EnSync, Inc. (NYSE American: ESNC), dba EnSync Energy Systems (the “Company”), which is creating the future of electricity with innovative residential and commercial distributed energy resource (DER) systems and Internet of Energy (IOE) control platforms, reported that, each of Richard Abdoo, Paul Koeppe, James Ozanne and Theodore Stern resigned as a member of the Board of Directors (the “Board”) of the Company.
On February 11, 2019, the Company notified The NSYE American (“NYSE American”) that these resignations had caused compliance deficiencies with the following sections of the NYSE American Company Guide: Section 802, requiring a majority-independent board, and Section 803, requiring an audit committee comprised of three independent directors.
Business Update
Following the end of the second quarter of fiscal 2019, the offtaker for a sizeable project the Company was working on in Hawaii sent the Company a letter purporting to terminate the subject power purchase agreement (“PPA”). Although this purported termination was without basis and was subsequently retracted by the offtaker, the Company’s receipt of this termination letter triggered a variety of significantly negative events for the Company including: (i) prevented the Company from successfully concluding negotiations for the sale of the PPA, which was expected to provide significant upfront payments; (ii) the Company delayed or canceled orders for a significant amount of equipment it had ordered in anticipation of commencing the project and facilitating timely completion of the project according to the offtaker’s aggressive project timelines, which severely negatively impacted relationships with some key suppliers; and (iii) negatively impacting the Company’s ability to pursue financing options, including strategic partnership transactions, PPA project financing facilities, working capital lines of credit, and additional sales of Common Stock or other debt or equity securities, which have also been negatively impacted by the deterioration in the state of the capital markets that began in the second quarter of fiscal 2019.
As previously reported on the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2019, (i) on January 23, 2019 Bradley Hansen resigned as the Company’s President and Chief Executive Officer and as a member of the Company’s Board of Directors, and (ii) on January 24, 2019 Sandeep Gupta was appointed as the Company’s interim Chief Executive Officer and Chief Restructuring Officer and also as a member of the Company’s Board of Directors. Mr. Gupta is a principal and founder of Novo Advisors, and his expertise ranges from the development of short-term liquidity forecasts, break-even analyses, and performance/profit improvement studies to mergers and acquisitions and liquidation analyses for healthy and distressed businesses across a wide array of industries.
Due to the severe impacts of the above and the current state of its business, the Company has a very short term need for additional financing which it has been actively pursuing. However, the Company has no commitments to obtain any additional financing, and if it does not obtain sufficient financing in the very near term, it will likely need to discontinue operations and initiate insolvency proceedings.
SOURCE EnSync, Inc.
