ARISE Technologies Reports Third Quarter Results
Revenues increase by 251% as shipments rise by more than 450%
On October 5, 2010, ARISE issued a release commenting on preliminary third-quarter results. The release is available at www.sedar.com or www.arisetech.com
WATERLOO, ON, Nov. 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 third quarter ended September 30, 2010. Financial results conform to Canadian generally accepted accounting principles ("GAAP") and all currency amounts are in Canadian dollars unless otherwise noted.
Q3 2010 Highlights:
- Total revenue of $23.0 million, compared with $6.6 million in Q3 2009
- Net loss of $5.2 million, compared with a net loss of $5.5 million in
Q3 2009
- Recorded Adjusted EBITDA* of $0.4 million profit, compared with a
loss of $4.5 million in Q3 2009
- Shipped 19.5 MW of PV cells, an increase of 454% from 3.5 MW in Q3
2009
- Sales from Systems Division increased 145% to $2.5 million from $1.0
million in Q2 2010
* ARISE defines Adjusted EBITDA as Earnings Before Interest
Depreciation and Amortization, excluding stock-based compensation,
the impact of one time asset writeoffs and foreign exchange
Subsequent to the end of Q3:
- Appointed Dan Shea, President and Chief Executive Officer of ARISE
- Closed a US$1.75 million working capital bridge loan ("Loan") from
Haverstock Master Fund, Ltd. and Trenrasp LLC
"Our momentum continued in the third quarter with significant increases in both revenue and PV cell shipments," said Dan Shea, President and CEO of ARISE. "As a result of the continued demand for our products, combined with improved operating efficiencies at our PV cell plant in Germany, we were able to record a positive gross profit for the quarter and year-to-date. This is a significant achievement as we transition from a development stage company to a profitable leader in the solar space."
"I am very encouraged by the strides that ARISE has taken over the past four quarters, posting consecutive improvements in both shipments and revenue. As CEO, my top priority is to drive the company towards profitability while continuing to strengthen the balance sheet," added Mr. Shea. "With ongoing strong demand in Germany, we intend to increase the production capacity of our plant in 2011 with the commissioning of Lines three and four. Our discussions regarding a potential partner for the Silicon Division are ongoing and we are proceeding steadily and cautiously on this undertaking, with the goal of maximizing the value of this asset."
Financial Overview
Sales for the quarter ended September 30, 2010 amounted to $23.0 million, compared with $6.6 million in the third quarter of 2009. PV cells accounted for 89% of Q3 2010 sales with the $2.5 million balance being generated by the Company's Systems Division.
Gross profit for the three months ended September 30, 2010 was $2.1 million, compared with a loss of $2.0 million for the same period in 2009.
Operating expenses for the third quarter of 2010 were $3.7 million, the lowest quarter level in two years, decreasing 18% from $4.5 million for the quarter ended September 30, 2009.
R&D expenses of $0.9 million for the three months ended September 30, 2010 decreased by 37% from $1.4 million in the second quarter of 2010.
General and administrative ("G&A") expenses decreased by 10% to $2.0 million, from $2.2 million in the third quarter of 2009.
Selling and marketing expenses for the quarter ended September 30, 2010 were $0.3 million, compared with $0.4 million in the third quarter of 2009.
Net interest expense for the third quarter of 2010 of $0.5 million, down 34% from the second quarter of 2010.
Other income and expenses for the quarter ended September 30, 2010, included a foreign exchange loss of $3.2 million, compared with a foreign exchange gain of $1.6 million for the third quarter of 2009. The largest component of the foreign exchange loss resulted from the translation into Canadian Dollars of financial liabilities of ARISE Germany which are denominated in Euros. During the quarter, the Euro strengthened by 7.4% compared to the Canadian dollar as at June 30, 2010.
Liquidity and Capital Resources
As at September 30, 2010, the Company had a working capital deficiency of $37.1 million consisting of current assets of $25.0 million less current liabilities of $62.1 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 period.
Cash and cash equivalents and restricted cash at September 30, 2010 totaled $0.8 million, compared to $0.7 million at December 31, 2009.
Conference Call and Webcast
ARISE will hold a conference call for analysts and investors at 8:30 a.m. (Eastern) on November 4. Dan Shea, 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: 21314960) from 11:30 a.m. on November 4, to 11:59 p.m. on November 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
65 Northland Road, Waterloo, Ontario, Canada N2V 1Y8
Doug McCollam, Chief Financial Officer, (519) 772-5706
ARISE Technologies Corporation
Interim Consolidated Balance Sheets
Unaudited
As at As at
September 30, December 31,
2010 2009
-------------- --------------
Assets
Current assets
Cash and cash equivalents $ 507,123 $ 401,565
Accounts receivable 7,232,226 1,788,991
Inventories 4,997,899 9,721,399
Government assistance receivable 1,152,439 5,508,171
Other receivables 1,806,465 148,297
Prepaid expenses 9,305,494 6,615,125
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25,001,646 24,183,548
Property, plant and equipment, net 49,501,781 56,161,103
Long term deposits 20,190,776 24,268,617
Restricted cash 251,000 250,420
Intangible assets, net 196,899 163,814
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$ 95,142,102 $ 105,027,502
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-------------------------------------------------------------------------
Liabilities
Current liabilities
Bank loans $ 13,813,859 $ 19,594,697
Accounts payable and accrued liabilities 25,816,544 23,319,955
Deferred revenue 6,975,495 5,965,723
Unearned government assistance 872,325 872,325
Current portion of long term debt 13,800,840 17,577,129
Current portion of capital lease payable 852,898 913,428
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62,131,961 68,243,257
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Long term deferred revenue 3,460,216 5,556,409
Long term capital lease payable 5,832,649 6,321,971
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9,292,865 11,878,380
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Total liabilities 71,424,826 80,121,637
-------------------------------------------------------------------------
Shareholders' Equity
Capital stock (Note 15a) 129,454,490 120,986,619
Contributed surplus (Note 15b) 16,357,813 10,687,834
Deficit (122,095,027) (106,768,588)
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23,717,276 24,905,865
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$ 95,142,102 $ 105,027,502
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ARISE Technologies Corporation
Interim Consolidated Statements of
Loss and Comprehensive Loss and Deficit
Unaudited
3 months ended September 30, 9 months ended September 30,
2010 2009 2010 2009
-------------- -------------- -------------- --------------
Sales $ 22,970,000 $ 6,586,012 $ 54,427,996 $ 20,430,472
Cost of goods
sold 20,818,058 8,032,509 53,198,915 25,795,336
Valuation
write-down of
inventory
related assets 34,489 510,453 196,904 14,887,157
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Gross profit
(loss) 2,117,453 (1,956,950) 1,032,177 (20,252,021)
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Expenses
Research and
development 910,361 1,442,140 3,372,381 5,747,692
General and
admini-
strative 1,999,724 2,220,753 8,888,392 7,037,002
Selling and
marketing 324,718 425,620 1,190,908 1,168,754
Depreciation
and
amortization 486,388 455,588 1,558,889 1,354,090
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3,721,191 4,544,101 15,010,570 15,307,538
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Operating loss (1,603,738) (6,501,051) (13,978,393) (35,559,559)
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Other expenses (income)
Interest
expense,
net 529,450 517,525 1,979,874 1,692,019
Foreign
exchange
loss (gain) 3,213,883 (1,589,121) (2,356,934) (2,943,796)
Loss on
disposal of
assets 122,635 - 1,790,125 -
Other (income)
expense (222,625) 20,991 (65,019) (545,811)
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3,643,343 (1,050,605) 1,348,046 (1,797,588)
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Net loss and
comprehensive
loss (5,247,081) (5,450,446) (15,326,439) (33,761,971)
Deficit,
beginning of
period (116,847,946) (93,806,709) (106,768,588) (65,495,184)
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Deficit, end
of period $(122,095,027) $ (99,257,155) $(122,095,027) $ (99,257,155)
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Loss per share
- basic and
diluted $ (0.03) $ (0.04) $ (0.09) $ (0.27)
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ARISE Technologies Corporation
Interim Consolidated Statements of Cash Flows
Unaudited
3 months ended September 30, 9 months ended September 30,
2010 2009 2010 2009
---------------------------- -----------------------------
Cash flows from
(used in)
operating
activities
Net loss for
the period $ (5,247,081) $ (5,450,446) $ (15,326,439) $ (33,761,971)
Items which
do not
involve cash:
Valuation
write-down
(reversal)
of inventory
related
assets 34,489 510,453 196,904 14,887,157
Unrealized
foreign
exchange
loss
(gain) 3,563,974 (1,340,610) (2,486,612) (3,466,940)
Depreciation
and
amorti-
zation 1,612,010 1,654,835 5,044,877 3,929,237
Accrued
interest 181,973 - 560,663 -
Loss on
disposal
of assets 122,635 - 1,790,125 -
Employee
stock
based
compensation 188,952 317,190 1,136,078 1,801,510
Non-employee
stock based
compensation 12,316 16,110 417,023 114,399
Fair value
of warrants
issued - - 270,000 -
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469,268 (4,292,468) (8,397,381) (16,496,608)
Changes in
non-cash
working
capital
items
(Increase)
decrease in
accounts
receivable (1,137,902) (200,403) (5,858,832) 5,981,068
Decrease
(increase)
in
inventories 402,603 (551,376) 3 ,816,742 (6,415,073)
Decrease
(increase)
in other
receivables 765,523 469,831 (453,957) 495,330
Increase in
prepaid
expenses (412,287) (1,543,958) (2,039,275) (4,269,121)
Increase in
other assets - (174,236) - (174,236)
(Decrease)
increase in
accounts
payable and
accrued
liabilities (2,396,101) 475,929 2,545,023 (2,077,897)
(Decrease)
increase in
deferred
revenue (1,196,536) 103,699 (1,161,397) (901,378)
-------------------------------------------------------------------------
(3,505,432) (5,712,982) (11,549,077) (23,857,915)
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Cash flows
from (used in)
financing
activities
Issuance of
capital
stock for
cash 218,407 - 14,098,407 -
Share
issuance
costs (59,230) - (1,226,210) -
Exercise of
warrants and
options - - 18,750 -
Proceeds of
loan payable - - 1,813,203 -
Repayment of
loan payable - - (1,813,203) -
Net proceeds
(repayment)
of bank
loans 2,964,409 (8,894,923) (4,800,474) (229,500)
Net proceeds
(repayment)
of long term
debt (1,402,472) 1,758,894 (2,796,849) 5,064,946
-------------------------------------------------------------------------
1,721,114 (7,136,029) 5,293,624 4,835,446
-------------------------------------------------------------------------
Cash flows from
(used in)
investing
activities
Decrease in
restricted
cash (580) - (580) 1,258,251
Change in
long term
deposits 1,200,803 1,994,071 3,477,770 5,161,156
Government
assistance (290,600) 9,592,707 3,949,126 12,996,124
Purchase of
intangible
assets (11,592) (12,787) (61,904) (20,849)
Purchase of
capital
assets (181,337) (1,307,962) (1,003,401) (21,280,865)
-------------------------------------------------------------------------
716,694 10,266,029 6,361,011 (1,886,183)
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Net cash
inflow
(outflow) (1,067,624) (2,582,982) 105,558 (20,908,652)
Cash and cash
equivalents,
beginning of
period 1,574,747 2,793,482 401,565 21,119,152
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Cash and cash
equivalents,
end of
period $ 507,123 $ 210,500 $ 507,123 $ 210,500
-------------------------------------------------------------------------
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Supplemental
disclosures of
cash flows:
Interest and
stand-by
fees paid $ 344,318 $ 517,945 $ 1 ,368,831 $ 1,739,800
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Income taxes
paid $ - $ - $ - $ -
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For further information: Investor Relations: Glen Williams, The Equicom Group, (416) 815-0700 x272