We expect Powin Mexico continue to sign up more local customers and substantially increase its operating income in 2015.

For the three months ended June 30, 2015, the Company had net loss of approximately $1.3 million or $0.05 per share, compared to net loss of approximately $1.9 million or $0.12 per share for the same period of 2014. As reported above the net loss decreased is primarily due to increased net revenue and decreased operating expenses.

Section 3-

Unregistered Sales of Equity Securities

At the Company’s annual shareholders meeting held on July 31, 2015 at 4:00pm PDST, the following announcement was read at the meeting:

“We plan to do a corporate re-organization. We will merge POWIN ENERGY CORPORATION into POWIN CORPORATION. As you know, SHUNFENG INTERNATIONAL CLEAN ENERGY, INC. (“Shunfeng”) invested $12.5M into Powin Energy Corporation for which it received 15% of Powin Energy Corporation.  When we merge Powin Energy Corporation into Powin Corporation, Shunfeng’s 15% of Powin energy will be converted into 15% of Powin Corporation.  However, before we effect the merger, there will be several things we plan to accomplish:  (1) Joseph Lu and his associates will convert approximately $7.6M in debt owed to them by Powin Corporation into Preferred Stock, convertible at the current market price of Powin Corporation stock at $0.56 per share, into common stock of Powin Corporation.  The $0.56 per share conversion price is based on the last trade in Powin stock as reported on the OTC:BB.  (2) We will drop down the historical business and assets of Powin Corporation into a new wholly-owned Subsidiary of Powin Corporation, sell the assets for cash to either Joseph Lu or his associates, or to an ESOP or a third unrelated party and distribute the cash as a one-time dividend to the Powin Corporation shareholders.  We will obtain a third party appraisal for the value of the historical Powin assets before we sell them.  If as a result of such appraisal it is determined that the value of Powin’s stock is greater than $0.56 per share, the $7,600,000 in debit that Mr. Lu and associates are converting into Preferred Stock will be converted at the higher price as determined by the appraisal.  After these actions are completed and Powin Energy Corporation has merged into Powin Corporation, the business of Powin Corporation will be the energy storage business now conducted by Powin Energy Corporation and we will change the name of Powin Corporation to Powin Energy Corporation or another name reflecting the energy storage business.  The reason we are doing this is because we believe that the energy storage business will attain more attention on Wall Street than is the case with our historic Powin Corporation business.  If Wall Street finds our energy storage business more attractive and if the business takes off with revenue and profitability, we hope to list our stock on NASDAQ.  We may also seek other private investors, similar to Shunfeng for the energy storage to fund growth opportunities.  When we get to the stage of merging Powin Energy Corporation into Powin Corporation, we will file an Information Statement with the SEC which we will circulate to our shareholders explaining this plan in detail.”

Item 1.01      Termination of a Material Definitive Agreement

As disclosed in the Company’s report on Form 8-K filed April 6, 2015, SF Suntech (“Suntech”) was given until May 31, 2015 to tender the balance of $12,500,000 owing under the terms of the Fourth Supplement Agreement to the Share Subscription Agreement dated August 8, 2014 (“Subscription Agreement”). Suntech failed to make the required payment on May 31, 2015. Accordingly, the Company has elected to terminate the Subscription Agreement, as it pertains to the remaining $12,500,000 owing thereunder.

POWIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months ended March 31,
		2015				2014
Net sales		$	2,710,268			$	2,534,759
Cost of sales			2,172,335				2,019,404
Gross profit			537,933				515,355
Operating expenses			1,950,566				1,914,724
Loss from operations			(1,412,633	)			(1,399,369	)
Other income (expense)
Other income			33,247				7,244
Interest expense			(108,478	)			(79,060	)
Other expenses			(145	)			-
Other expenses			(75,376	)			(71,816	)
Loss before income taxes			(1,488,009	)			(1,471,185	)
Provision for income taxes			-				-
Net loss			(1,488,009	)			(1,471,185	)
Net loss attributable to non-controlling interest			(48,683	)			(47,385	)
Net loss attributable to Powin Corporation			(1,439,326	)			(1,423,800	)
Loss per share:
Basic		$	(0.09	)		$	(0.09	)
Diluted		$	(0.09	)		$	(0.09	)
Weighted average shares outstanding:
Basic			16,243,839				16,232,755
Diluted			16,243,839				16,232,755

Management Discussion and Analysis

Consolidated net sales for the three months ended March 31, 2015, increased approximately $176,000 or 6.9% from the same period of 2014. The increase was substantially in the contract manufacturing segment, which experienced a revenue increase of approximately $94,000 or 7.2%and in the manufacturing segment, which experienced a revenue increase of approximately $126,255 or 11.2% compared to the first quarter of 2014. The primary reason for the increase was a stronger seasonality for serveral existing customers of Powin Manufacturing and favorable economic environment in US.

Manufacturing sales increased approximately $126,000 or 11% as the relationship with the segment’s primary customer, Daimler Trucks North America, improved during the three months ended March 31, 2015 compare to the same period last year.

The Energy sales decreased approximately $50,000 or 69% primarily due to pause of our electrical vehicle charge station sales, which is lumpy in nature. Powin Energy has been focusing on the commercialization of its electricity storage products andand expects to book orders in 2015.

Mexico sales increased approximately $5,000 or 16% as Powin Mexico Starts ramping its contracted manufacturing business for local customers. We expect Powin Mexico continue to sign up more local customers and substantially reduce its operation loss in 2015.

Consolidated operating expenses for the three months ended March 31, 2015, increased approximately $36,000 or 1.9%, from $1.9 million in the same period of 2014 to $2.0 million. The increase is primarily in professional fees in Energy to prepare the segment for the launch of new products in the third half of 2014.

For the three months ended March 31, 2015, the Company had net loss of approximately $1.4 million or $0.09 per share, compared to net loss of approximately $1.4 million or $0.09 per share for the same period of 2014. As reported above the net loss increased is primarily due to increased operating expenses.
 

2015 Outlook

We expect 2015 to be a transitional year for Powin Corporation, with the traditional manufacturing segment stabilized in 2014 and poised to returning to growth in 2015, and the energy segment entering commercialization stage. In addition, we have established a new strategic direction for Powin Mexico factory and aligned its cost structure with the new strategy. We believe our investment made in the past several years in Powin Energy has paved a solid foundation for us in the fast growing energy storage market, with competitive products and a growing sales pipeline. For 2015, Powin management has identified following initiatives for each business segment.

Powin OEM business revenue has stabilized in 2014 with no client attrition in the second half of 2014. OEM segment gross margin slightly improved in 2014 compared to 2013 due to a better mixture. In 2015, we have identified several new products to be growth drivers; including one product which is well received by customers shortly after its introduction to the market and for which Powin has exclusive manufacturing right.

Powin manufacturing business experienced a modest improvement in both top line and profitability in 2014 as we focused on key accounts, like Daimler Freightliner, in 2014. Entering 2015, we are investing in our sales force to seek additional key accounts. Our long term track record in operation and extensive experience in manufacturing with relentless focus on quality and cost are our key leverage to win new key accounts.

2014 was a busy year for Powin Energy as we focused on product research and development as well as getting strategic investment from outside investors. On August 7, 2014, the Company’s subsidiary Powin Energy Corporation (“Powin Energy”) signed a Share Subscription Agreement (“the Agreement”) for an investment of $25,000,000 from SF Suntech, Inc., a Delaware corporation (“SF Suntech”), a wholly-owned subsidiary of Shunfeng Photovoltaic International Limited (“Shunfeng”). Pursuant to the terms of the Agreement, $5,200,000 of the $25,000,000 will be used by Powin Energy to pay off a loan owing to the Company and the balance will be used by Powin Energy for working capital and other purposes. The Agreement also granted SF Suntech an option to acquire an additional 30% of Powin Energy for $37,500,000 which options are exercisable within two years from the grant date. Pursuant to a related Shareholder Agreement, SF Suntech will appoint four directors from a seven-person board of Powin Energy upon completing the $25,000,000 investment. The Company will pay a 6% finder’s fee to an unrelated party in connection with this transaction.

On January 15, 2015, the Company, Powin Energy and SF Suntech signed an amendment for the Agreement (“the Amendment”). The Amendment redefined the closing date to February 27, 2015. The amendment also redefined first deposit to be $3,000,000 and request second deposit of $2,000,000 to be deposited by January 16, 2015.  SF Suntech made the $2,000,000 deposit on January 16, 2015 but did not make an additional payment by February 27th, 2015.

Subsequently, SF Suntech wired additional $50,000 refundable (in the event of an extension agreement is not entered into by the parties) good faith deposit to Powin Energy’s new Wells Fargo bank account set up in conformance with SF Suntech’s instructions.

Effective April 2, 2015, Powin Corporation and its wholly-owned subsidiary, Powin Energy Corporation (collectively “Powin”) and SF Suntech, Inc. (“Suntech”) signed a Fourth Supplemental Agreement (“Supplement”) to the Share Subscription Agreement dated August 8, 2014 (“Subscription Agreement”).

Under the Supplement, the First Closing Date of the Subscription Agreement was April 2, 2015 (“First Closing”) at which time Suntech made a payment to Powin in the amount of $7,450,000. That payment plus the previous payments of $3,000,000 on August 29, 2014; $2,000,000 on January 15, 2015 and $50,000 on March 2, 2015 represent a total $12,500,000 paid toward the full $25,000,000 owing under the Subscription Agreement.  Powin issued 2,143 shares of Powin Energy Common Stock to Suntech for the $12,500,000 made investment to date.

The Supplement further establishes the Second Closing Date of the Subscription Agreement as May 31, 2015 (“Second Closing”) when the balance of $12,500,000 is to be paid. If that payment is made, Powin will issue to Suntech an additional 2,143 shares of Powin Energy Common Stock.  In the event Suntech is unable or unwilling to pay the remaining subscription balance, Powin will be free to sell the 2,143 shares to another purchaser for the same price per share as paid by Suntech.

Powin Energy Corporation is authorized by Suntech to make a payment of $1,500,000 to Powin Corporation from the proceeds of the First Closing as an additional payment against the remaining $4,000,000 outstanding obligation owing by Powin Energy to Powin Corporation. This will leave a balance owing by Powin Energy to Powin Corporation of approximately $2,500,000 which will be repaid from the proceeds of the Second Closing, if Suntech is able to complete its subscription commitment, or from the proceeds of a subscription commitment from another purchaser of Powin Energy’s Common Stock.

We expect Powin Energy to enter its commercialization stage in 2015 based on our existing sales pipeline. We have established a hardware research & development center in YangZhou China and a software development team in Taiwan. Both teams are fully ramped by the end of 2014 and executing well on their R&D roadmap. We expect several new products or functions to be released in 2015, to increase Powin Energy's competitiveness in the energy storage market. We expect to record revenue from commercial sales or leasing of Powin energy storage products in the second half of 2015.

Powin Mexico factory entered large scale manufacturing of gun safes in 2014, though its profit margin has not been satisfactory. We have promptly adjusted our strategy, shifting toward to seek more local contract manufacturing work in 2015. We believe the new strategy can leverage our factory's physical proximity to its local customers compared to vendors in China, while reducing our working capital pressure. Accordingly, we have adjusted Powin Mexico cost structure to reduce operating loss. In the meantime, we continue to work on improvement of our factory productivity with better utilization of manufacturing automation software and better training for workers. We expect Powin Mexico factory to substantially reduce its operating loss in 2015 compared to 2014.

 

Section 1-  Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

Effective April 2, 2015, Powin Corporation and its wholly-owned subsidiary, Powin Energy Corporation (collectively “Powin”) and SF Suntech, Inc. (“Suntech”) signed a Fourth Supplemental Agreement (“Supplement”) to the Share Subscription Agreement dated August 8, 2014 (“Subscription Agreement”) which was previously disclosed in the report on Form 8-K filed by Powin on August 8, 2015.

Under the Supplement, the First Closing Date of the Subscription Agreement was April 2, 2015 (“First Closing”) at which time Suntech made a payment to Powin in the amount of $7,450,000. That payment plus the previous payments of $3 million on August 29, 2014; $2 million on January 15, 2015 and $50,000 on March 2, 2015 represent a total $12,500,000 paid toward the full $25 million owing under the Subscription Agreement. Powin issued 2,143 shares of Powin Energy Common Stock to Suntech for the $12,500,000 made investment to date.

The Supplement further establishes the Second Closing Date of the Subscription Agreement as May 31, 2015 ( “Second Closing”) when the balance of $12,500,000 is to be paid. If that payment is made, Powin will issue to Suntech an additional 2,143 shares of Powin Energy Common Stock. In the event Suntech is unable or unwilling to pay the remaining subscription balance, Powin will be free to sell the 2,143 shares to another purchaser for the same price per share as paid by Suntech.

Powin Energy Corporation is authorized by Suntech to make a payment of $1,500,000 to Powin Corporation from the proceeds of the First Closing as an additional payment against the remaining $4,000,000 outstanding obligation owing by Powin Energy to Powin Corporation. This will leave a balance owing by Powin Energy to Powin Corporation of approximately $2,500,000 which will be repaid from the proceeds of the Second Closing, if Suntech is able to complete its subscription commitment, or from the proceeds of a subscription commitment from another purchaser of Powin Energy’s Common Stock.

Management Discussion and Analysis

Consolidated net sales for the year ended December 31, 2014, decreased approximately $6.6 million or 36.8% from the same period of 2013. The decrease was substantially all in the contract manufacturing segment, which experienced a revenue decline of approximately $6.9 million or 56.0% compared to the first three quarters of 2013. The primary reason for the decrease was the loss of two customers that began purchasing directly from the manufacturers.

On a sequential basis, Contract manufacturing revenues for the fourth quarter of 2014 were down $148,000 or 9.3% from the third quarter of 2014.

Mexico sales decreased approximately $14,000 or 10% primary due to the truck parts sold to Daimler by Mexico last year were moved back to supply by Powin Manufacturing in 2014. Product and Service revenue decreased $529,000 or 97% as the Company phased out the legacy businesses within this segment.

Manufacturing sales increased approximately $503,000 or 11% as the relationship with the segment’s primary customer, Daimler Trucks North America, improved during the year ended December 31, 2014 compare to the same period last year.

The Energy sales increased approximately $418,000 or 204% primarily due to continued investment being made by the company in this segment’s sales and new product development. The Energy segment is finalizing its product offerings and expects to book orders in 2015.

Consolidated operating expenses for the year ended December 31, 2014, increased approximately $1.2 million dollars or 19.2%, from $6.5 million in the same period of 2013 to $7.7 million. The increase is primarily in salaries and professional fees in Energy to prepare the segment for the launch of new products in 2014.

For the year ended December 31, 2014, the Company had net loss of approximately $5.9 million or $0.36 per share, compared to net loss of approximately $5.9 million or $0.36 per share for the same period of 2013. As reported above the net loss increased is primarily due to increased operating expenses.

Item 1.01 Entry into a Material Definitive Agreement

Effective January 15, 2015, Powin Corporation and its wholly-owned subsidiary, Powin Energy Corporation (collectively “Powin”) and SF Suntech, Inc. (“Suntech”) signed an Amendment Agreement (“Amendment”) to the Share Subscription Agreement dated August 8, 2014 (“Subscription Agreement”) which was disclosed in Powin’s report on Form 8-K dated August 8, 2014.

Under the Amendment, the Closing Date for the Subscription Agreement was changed to February 27, 2015 and Suntech, which had made a good faith deposit of $3 million to Powin on August 29th, 2014, made an additional non-refundable deposit to Powin in the amount of $2 million on January 16, 2015 toward the full $25 million owing under the Subscription Agreement. The Amendment further provided that in the event Suntech fails to close on the remaining subscription balance of $20 million on or before February 27, 2015, but invests at least another $7.5 million on or before February 27, 2015, Suntech will receive 2,143 shares of common stock of Powin Energy Corporation which will represent one-half (1/2) of the total investment called for by the Subscription Agreement. However, in the event the $7.5 million is not invested, the initial deposit made by Suntech of $3 million on August 29, 2014 and the $2 million deposit on January 16th, 2015 under the Subscription Agreement will constitute Powin’s liquidated damages.

POWIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Management Discussion and Analysis

Consolidated net sales for the three months ended September 30, 2014, decreased approximately $200 thousand or 4.5% from the same period of 2013. The decrease was substantially all in the contract manufacturing segment, which experienced a revenue decline of approximately $600 thousand or 26.7% compared to the third quarter of 2013. The primary reason for the decrease was the loss of two customers that began purchasing directly from the manufacturers. On a sequential basis, Contract manufacturing revenues for the third quarter of 2014 were up $474 thousand or 42.4% from the second quarter of 2014.
 
For the three months ended September 30, 2014, compared to the same period last year, all other segments performed as expected. Manufacturing sales increased approximately $252 thousand or 22% due to sales to the segment’s primary customer, Daimler Trucks North America, decreased during the three months ended September 30, 2014 compared to the same period last year. Energy sales increased approximately $205 thousand or 549% due to continued investment being made by the Company in this segment’s sales and new product development. Mexico sales decreased approximately $3 thousand or 14% primary due to the truck parts sold to Daimler by Mexico last year were moved back to supply by Powin Manufacturing in 2014. Mexico segment is ramping production and expects to see revenues increase in 2015. Product and Service revenue decreased approximately $25 thousand or 77% as the Company phased out the legacy businesses within this segment.

For the nine months ended September 30, 2014, the Company had net loss of approximately $4.6 million or $0.28 per share, compared to net loss of approximately $3.5 million or $0.22 per share for the same period of 2013. As reported above the net loss increased is primarily due to increased operating expenses.

POWIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Management Discussion and Analysis

Consolidated net sales for the three months ended June 30, 2014, decreased approximately $2.2 million or 46.9% from the same period of 2013. The decrease was substantially all in the contract manufacturing segment, which experienced a revenue decline of $2.1 million or 65.7% compared to the second quarter of 2013. The primary reason for the decrease was the loss of two customers that began purchasing directly from the manufacturers. On a sequential basis, Contract manufacturing revenues for the second quarter of 2014 were down $178 thousand or 13.7% from the first quarter of 2014.

Item 1.01 Entry into a Material Definitive Agreement

Powin Corporation announces today that its wholly-owned subsidiary, Powin Energy Corporation, has signed agreement for an investment of $25,000,000 from SF Suntech, Inc., a Delaware corporation (“SF Suntech”) a wholly-owned subsidiary of Shunfeng Photovoltaic International Limited (“Shunfeng”) pursuant to a Share Subscription Agreement which also granted SF Suntech an option exercisable within two years to acquire another 30% of Powin Energy Corporation for $37,500,000. Pursuant to the terms of the Share Subscription Agreement, $5,200,000 of the $25,000,000 will be used by Powin Energy Corporation to pay off a loan owing to its parent corporation, Powin Corporation, and the balance will be used by Powin Energy Corporation for working capital and other purposes.

Pursuant to a related Shareholders Agreement, SF Suntech will appoint four directors from a seven person board of Powin Energy upon completing the $25,000,000 investment. Powin Corporation will be paying a 6% finder’s fee to an unrelated party in connection with this transaction. Subject to the terms and conditions of the Share Subscription Agreement, the transaction is scheduled to close on August 29, 2014.

POWIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Management Discussion and Analysis

Consolidated net sales for the three months ended March 31, 2014, decreased approximately $4.3 million or 63% from the same period of 2013. The decrease was substantially all in the contract manufacturing segment, which experienced a revenue decline of $4.4 million or 77.2% compared to the first quarter of 2013. The primary reason for the decrease was the loss of two customers that began purchasing directly from the manufacturers. On a sequential basis, Contract manufacturing revenues were down $258 thousand or 16.6% from the fourth quarter of 2013. The Company expects modest increases in Contract manufacturing revenues for the full year 2014.

All other segments performed as expected with Manufacturing sales increasing $139 thousand or 14%; Energy and Mexico remaining flat; and Product and Service revenue decreasing $70 thousand or 96% as the Company phased out the legacy businesses within this segment.

For the three months ended March 31, 2014, the Company had net loss of approximately $1.4 million or $0.09 per share, compared to net loss of approximately $669 thousand or $0.04 per share for the same period of 2013.

POWIN CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Management Discussion and Analysis

Contract manufacturing revenues were down $23.0M or 65.0% in 2013 as compared to 2012. The primary reason for this decline was the loss of the segment’s three largest customers, including a previously disclosed related-party. These long-time customers each began sourcing their manufacturing directly from factories in China to reduce costs.

Revenues for the manufacturing segment were down $1.2M or 20.9% for the year. The segment has one customer, Freightliner, which makes up a significant portion of the revenues. Freightliner sources parts from many manufacturers and shops for price, quality and service. Powin is very competitive on price and quality, but we lost some of our business with Freightliner in 2013 because of service issues. These issues are being remediated and the relationship is improving. As a result, we expect modest growth in manufacturing in 2014.

All other segments are minor and taken as a whole were essentially flat year over year. We expect to grow the Energy and Mexico segments in the coming years; while essentially phasing out the CPP and Warehousing segments.

As noted above, Contract manufacturing and Manufacturing experienced declining revenues in 2013 as compared to 2012, but also took steps to decrease costs to keep the operating losses in those segments to a minimum. Conversely, the Company invested is the Energy and Mexico segments, resulting in continued losses in the case of Mexico and increased losses in the case of Energy. Both of these segments expect to see meaningful increases in revenue and decreases in operating losses in 2014.