ARISE Technologies Reports First Quarter Results
Revenues increase by 125% and EPS loss narrows to $0.02 from $0.12 compared to same period last year
On April 14, 2010, ARISE issued a release commenting on preliminary first-quarter results. The release is available at www.sedar.com or www.arisetech.com
WATERLOO, ON, May 12 /CNW/ - ARISE Technologies Corporation (TSX: APV and Frankfurt: A3T), which is dedicated to becoming a leader in high-performance, high-quality, cost-effective solar technology, today reported its financial results for the first quarter ended March 31, 2010. Financial results conform to Canadian generally accepted accounting principles ("GAAP") and all currency amounts are in Canadian dollars unless otherwise noted.
Q1 2010 Highlights:
- Total revenue of $16.2 million, compared with $7.2 million in Q1 2009
- Net loss of $2.7 million, compared with a net loss of $14.8 million
in Q1 2009
- Shipped 13.9 MW of PV cells, an increase of 500% from 2.3 MW in Q1
2009
- Good progress on PV cell customer and regional diversification
- Tested first ARISE PV modules manufactured in Ontario
"We are very pleased to report continued significant improvements across our operations during the first quarter of 2010. Our total revenue increased by 125%, compared to the first quarter of 2009. Revenue for the first quarter of 2010 was also up 43% over the fourth quarter of 2009," said Vern Heinrichs, President and CEO of ARISE.
"Our PV cell shipments accelerated dramatically during the quarter due to increased production and the sale of most of our year end finished goods inventory. The strengthening solar marketplace also helped ARISE ship 13.9 MW of PV cells during the first three months of the year. During the first quarter, shipments were up 500% compared to a year ago and increased by 98% over the fourth quarter of 2009. During the quarter we were able to expand our shipments outside of Germany to other countries including France and Canada, as more customers are requesting a 'made in Germany' premium quality PV cells to support their marketing strategies," added Mr. Heinrichs.
"Line Two at our PV manufacturing plant in Germany is expected to be in production by the first week of June, slightly ahead of our earlier projections, helping to meet continued strong demand for our products. We are very pleased with the increases we have been able to achieve in cell efficiency, high production yield and consistency of product. As part of the agreement with Commerzbank to extend our credit facility, we have committed to inject (euro)5 million into ARISE Technologies Deutschland GmbH (ARISE Germany) by the end of May, 2010 to support the capital expenditures and the working capital in that operation," commented Mr. Heinrichs.
"In Ontario, our Systems Division has signed more than 35 contracts since the advent of the Ontario Feed-In Tariff program. Contracts range from private houses to schools and universities. Over half of these are either completed or under construction at this time. To support our future business, we have started testing the first ARISE PV modules manufactured in Ontario by a third party manufacturer. Having ARISE modules in made Ontario will allow us to meet the Ontario Power Authority's domestic content requirements that will take effect in 2011."
"Finally, we continue to conduct discussions and negotiations with potential strategic partners for our silicon technology. We look forward to providing updates on our progress in this area over the coming months," concluded Mr. Heinrichs.
Financial Overview
Sales for the quarter ended March 31, 2010 amounted to $16.2 million, compared with $7.2 million in the first quarter of 2009. PV cells accounted for 96.3% of Q1 2010 sales with the balance being generated by the Company's Systems Division.
Gross loss for the three months ended March 31, 2010 was $0.6 million, compared with a loss of $10.2 million for the same period in 2009.
Operating expenses for the first quarter of 2010 were $4.2 million, a decrease of 17% from $5.1 million for the quarter ended March 31, 2009.
R&D expenses decreased by 47% for the first quarter of 2010 to $0.9 million from $1.7 million in for the three months ended March 31, 2009.
General and administrative ("G&A") expenses were essentially flat at $2.5 million, equivalent to the same period last year.
Selling and marketing expenses for the quarter ended March 31, 2010 were $0.3 million, flat when compared with the first quarter of 2009.
Net interest expense for the first quarter of 2010 was $0.6 million, virtually unchanged from $0.6 million for the three months ended March 31, 2009.
Other income and expenses for the quarter ended March 31, 2010, included a foreign exchange gain of $3.7 million, compared with a foreign exchange gain of $0.8 million for the first quarter of 2009.
Liquidity and Capital Resources
As at March 31, 2010, the Company had a working capital deficiency of $42.9 million consisting of current assets of $22.5 million less current liabilities of $65.4 million. This compares with negative working capital at December 31, 2009 of $44.0 million consisting of current assets of $24.2 million less current liabilities of $68.2 million.
Cash and cash equivalents and restricted cash at March 31, 2010 totaled $361,875, a decrease of $290,110 since December 31, 2009.
In the near future, ARISE expects to file a Preliminary Prospectus Supplement to our existing Base Shelf Prospectus.
Conference Call and Webcast
ARISE will hold a conference call for analysts and investors at 9:00 a.m. (Eastern) on Wednesday, May 12, 2010. The company will file its financial statements, and Management Discussion and Analysis with SEDAR and these documents will be available on ARISE's website prior to the conference call. Vern Heinrichs, Chairman, and President and Chief Executive Officer, and Doug McCollam, Chief Financial Officer, will be available to answer questions during the call.
Vern Heinrichs, President and Chief Executive Officer, and Doug McCollam, Chief Financial Officer, will be available to answer questions during the call.
To participate in the call, please dial (647) 427 - 7450 or 1-888 - 231 - 8191 (Canada and the U.S. only) at least five minutes prior to the start of the call. A live audio webcast of the conference call will be available at www.newswire.ca and www.arisetech.com.
An archived recording of the call will be available at 416-849-0833 or 1-800-642-1687 (Pass code: 72090495, Canada and the U.S. only) from 1:00 p.m. on May 12, to 11:59 p.m. on May 19, 2010.
About ARISE Technologies
ARISE Technologies Corporation, based in Waterloo, Ontario, is dedicated to becoming a leader in high-performance, cost-effective solar technology. The company operates through three divisions. The PV Cell Division manufactures PV (photovoltaic) cells at its first manufacturing plant opened in April 2008 in Bischofswerda, Germany. The division is developing proprietary technology with a target of achieving a step-by-step progression to a high-efficiency level of greater than 20%. The PV Silicon Division is using a proprietary method to produce silicon at 7N+ high-purity (99.99999% purity) for PV cell applications, based on a simplified chemical vapor deposition process. The division is focusing on scaling up its process to provide ARISE with control over its supply, costs, and quality. The PV Systems Division has been providing PV solutions for solar farms and rooftop installations since 1996 throughout North America. ARISE is planning to expand its systems business in Ontario under the Ontario FIT (Feed-In Tariff) program.
The company's shares are listed on the Toronto Stock Exchange under the symbol APV and on the Frankfurt Open Market Exchange under the symbol A3T. Additional information is available at www.arisetech.com and www.sedar.com.
Forward-Looking Statements and Risk Factors
Certain statements in this news release may be considered to be forward-looking. Such statements are based on management's current expectations, estimations, and assumptions based on experience, trends, and other factors that are subject to the significant risks and uncertainties described in our regulatory filings. Please refer to these. Such risks and uncertainties may include, but are not limited to, the effects of general economic conditions, changing foreign exchange rates, actions by government authorities, the requirement for additional capital, risks associated with manufacturing, , industry supply levels, competitive pricing pressures and misjudgements in the course of preparing forward-looking statements.
Risk factors relating to ARISE are discussed in the Risk Factors section of ARISE's Annual Information Form and under the headings Liquidity and Capital Resources and Risk and Uncertainties in ARISE's year-end Management's Discussion and Analysis which are or will be available at www.sedar.com. These factors should be considered carefully, and readers should not place undue reliance on ARISE's forward-looking statements.
ARISE assumes no obligation to update any forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements.
ARISE Technologies Corporation
Interim Consolidated Balance Sheets
Unaudited
As at As at
March 31, December 31,
2010 2009
--------------- ---------------
Assets
Current assets
Cash and cash equivalents $ 111,455 $ 401,565
Accounts receivable 4,467,440 1,788,991
Inventories 5,184,597 9,721,399
Government assistance receivable 5,044,383 5,508,171
Other receivables 230,471 148,297
Prepaid expenses 7,435,845 6,615,125
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22,474,191 24,183,548
Property, plant and equipment, net 54,210,161 56,161,103
Long term deposits 22,989,677 24,268,617
Restricted cash 250,420 250,420
Intangible assets, net 181,356 163,814
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$ 100,105,805 $ 105,027,502
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Liabilities
Current liabilities
Bank loans $ 17,546,767 $ 19,594,697
Accounts payable and accrued
liabilities 24,105,049 23,319,955
Deferred revenue 5,911,156 5,965,723
Unearned government assistance 872,325 872,325
Current portion of long term debt 16,097,279 17,577,129
Current portion of capital lease payable 836,517 913,428
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65,369,093 68,243,257
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Long term deferred revenue 5,102,893 5,556,409
Long term debt - -
Long term capital lease payable 5,765,256 6,321,971
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10,868,149 11,878,380
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Total liabilities 76,237,242 80,121,637
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Shareholders' Equity
Capital stock 122,501,694 120,986,619
Contributed surplus 10,794,082 10,687,834
Deficit (109,427,213) (106,768,588)
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23,868,563 24,905,865
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$ 100,105,805 $ 105,027,502
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ARISE Technologies Corporation
Interim Consolidated Statements of Loss and Comprehensive Loss
Unaudited
Three months ended March 31,
2010 2009
--------------------------------
Sales $ 16,156,232 $ 7,219,085
Cost of goods sold 16,539,087 8,563,488
Valuation write-down of inventory
related assets 227,977 8,864,292
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Gross loss (610,832) (10,208,695)
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Expenses
Research and development 932,435 1,743,184
General and administrative 2,447,193 2,538,430
Selling and marketing 364,722 340,595
Depreciation and amortization 469,365 450,155
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4,213,715 5,072,364
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Operating loss (4,824,547) (15,281,059)
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Other expenses (income)
Interest expense, net 646,598 592,221
Foreign exchange (gain) (3,707,180) (768,360)
Loss on disposal of assets 977,821 -
Other income (83,161) (345,505)
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(2,165,922) (521,644)
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Net loss and comprehensive loss (2,658,625) (14,759,415)
Deficit, beginning of period (106,768,588) (65,495,184)
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Deficit, end of period $ (109,427,213) $ (80,254,599)
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Loss per share - basic and diluted $ (0.02) $ (0.12)
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ARISE Technologies Corporation
Interim Consolidated Statements of Cash Flows
Unaudited
Three months ended March 31,
2010 2009
-------------------------------
Cash flows (used in) from operating
activities
Net loss for the period $ (2,658,625) $ (14,759,415)
Items which do not involve cash:
Valuation write-down of inventory
related assets 227,977 8,864,292
Foreign exchange gain (4,116,065) (468,373)
Depreciation and amortization 1,641,251 1,101,415
Loss on disposal of assets 977,821 -
Employee stock based compensation 89,856 899,172
Non-employee stock based compensation 16,783 45,576
-------------------------------------------------------------------------
(3,821,002) (4,317,333)
Changes in non-cash working capital items
(Increase) decrease in accounts
receivable (3,070,516) 1,721,435
Decrease (increase) in inventories 3,971,226 (7,494,373)
Decrease (increase) in other receivables 66,831 (832,837)
Increase in prepaid expenses (220,650) (1,620,355)
(Decrease) increase in accounts payable
and accrued liabilities 2,255,282 (3,861,883)
Decrease in deferred revenue (518,402) (633,637)
-------------------------------------------------------------------------
(1,337,231) (17,038,983)
-------------------------------------------------------------------------
Cash flows from (used in) financing
activities
Issuance of capital stock for cash 1,650,000 -
Share issuance costs (134,926) -
Exercise of warrants and options - -
Net proceeds (repayment) of bank loans (434,655) 11,804,052
Net proceeds (repayment) of long term debt 150 6,037,621
Repayment of capital lease payable (26,648) -
-------------------------------------------------------------------------
1,053,921 17,841,673
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Cash flows from (used in) investing
activities
Change in long term deposits 678,869 1,578,816
Government assistance - (981,328)
Decrease in restricted cash - 951,881
Purchase of intangible assets (31,050) (26,963)
Purchase of capital assets (654,619) (16,756,608)
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(6,800) (15,234,202)
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Net cash outflow (290,110) (14,431,512)
Cash and cash equivalents, beginning of
period 401,565 21,119,152
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Cash and cash equivalents, end of
period $ 111,455 $ 6,687,640
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Supplemental disclosures of cash flows:
Interest and stand-by fees paid $ 646,664 $ 470,690
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Income taxes paid $ - $ -
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%SEDAR: 00017494E
For further information: ARISE Technologies Corporation, 65 Northland Road, Waterloo, Ontario, Canada, N2V 1Y8, Doug McCollam, Chief Financial Officer, (519) 772-5706, www.arisetech.com; Investor Relations: Glen Williams, The Equicom Group, (416) 815-0700 x272
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