World Energy Reports Financial Results for Q2 2008



    WORCESTER, MA, Aug. 7 /CNW/ - World Energy Solutions, Inc. (TSX: XWE), a
leading operator of online exchanges for energy and environmental commodities,
today announced its financial results for the three and six months ended
June 30, 2008. All figures below are in U.S. dollars, unless stated otherwise.

    
    Q2 2008 Highlights (compared with Q2 2007)
    ------------------------------------------
    -   Revenue increased by 43% to $2.8 million
    -   Annualized retail backlog(*) grew to $8.5 million from $6.0 million
    -   Wholesale client base rose sixfold to 30 from 5, although revenue
        affected by high-priced commodity environment
    -   Channel partner network increased to 53 from 34
    -   Continued to solidify retail business through new transactions with
        many commercial and industrial (C&I) customers, government customers
        and with key renewals
    -   Subsequent to quarter end, finalized contract with
        Regional Greenhouse Gas Initiative, Inc. (RGGI) under which
        World Energy will provide auction services related to the design and
        implementation of the United States' only cap-and-trade carbon market
    

    "The second quarter was highlighted by strong performance from our base
retail product line, resulting in a record $8.5 million in annualized retail
backlog. Key drivers during the quarter included the continued growth of our
government franchise with the expansion of our State of Connecticut
relationship and a successful five-year auction for the City of Springfield,"
said Richard Domaleski, Chief Executive Officer, World Energy Solutions. "The
success of our dedicated wholesale sales team was reflected in accelerating
traction with new wholesale customers, which is an important indicator of
future growth. However, the high-priced energy environment continued
throughout the second quarter, which we believe caused many customers to delay
their purchasing decisions. Despite the market conditions, we executed
successful auctions for four new wholesale customers, and believe we have
positioned the company to capitalize on this significant opportunity once
customers return to the market. We have already seen increased activity in
July as natural gas has moved below $10 per decatherm."
    Mr. Domaleski added: "During the quarter, we passed a significant
milestone with RGGI, developing materials that supported RGGI's release of the
auction notice and bidder application for their first auction, which is
scheduled for September 25, 2008. This promises to be an exciting event for
our Company and for the shaping of a U.S. cap-and-trade system to curb carbon
emissions."

    Financial Review
    ----------------
    For the quarter ended June 30, 2008, revenue increased by 43% over the
same period in the prior year to $2.8 million as a result of increased auction
activity in the Company's retail product line, new customer wins and the
acquisition of the assets of EnergyGateway. The year-over-year growth in
revenue also reflects the addition of 19 new channel partners during Q2 2008
compared with the same period in the prior year. During Q2 2008, the Company
added 10 new wholesale customers, bringing its wholesale customer base to 30.
However, the Company believes that some of these customers delayed procurement
decisions during the period because of the high-priced energy environment. As
a result, revenue from the Company's wholesale product line represented 4% of
total revenue in Q2 2008, compared with an average of 17% in the previous two
quarters. For the third quarter to date, wholesale auction revenue has already
exceeded second quarter levels as electricity and natural gas prices have
declined.
    Total operating expenses for Q2 2008 were $3.9 million, compared with
$3.3 million in Q2 2007 and $4.1 million in Q1 2008. The year-over-year
increase primarily reflects the planned investment in the Company's direct
sales force and account management teams as well as the addition of the
EnergyGateway operations. At June 30, 2008, the Company had 62 employees,
compared with 54 at the same point last year and 62 at March 31, 2008.
Management expects its fixed cost structure to remain stable at current
levels. The Company's major infrastructure investment was completed during
2007 and its fixed operating costs have remained flat over the past three
quarters.
    Net loss for the second quarter of 2008 was $2.4 million, or $(0.03) per
share, compared with a net loss of $1.2 million, or $(0.02) per share, in the
second quarter of 2007. The year-over-year change is primarily due to higher
operating expenses and decreases in interest income and income tax benefit,
partially offset by an increase in revenue.
    Revenue for the six months ended June 30, 2008 rose 71% over the same
period last year to $5.9 million due to organic growth from increased auction
activity and energy consumption and the addition of EnergyGateway. This growth
reflects increases in all of the Company's base energy procurement markets,
including wholesale, government and C&I.
    Total operating expenses for the six months ended June 30, 2008 increased
to $7.9 million from $5.3 million in the same period last year primarily due
to increases in salary, benefit and recruiting costs reflecting the Company's
increased employee base. Net loss for the year-to-date period was
$4.5 million, or $(0.05) per share, compared with $1.6 million, or $(0.02) per
share, in the first six months of 2007.
    At June 30, 2008, the Company had no long-term bank debt and cash and
cash equivalents of $2.3 million, compared with $4.1 million at March 31,
2008. Net cash used in operations during the first six months of 2008 was
$4.4 million, which included $1.2 million of working capital increases
primarily attributable to forecasted decreases in accrued compensation and
accounts payable. The Company believes that it has the resources necessary to
fund its ongoing operations and pursue its growth initiatives.

    
    (*)Annualized retail backlog represents the revenue that the Company
    would derive within the 12 months following the date on which the backlog
    is calculated from contracts between consumer, industrial and government
    (CIG) energy consumers and energy suppliers that are in force on such
    date, assuming such CIG energy consumers use energy at their historical
    usage levels. In addition, contracted backlog includes annualized
    expected management fees, which represent contracts for risk management
    services between World Energy and energy consumers that are recognized on
    a monthly basis and are expected to be received over the following
    12 months. Management fees can be terminated within 30 days per the terms
    of the contracts. The annualized backlog at June 30, 2008 included
    contracted backlog of $7.2 million and expected management fees of
    $1.3 million.
    

    Conference Call & Webcast

    World Energy will hold a conference call today, August 7, 2008, at
10:00 a.m. (ET) to discuss its financial results and other corporate
developments. To access the conference call by telephone, dial 416-915-5762 or
1-800-814-4862. A live audio webcast of the conference call will be available
through the Investor Relations/News & Events section of the Company's website
at www.worldenergy.com and at www.newswire.ca. Please connect at least 15
minutes prior to the conference call to ensure adequate time for any software
download that may be required to join the webcast. An archived replay of the
webcast will be available for 360 days.

    About World Energy

    World Energy operates leading online exchanges for energy and
environmental commodities. Our proven approach provides market intelligence,
promotes liquidity, and creates price transparency for all market
participants, enabling our customers to transact with confidence and to seek
the best possible price. To date, the company has transacted more than
45 billion kwh of electricity, nearly 1bb kwh of green power and Renewable
Energy Certificates (RECs) and over one trillion cubic feet of natural gas.
For more information, please visit www.worldenergy.com.

    This press release contains forward-looking statements that are subject
to risks and uncertainties that could cause actual results to differ from
those indicated in the forward looking statements. Such risks and
uncertainties include, but are not limited to: our revenue is dependent on
actual future energy purchases pursuant to completed procurements; the demand
for our services is affected by changes in regulated prices or cyclicality or
volatility in competitive market prices for energy; we depend on a small
number of key energy consumers, suppliers and channel partners; there are
factors outside our control that affect transaction volume in the electricity
market; and there are other factors identified in our Annual Report on Form
10-K and subsequent reports filed with the Securities and Exchange Commission.

    

                        WORLD ENERGY SOLUTIONS, INC.
         SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                          Three Months Ended           Six Months Ended
                               June 30,                    June 30,
                      -------------------------------------------------------
                         2008          2007          2008          2007
                      ------------- ------------- ------------- -------------

    Revenue           $  2,760,695  $  1,927,192  $  5,875,212  $  3,428,329

    Cost of revenue      1,276,859       669,782     2,512,912     1,066,143
                      ------------- ------------- ------------- -------------

    Gross profit         1,483,836     1,257,410     3,362,300     2,362,186

    Sales and
     marketing           2,770,924     1,834,314     5,414,660     2,936,349

    General and
     administrative      1,100,642     1,484,804     2,521,625     2,397,797
                      ------------- ------------- ------------- -------------

    Operating loss      (2,387,730)   (2,061,708)   (4,573,985)   (2,971,960)

    Interest income,
     net                     7,413       170,219        33,726       374,243
                      ------------- ------------- ------------- -------------

    Loss before
     income taxes       (2,380,317)   (1,891,489)   (4,540,259)   (2,597,717)

    Income tax benefit           -       713,919             -       980,711
                      ------------- ------------- ------------- -------------

    Net loss          $ (2,380,317) $ (1,177,570) $ (4,540,259) $ (1,617,006)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Loss per share:
      Net loss per
       common share
       - basic        $      (0.03) $      (0.02) $      (0.05) $      (0.02)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

      Net loss per
       common share
       - diluted      $      (0.03) $      (0.02)        (0.05) $      (0.02)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Weighted average
     shares
     outstanding -
     basic              82,886,727    78,283,719    82,703,102    77,402,625
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Weighted average
     shares
     outstanding -
     diluted            82,886,727    78,283,719    82,703,102    77,402,625
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

               SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET

                                                 June 30, 2008
                                               ----------------
    Assets
    ------
      Current assets                              $  4,944,015
      Property and equipment, net                      561,242
      Goodwill                                       3,178,701
      Other assets                                   7,217,808
                                               ----------------
        Total assets                              $ 15,901,766
                                               ----------------
                                               ----------------

    Liabilities and stockholders' equity
    ------------------------------------
      Accrued commissions                         $    623,850
      Accounts payable and accrued liabilities       2,082,964
      Other current liabilities                        396,525
                                               ----------------
        Total current liabilities                    3,103,339
      Total long-term liabilities                       25,411
      Stockholders' equity                          12,773,016
                                               ----------------
        Total liabilities and stockholders'
         equity                                   $ 15,901,766
                                               ----------------
                                               ----------------
    




For further information:

For further information: Jim Parslow, World Energy Solutions, Inc.,
(508) 459-8100, jparslow@worldenergy.com; Craig Armitage, The Equicom Group,
(416) 815-0700 x278, carmitage@equicomgroup.com

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WORLD ENERGY SOLUTIONS, INC.

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