ARISE Technologies Reports Second Quarter Results
Revenues increase by 131% as shipments rise by more than 300%
On July 15, 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, Aug. 4 /CNW/ - ARISE Technologies Corporation (TSX: APV and Frankfurt: A3T), which is a leader in high-performance, high-quality, cost-effective solar technology, today reported its financial results for the second quarter ended June 30, 2010. Financial results conform to Canadian generally accepted accounting principles ("GAAP") and all currency amounts are in Canadian dollars unless otherwise noted.
Q2 2010 Highlights:
- Total revenue of $15.3 million, compared with $6.6 million in Q2 2009
- Net loss of $7.4 million, compared with a net loss of $13.6 million
in Q2 2009
- Shipped 11.8 MW of PV cells, an increase of 312% from 2.9 MW
in Q2 2009
- Completed $11.5 million brokered offering
- Systems division signed joint venture agreement with Sky Solar
"We continued to report improvements across key areas of our business during the second quarter with significant year-over-year increases in revenue and PV cell shipments," said Vern Heinrichs, President and CEO of ARISE. "Customer demand remains strong in both Europe and Ontario, and demand for our products is currently outpacing the available supply. Line two at our German plant is now running at full capacity, bringing our annual production capabilities to 85MW. We expect the strong demand to continue throughout the second half of 2010 and are in the early stages of planning lines three and four."
"In Ontario, we continued to make strides in advancing the progress of our Systems division. This quarter, for the first time, the systems division generated more than $1 million in revenue from its operations in the Ontario market," added Mr. Heinrichs. "During the quarter, we signed a joint-venture agreement with Sky Solar whose European headquarters are in Neurnberg, Germany, to provide engineering, procurement and contracting services for ARISE and Sky Solar projects in Ontario. This agreement is significant because it provides ARISE with access to the project finance, engineering and construction expertise of Sky Solar, a multi-national enterprise with considerable experience in the PV solar market."
Financial Overview
Sales for the quarter ended June 30, 2010 amounted to $15.3 million, compared with $6.6 million in the second quarter of 2009. PV cells accounted for 93% of Q2 2010 sales with the balance being generated by the Company's Systems Division.
Gross loss for the three months ended June 30, 2010 was $0.5 million, compared with a loss of $8.1 million for the same period in 2009.
Operating expenses for the second quarter of 2010 were $7.1 million, an increase of 24.3% from $5.7 million for the quarter ended June 30, 2009.
R&D expenses decreased by 40% for the second quarter of 2010 to $1.5 million from $2.6 million for the three months ended June 30, 2009.
General and administrative ("G&A") expenses increased to $4.5 million, from $2.3 million in the second quarter of 2009. The 96% increase was predominately the result of increased stock-based compensation related to the issuance of stock options, deferred share units, and warrants on a bridge loan in the second quarter of 2010.
Selling and marketing expenses for the quarter ended June 30, 2010 were $0.5 million, compared with $0.4 million in the second quarter of 2009.
Net interest expense for the second quarter of 2010 was $0.8 million, up slightly from $0.6 million for the same period the prior year.
Other income and expenses for the quarter ended June 30, 2010, included a foreign exchange gain of $1.9 million, compared with a foreign exchange gain of $0.6 million for the second quarter of 2009.
Liquidity and Capital Resources
As at June 30, 2010, the Company had a working capital deficiency of $34.8 million consisting of current assets of $24.0 million less current liabilities of $58.8 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. The decrease in working capital deficiency reflects cash raised from the issuance of shares during the quarter.
Cash and cash equivalents and restricted cash at June 30, 2010 totaled $1.8 million, an increase of $1.2 million from December 31, 2009.
Conference Call and Webcast
ARISE will hold a conference call for analysts and investors at 8:30 a.m. (Eastern) on Wednesday, August 4, 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, 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 (Canada and the U.S. only) (Pass code: 86713865) from 11:30 a.m. on August 4, to 11:59 p.m. on August 11, 2010. (ET)
About ARISE Technologies
ARISE Technologies Corporation, based in Waterloo, Ontario, is 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 rooftop and ground-mounted PV solutions since 1996. 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
June 30, December 31,
2010 2009
-------------- --------------
Assets
Current assets
Cash and cash equivalents $ 1,574,747 $ 401,565
Accounts receivable 5,727,979 1,788,991
Inventories 5,341,001 9,721,399
Government assistance receivable 711,571 5,508,171
Other receivables 1,848,803 148,297
Prepaid expenses 8,775,971 6,615,125
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23,980,072 24,183,548
Property, plant and equipment, net 51,177,210 56,161,103
Long term deposits 21,391,579 24,268,617
Restricted cash 250,420 250,420
Intangible assets, net 187,973 163,814
-------------------------------------------------------------------------
$ 96,987,254 $ 105,027,502
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Current liabilities
Bank loans $ 10,280,108 $ 19,594,697
Accounts payable and accrued liabilities 25,420,956 23,319,955
Deferred revenue 7,508,412 5,965,723
Unearned government assistance 872,325 872,325
Current portion of long term debt 13,880,128 17,577,129
Current portion of capital lease payable 793,769 913,428
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58,755,698 68,243,257
-------------------------------------------------------------------------
Long term deferred revenue 4,100,454 5,556,409
Long term capital lease payable 5,448,785 6,321,971
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9,549,239 11,878,380
-------------------------------------------------------------------------
Total liabilities 68,304,937 80,121,637
-------------------------------------------------------------------------
Shareholders' Equity
Capital stock 129,295,313 120,986,619
Contributed surplus 16,234,950 10,687,834
Deficit (116,847,946) (106,768,588)
-------------------------------------------------------------------------
28,682,317 24,905,865
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$ 96,987,254 $ 105,027,502
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-------------------------------------------------------------------------
ARISE Technologies Corporation
Interim Consolidated Statements of Loss and Comprehensive Loss
and Deficit
Unaudited
3 months ended June 30, 6 months ended June 30,
2010 2009 2010 2009
----------------------------- -----------------------------
Sales $ 15,301,765 $ 6,625,375 $ 31,457,997 $ 13,844,460
Cost of goods
sold 15,841,769 8,458,035 32,380,857 17,021,523
Valuation
write-down
(reversal) of
inventory
related
assets (65,562) 6,253,714 162,415 15,118,006
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Gross loss (474,442) (8,086,374) (1,085,275) (18,295,069)
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Expenses
Research and
development 1,529,585 2,562,368 2,462,021 4,305,552
General and
administrative 4,468,718 2,277,818 6,956,562 4,816,248
Selling and
marketing 474,224 402,539 798,296 743,134
Depreciation and
amortization 603,137 448,348 1,072,502 898,503
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7,075,664 5,691,073 11,289,381 10,763,437
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Operating loss (7,550,106) (13,777,447) (12,374,656) (29,058,506)
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Other expenses
(income)
Interest
expense, net 803,825 582,273 1,450,423 1,174,494
Foreign
exchange gain (1,863,635) (586,314) (5,570,817) (1,354,674)
Loss on
disposal of
assets 689,669 - 1,667,490 -
Other (income)
expense 240,767 (221,296) 157,606 (566,801)
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(129,374) (225,337) (2,295,298) (746,981)
-------------------------------------------------------------------------
Net loss and
comprehensive
loss (7,420,732) (13,552,110) (10,079,358) (28,311,525)
Deficit,
beginning of
period (109,427,213) (80,254,599) (106,768,588) (65,495,184)
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Deficit, end
of period $(116,847,945) $ (93,806,709) $(116,847,946) $ (93,806,709)
-------------------------------------------------------------------------
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Loss per
share - basic
and diluted $ (0.05) $ (0.11) $ (0.07) $ (0.22)
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ARISE Technologies Corporation
Interim Consolidated Statements of Cash Flows
Unaudited
3 months ended June 30, 6 months ended June 30,
2010 2009 2010 2009
----------------------------- -----------------------------
Cash flows
(used in)
from
operating
activities
Net loss for
the period $ (7,420,733) $ (13,552,110) $ (10,079,358) $ (28,311,525)
Items which
do not
involve
cash:
Valuation
write-down
(reversal) of
inventory
related
assets (65,562) 6,253,714 162,415 15,118,006
Unrealized
foreign
exchange
gain (1,934,522) (1,179,944) (6,050,432) (2,126,330)
Depreciation
and
amortization 1,791,617 1,172,987 3,432,867 2,274,402
Loss on
disposal of
assets 689,669 - 1,667,490 -
Employee
stock based
compensation 857,270 585,149 947,126 1,484,321
Non-employee
stock based
compensation 387,924 52,712 404,706 98,288
Fair value of
warrants
issued 270,000 - 270,000 -
-------------------------------------------------------------------------
(5,424,337) (6,667,492) (9,245,186) (11,462,838)
Changes in
non-cash working
capital items
(Increase)
decrease in
accounts
receivable (1,650,414) 4,347,345 (4,720,930) 6,181,471
Decrease
(increase) in
inventories (557,087) 538,219 3,414,139 (6,604,999)
Decrease
(increase) in
other
receivables (1,286,311) 834,279 (1,219,481) 25,499
Increase in
prepaid
expenses (1,406,338) (1,104,808) (1,626,988) (2,725,163)
(Decrease)
increase in
accounts
payable and
accrued
liabilities 3,116,323 1,597,829 5,371,608 (2,553,826)
Decrease in
deferred
revenue 553,541 (388,293) 35,137 (1,005,077)
-------------------------------------------------------------------------
(6,654,623) (842,921) (7,991,701) (18,144,933)
-------------------------------------------------------------------------
Cash flows from
(used in)
financing
activities
Issuance of
capital stock
for cash 12,230,000 - 13,880,000 -
Share issuance
costs (1,032,054) - (1,166,980) -
Exercise of
warrants and
options 18,750 - 18,750 -
Proceeds of
loan payable 1,813,203 - 1,813,203 -
Repayment of
loan payable (1,813,203) - (1,813,203) -
Net proceeds
(repayment) of
bank loans (7,330,228) (3,076,763) (7,764,883) 8,665,423
Net proceeds
(repayment) of
long term
debt (1,394,528) (2,708,166) (1,394,528) 3,306,052
Repayment of
capital lease
payable (25,145) - (51,794) -
-------------------------------------------------------------------------
2,466,795 (5,784,929) 3,520,565 11,971,475
-------------------------------------------------------------------------
Cash flows from
(used in)
investing
activities
Change in long
term deposits 1,598,097 1,588,269 2,276,967 3,167,085
Government
assistance 4,239,726 4,061,447 4,239,726 3,403,417
Decrease in
restricted
cash - 306,370 - 1,258,251
Purchase of
intangible
assets (19,260) (6,103) (50,311) (8,062)
Purchase of
capital
assets (167,445) (3,216,291) (822,064) (19,972,903)
-------------------------------------------------------------------------
5,651,118 2,733,692 5,644,318 (12,152,212)
-------------------------------------------------------------------------
Net cash inflow
(outflow) 1,463,290 (3,894,158) 1,173,182 (18,325,670)
Cash and cash
equivalents,
beginning of
period 111,457 6,687,640 401,565 21,119,152
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Cash and cash
equivalents,
end of
period $ 1,574,747 $ 2,793,482 $ 1,574,747 $ 2,793,482
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-------------------------------------------------------------------------
Supplemental
disclosures
of cash flows:
Interest and
stand-by fees
paid $ 756,539 $ 583,945 $ 1,403,203 $ 1,221,855
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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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