“The third quarter saw our revenue growth rate accelerate to 59% over the same period in the prior year as we continue to execute our growth strategies in each of the three product lines – retail, wholesale and green credits,” said Richard Domaleski, Chief Executive Officer, World Energy Solutions. “Key achievements in our base retail product line included a new, five-year contract with the State of Connecticut, which represented our third state award this year and underscored our position as a leading on-line exchange for energy and energy-related products to government entities. We continued to expand our commercial and industrial business, with wins at some of the largest companies in the country, and continued to increase our channel partner network.  Integration of the EnergyGateway business has proceeded smoothly, and we are seeing results from initial cross-selling efforts.”

“In the wholesale product line, we added our seventh client – fifth this year – and executed follow-on transactions at two existing clients.  We have seen the revenue from this product line more than double during the first nine months of 2007 compared to the same period in 2006,” Domaleski continued. “Our Connecticut procurement had a significant green component, highlighting our expertise in supporting entities seeking to voluntarily green energy portfolios.  Connecticut is the 5th of the 10 Regional Greenhouse Gas Initiative (RGGI) states that have successfully procured with World Energy.”

Revenue for the three months ended September 30, 2007 rose 59% compared with the third quarter of 2006 to $2.7 million due to the addition of the EnergyGateway business and increased energy consumption by energy consumers. This growth reflects increases in the Company’s wholesale and commercial and industrial energy procurement markets.

Total operating expenses for the third quarter of 2007 increased to $4.9 million, which includes non-cash stock-based compensation of approximately $634,700, from $1.3 million in the same period last year primarily due to increases in salary, benefit and recruiting costs resulting from the Company’s increased employee base, as well as higher legal, audit and compliance costs and the addition of the EnergyGateway business. World Energy had 56 employees at September 30, 2007 compared with 20 at September 30, 2006. This change reflects the addition of the former EnergyGateway employees and increased staffing levels in all functional areas, including the Company’s first dedicated full-time employees to pursue the wholesale and green markets. The Company expects operating expenses to rise moderately for the remainder of 2007 as it builds out the infrastructure required to support its growth plans.

Net loss for the third quarter of 2007 was $1.8 million, or $0.02 per share, compared with net income of $12,000 in the third quarter of 2006.  The year-over-year change is due to higher operating expenses, which were partially offset by increases in revenue, interest income and income tax benefit.

“It is gratifying to see us implement the strategies we set out one year ago.  Since that time, we have attracted extremely high quality individuals to the management ranks of the company, built a strong sales team, acquired one of the industry leading on-line brokerage companies, and launched two new lines of business,” concluded Mr. Domaleski.

Revenue for the nine months ended September 30, 2007 rose 46% over the same period last year to $6.1 million due to the acquisition of the EnergyGateway business and increased energy consumption by energy consumers. 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 nine months ended September 30, 2007 increased to $10.2 million from $3.5 million in the same period last year primarily due to increases in salary, benefit and recruiting costs resulting from the Company’s increased employee base, higher legal, audit and compliance costs and the addition of the EnergyGateway business.

*Annualized contracted 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. Annualized expected management fees represent contracts for risk management services between World Energy and the energy consumer that are recognized on a monthly basis and are expected to be received over the following 12-months. These services can be terminated within 30-days per the terms in the contract.

Conference Call & Webcast
World Energy will hold a conference call today, November 13, 2007, at 10:00 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 416-644-3422 or 1-800-731-6941.

A live audio webcast of the conference call will be available www.worldenergy.com and 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 energy-related products.  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 over 40 billion kWh of electricity, 700 million kWh of green power and Renewable Energy Certificates (RECs) and 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.

 

 

SUMMARY OF WORLD ENERGY SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2006		2007		2006
Revenue	$2,675,343		$1,686,993		$6,103,672		$4,166,763
Operating income (loss)	(3,017,704)		74,207		(5,989,664)		(188,220)
Interest income (expense), net	108,195		(53,606)		482,438		(154,788)
Income (loss) before income taxes	(2,909,509)		20,601		(5,507,226)		(343,008)
Net income (loss)	$(1,810,384)		$12,361		$(3,427,390)		$(207,451)
Net income (loss) available to common stockholders	$(1,810,384)		$10,561		$(3,427,390)		$(212,851)
Earnings (loss) per share:
Net earnings (loss) per voting common share – basic	$( 0.02)		$ —		$(0.04)		$ (0.01)
Net earnings (loss) per non-voting     common share – basic	$   —		$  —		$ —		$ (0.01)
Net earnings (loss) per share available to common     stockholders – diluted	$(0.02)		$ —		$ (0.04)		$ (0.01)
Weighted average shares outstanding – basic	81,943,263		42,349,744		78,932,803		41,281,059
Weighted average shares outstanding – diluted	81,943,263		57,243,406		78,932,803		41,281,059

	September 30, 2007
Assets
Current assets	$          10,816,391
Property and equipment, net	531,239
Goodwill	3,178,701
Other assets	11,204,254
Total assets	$         25,730,585
Liabilities and stockholders' equity
Accrued commissions	$             635,344
Accounts payable and accrued liabilities	2,773,771
Other current liabilities	395,870
Total current liabilities	3,804,985
Total long-term liabilities	56,315
Stockholders’ equity	21,869,285
Total liabilities and stockholders’ equity	$        25,730,585