Struggling RGS Energy reports another loss, awaits capital

LOUISVILLE —  RGS Energy (Nasdaq: RGSE), an installer of residential and small-commercial rooftop solar equipment based in Louisville, on Tuesday reported a loss of $3.5 million for its second quarter, down only slightly from the $3.7 million loss it posted in the first quarter, as it continues to execute a “business-turnaround strategy.”

The loss amounted to $5.42 per share.

RGS generated revenue of $4.9 million for the quarter that ended June 30, compared with $14.727 million for the same period a year ago.

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“Commencing the fourth quarter of 2014, the company began executing a business turnaround strategy designed to reduce the required level of sales necessary to achieve break-even or better operating results,” RGS said in a statement accompanying the earnings report. “To execute the business turnaround strategy, the company has to become better capitalized. The company has successfully raised additional financial capital from investors that is expected to become available to the Company during the fourth quarter.”

During a conference call Tuesday morning, RGS chief executive Dennis Lacey said that “soon the convertible notes of $10 million that we raised during April become convertible and therefore triggering releases from the restricted cash account commencing Oct. 1. This money will allow us to pursue our strategy of growing revenue and achieving our goal of break-even and better results.”

As of June 30, RGS had received $1.75 million in cash from those notes, the report said.

“Further, we recently filed a Form S-1 registration statement for 5,000 units of convertible deferred stock and warrants,” Lacey said. “So, we are making progress on our efforts to arrange for the additional financial capital that is necessary for executing our business turnaround strategy.”

RGS Energy and its senior lender on Monday entered into a second modification to RGS’ senior lending facility, the earnings report said. “Under this modification, certain of the company’s assets, accounts receivable due from third parties, are extended in time as to the collateral’s advance rate under the lending facility. This had the effect of increasing the amount that the company is able to draw under the lending facility.”

Earlier this year, RGS Energy officially regained compliance with the Nasdaq rule requiring a minimum per-share price of $1. RGS in June carried out its second 1-for-20 reverse stock split in little more than a year to boost the price of its shares, which have traded as high as $8.90 on Aug. 4 and closed at $7.03 on Tuesday.

In July, RGS said Nasdaq had granted it an extension until Oct. 11 to regain compliance with a rule that requires a minimum of $2.5 million in stockholders equity for its stock to be listed on the Nasdaq Capital Market.