Revenues have risen sharply for Distributed Energy Systems and progress continues towards profitability.

Revenues rose to $12.2 million for the second quarter ended June 30, compared with $4.3 million in the same period one year ago and the company narrowed its second quarter 2005 net loss to $4,502,000, or $0.13 per share, compared to $5,894,000, or $0.17 per share, during the same period in 2004.

The company says the record quarterly revenues primarily reflect strong performance at its Northern Power Systems unit - Northern Power, along with Proton Energy Systems, merged to form Distributed Energy Systems Corp in late 2003.

DESC reported that its gross margins were positive for the third consecutive quarter. Cash and marketable securities as of June 30 were $45.8 million compared to $49.8 million for the previous quarter.
The change primarily reflected the net loss for the quarter, with working capital requirements remaining essentially unchanged.

Chip Schroeder, DESC president, explained: \\$quot;During the quarter, we saw continuing strength in business development and a growing backlog for Northern Power's remote and on-site electric power systems and services.
“Growth, from existing and new customers alike, stems from the rapid progress being made at Northern Power, especially through our offices in California, New York and Texas that were set up to serve the expanding new energy marketplace.

\\$quot;However, even as we strive to grow Northern Power's revenues and foster
Proton Energy Systems' penetration of large existing markets for its on-site commercial hydrogen systems, we are mindful of the need to control operating costs, improve margins and strengthen cash flow. Results this year and going forward must do an even better job of reflecting our intensified focus on three things - solid revenue growth, lower costs and a good balance sheet.\\$quot;

Highlights for this year include a three-year distribution agreement with Airgas to market and distribute Proton’s HOGEN on-site hydrogen generators in the US and a similar agreement with Praxair to become the exclusive distributor in Canada and a US distributor.

DESC’s Proton unit has also entered into an agreement with Linde Gas to become part of the Proton network of distributors with responsibility for serving the US, Caribbean and Mexico.
A $3 million contract has also been signed for Northern Power to design, engineer and construct a 400 kW solar power system for Timberland.