ARISE Technologies Reports 2008 Second-Quarter Results



    
    -   Second-quarter highlights include first shipments of PV cells to
        customers following start of production at plant in Germany
    -   Expects 2008 second-half shipments of PV cells to total 14-16MW for
        revenues of $42-48 million, approximately a third of which will be in
        third quarter
    -   Company in advanced discussions with additional customers for PV
        cells
    -   Signs Offer to Lease agreement for a building in Kitchener-Waterloo
        region to house 7N+ solar-grade polysilicon pilot plant
    -   Holding discussions with potential additional technology partners
    -   Conference call and webcast to be held Tuesday, 8:30am (EDT)
    

    WATERLOO, ON, Aug. 11 /CNW/ - ARISE Technologies Corporation (TSX: APV
and Frankfurt: A3T), which is dedicated to becoming a leader in
high-performance, cost-effective solar technology, today reported its
financial results for the 2008 second quarter and first half ended June 30,
2008. Financial results conform to Canadian generally accepted accounting
principles (GAAP) and all currency amounts are in Canadian dollars.
    "Among a great many highlights during the 2008 second quarter and in the
weeks since, several particularly stand out," said Bart Tichelman, President
and Chief Executive Officer.
    "Foremost among our accomplishments was the opening of our PV
(photovoltaic) cell manufacturing plant in Bischofswerda, Germany, the
start-up of manufacturing, and the shipment of the first cells to our
customers. In mid-July, the plant achieved on Line 1 the target level of 15
percent average efficiency for its PV cells (peak reached 15.7 percent), as
well as our targets for manufacturing yield and throughput, and moved to 24/7
production to meet the demand of our customers.
    "Our second-quarter results include our first sales of PV cells,
amounting to $460,676. We expect this volume to increase dramatically in the
second half of the year. Our current view is that second-half 2008 shipments
of PV cells will total between 14 and 16 megawatts, amounting to $42-48
million of revenues, approximately a third of which will be in the third
quarter. In addition, we expect Systems Division revenue to amount to $500,000
to $600,000 in the second half," Mr. Tichelman said.

    
    Second-Quarter Highlights

    -   ARISE's new German plant began production on April 17, officially
        opened on June 6, and began shipping to customers in June. The first
        line is ramping up production on a 24/7 basis and is on track to
        reach its annual capacity of 35-40MW within the planned six-month
        period. As previously announced, the second line is planned for the
        plant in the 2009 first quarter to add another 40MW of capacity.

    -   ARISE Germany signed its second major, long-term sales contract for
        its PV cells. Under a five-year agreement, ARISE will supply aleo
        solar AG with 90MW of PV cells.

    -   On May 21, the company completed a bought-deal offering under which
        the underwriters purchased 20,500,000 common shares from ARISE for
        gross proceeds to the company of $45.1 million.

    -   Also on May 21, the company announced that it had met the third major
        milestone at its Silicon Feedstock Mini Pilot Plant Project in
        Waterloo. This cleared the way for ARISE to proceed with its
        previously announced plans to build a Pilot Plant with a target
        capacity of 50 tonnes of silicon per year in 2009 and a target
        production capacity of 400 tonnes annually in 2010. Meeting the third
        milestone required achieving specific objectives at the Mini Pilot
        Plant with respect to economics, scalability, and quality of the
        process. The company met its first milestone of the project with the
        August 2007 commissioning of the Silicon Refining Furnace version 3.1
        (SiRF(TM) 3.1). ARISE met its second milestone when the Mini Pilot
        Plant became operational in December 2007, successfully producing
        polysilicon.

    -   On June 11, the company announced that ARISE Germany had signed a
        six-year agreement with a wholly owned subsidiary of ReneSola Ltd to
        supply ARISE with 203.5MW of silicon wafers. ReneSola Ltd is a
        leading solar wafer manufacturer based in China. The agreement
        extends through June 30, 2014. ARISE now has supply contracts for
        100 percent of its solar wafers requirements in 2008 and
        approximately 60 percent of its needs for its 2009 PV cell production
        plans. ReneSola is the seventh, high-quality silicon wafer
        manufacturer with which ARISE has developed a supply relationship
        that the company believes will enable it to meet its longer-term
        requirements.

    -   On June 12, ARISE announced that Sino-American Silicon Products Inc.
        (SAS) has contracted with ARISE to purchase 120 tonnes of 7N+ solar-
        grade polysilicon. SAS will purchase 40 tonnes in each of 2011, 2012,
        and 2013. ARISE plans to manufacture the 7N+ high-purity (99.99999
        percent purity) silicon at its new pilot plant in Kitchener-Waterloo.
        The contract with SAS is consistent with ARISE's plan to use the
        output from the planned silicon plant to meet the requirements of its
        growing PV cell production at its plant in Germany as well as for
        sale to other companies. Under a second three-year agreement signed
        between the companies, ARISE will consign 7N+ polysilicon to SAS. SAS
        will use the material to process silicon wafers for ARISE, which will
        use them for its PV cell manufacturing operations. Under this
        agreement, the processing will consist of 40 tonnes in 2010,
        80 tonnes in 2011, and 160 tonnes in 2012.
    

    Second-Quarter and First-Half Financial Highlights

    ARISE Technologies second-quarter financial results reflect the
manufacturing start-up and the first revenues recorded for shipping of its PV
cells to its customers.
    As the result of the first PV cell sales of $460,676, 2008 second-quarter
sales more than doubled compared with the 2007 period, up 144.4 percent to
$745,347. In the 2007 second quarter, sales were $305,014 and all revenues
were generated by the company's Systems Division, which mainly is focused on
building solar farms and rooftop installations in Ontario. For the first half
of 2008, sales were $920,724, up 87.2 percent from $491,815 in the
year-earlier period as the result of the start-up of PV cell sales in the
second quarter.
    Gross profit for the 2008 second quarter and first half was a negative
$1.30 million and a negative $1.28 million, respectively, reflecting
significant scrap costs and under-used capacity resulting from the start-up of
PV cell production on Line 1. Scrap includes breakage as well as all off-spec
production, which was expected for a start-up production situation. The
company expects to increase gross margin in the second half of 2008 due to
stable PV cell production processes and increased sale volumes for PV cells as
well as for the Systems Division. In the 2007 quarter and first half, gross
profit was $30,360 and $46,809, respectively. The company also expects to
recover a portion of its scrap expense in the second half by selling the
material for secondary applications or for silicon recycling.
    Operating expenses were $5.71 million in the 2008 second quarter, up from
$3.61 million in the 2007 period. The increase was mainly due to higher
general and administrative (G&A) costs, including more than $1.01 million
incurred by ARISE Germany for payroll, legal, and travel as it started up
production, compared with less than $200,000 a year earlier. Other G&A
increases included stock-based compensation expense (non-cash) of
$1.44 million compared with $0.84 million in the 2007 quarter, and higher
payroll and professional fees. Research and development expenses were down at
$1.50 million, compared with $1.59 million in the 2007 quarter. Selling and
marketing expenses increased to $0.49 million from $0.11 million a year
earlier, and included feasibility costs for currently in-process solar farm
projects. In the first half of 2008, operating expenses were $11.00 million,
compared with $4.94 million in the first six months of 2007 with the increase
mainly attributable to the same factors that affected the second quarter of
2008.
    Interest expense (net) for the second-quarter 2008 was $320,346, compared
with interest income in the 2007 period of $120,876 as the company increased
its borrowing from Commerzbank AG Germany. This increased expense was more
than offset by a foreign exchange gain of $863,666, compared with a gain of
$40,854 in the 2007 quarter. In the first half of 2008, the company had
interest expense of $44,787, compared with interest income of $116,158 a year
earlier. The first-half foreign exchange gain was $475,733 in 2008 and $40,854
in 2007.
    The net loss for the 2008 second quarter was $6.51 million (a loss of
$0.05 per basic and diluted share), compared with a net loss $3.42 million (a
loss of $0.06 per basic and diluted share) in the 2007 period. For the first
half of 2008, ARISE's net loss was $11.88 million ($0.10 per basic and diluted
share), compared with a loss of $4.73 million ($0.10 per basic and diluted
share) in the six-month 2007 period.
    As at the end of the 2008 second quarter, ARISE had positive working
capital of $46.05 million. Cash and cash equivalents were $42.18 million at
end of the second quarter, reflecting the completion of the equity bought-deal
offering in May. Subsequently, in July, the company made two prepayments
totaling $20.60 million for inventory purchases of silicon wafers for the
German manufacturing plant. As at August 8, 2008, ARISE had cash and cash
equivalents of approximately $21.75 million. The company expects to be able to
offset some of the funds required for inventory prepayments with customer
advance deposits, thereby limiting the impact of silicon wafer prepayments on
its working capital.

    Outlook - Advanced Negotiations with Additional Customers

    "In addition to the significant increase in PV cell shipments and sales
that we expect to record in the 2008 third and fourth quarters, we are working
on a number of other major developments that will contribute to our growth and
ability to create value for our shareholders," Mr. Tichelman said.
    "We are in advanced discussions with additional customers for our PV
cells. We have supplied these customers with cells for their testing and are
negotiating agreements with each. There can be no guarantee, of course, that
we will sign any or all of these, but we are optimistic of doing so.
    "We have signed an Offer to Lease agreement for a building in the
Kitchener-Waterloo area that will house our 7N+ solar-grade polysilicon pilot
plant. Leasing this facility will result in a more flexible building with
respect to adding capacity in stages and lower costs than we had previously
expected.
    "We will proceed in the third quarter with the new pilot plant, according
to the previously announced schedule," Mr. Tichelman continued. "We expect the
new-generation SiRF to be fabricated and running in September at our supplier
and we expect delivery of the first SiRF 4 furnace in first-quarter 2009. The
plant's target production capacity remains at 50 tonnes per year in 2009,
increasing to a target capacity of 400 tonnes per year in 2010.
    "Based on our cost objectives for the plant and design concepts, and
discussions with the University of Waterloo," Mr. Tichelman continued, "we
determined that the University's campus is not the best place to locate the
pilot plant. We appreciate that the University and the City of Waterloo have
certain design, appearance, and size and use ratio requirements for the
campus. Unfortunately, meeting these requirements would require ARISE to incur
additional costs that are unnecessary to construct a plant suitable for its
needs. ARISE greatly values our relationship with the University of Waterloo.
We expect to continue working closely with it and also will continue to
consider its campus for future corporate and research facilities that likely
will be more compatible with the University's requirements."
    Regarding the company's technology progress, ARISE's Chief Technology
Officer and Vice-Chairman, Ian MacLellan, reported that "we have made good
progress on the quality of our silicon. We recently have been able to pull a
mono-crystalline ingot with our material in a float-zone process. This is an
important linkage with our high-efficiency PV cell program.
    "We have been very pleased with the partnership forged with Ebner
Gesellschaft M.B.H. in the development of our high-purity silicon process. We
believe that other similar partnerships for our technology can be productive,"
Mr. MacLellan said.
    "In addition to technology partnerships," Mr. Tichelman added, "we also
are considering collaborations for our Systems Division business. All such
partnerships would alleviate some of the financing that we would otherwise
require in the future."
    ARISE is initiating holding conference calls and webcasts following the
issuance of each quarter's results and will hold a conference call for
analysts and investors at 8:30 a.m. (Eastern) on Tuesday, August 12. 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.
    Bart Tichelman, President and Chief Executive Officer, and Dave Chornaby,
Chief Financial Officer, will be available to answer questions during the
call.
    To participate in the call, please dial 416-644-3420 or 1-800-732-1073
(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 416-640-1917 or
1-877-289-8525 (Canada and the U.S. only) (Passcode 2128734, followed by the
number sign) from 10:50 a.m. on August 12 to 11:59 p.m. on August 20. An
archived recording of the webcast will also be available at ARISE's website.

    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 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 percent. The PV Silicon Division is using a proprietary method to
produce silicon at 7N+ high-purity (99.99999 percent 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 provides complete
turnkey PV solutions for solar farms and rooftop installations under the
Ontario standard offer 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

    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, uncertainties associated with legal proceedings and negotiations,
industry supply levels, competitive pricing pressures and misjudgments in the
course of preparing 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
                         Consolidated Balance Sheets
                                  Unaudited
                                                          As at        As at
                                                        June 30, December 31,
                                                           2008         2007
                                                    ------------ ------------
    Assets
    Current assets
      Cash and cash equivalents                     $42,184,419  $37,908,430
      Accounts receivable                               717,172      254,025
      Inventory                                      27,206,056      855,588
      Government assistance receivable                9,996,562    6,096,333
      Other receivables                               6,726,959    1,477,584
      Prepaid expenses                                2,511,876      412,270
    -------------------------------------------------------------------------
                                                     89,343,044   47,004,230

    Capital assets, net                              29,286,466   14,402,403
    Long term deposits                               19,098,632    5,181,347
    Other assets, net                                    68,934       53,086
    -------------------------------------------------------------------------
                                                   $137,797,076  $66,641,067
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                 Liabilities
    Current liabilities
      Bank loans                                    $27,179,919   $1,087,835
      Accounts payable and accrued liabilities        9,089,320    8,980,796
      Deferred revenue                                4,060,337       47,263
      Unearned government assistance                    945,329    2,713,078
      Current portion of long term debt               2,013,146            -
    -------------------------------------------------------------------------
                                                     43,288,051   12,828,972
    Long term debt                                    4,533,501            -
    -------------------------------------------------------------------------
                                                     47,821,552   12,828,972
    -------------------------------------------------------------------------


                      Shareholders' Equity (Deficiency)

    Capital stock                                   118,805,503   72,857,557
    Contributed surplus                               6,241,317    4,140,849
    Deficit                                         (35,071,296) (23,186,311)
    -------------------------------------------------------------------------
                                                     89,975,524   53,812,095
    -------------------------------------------------------------------------
                                                   $137,797,076  $66,641,067
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Approved by the board

    (signed) Bart Tichelman ............. Director

    (signed) Harold Alexander .......... Director



                       ARISE Technologies Corporation
           Consolidated Statements of Loss and Comprehensive Loss
                                  Unaudited

                        3 months ended June 30,     6 months ended June 30,
                              2008          2007          2008          2007
                      ------------- ------------- ------------- -------------
    Sales             $    745,347  $    305,014  $    920,724  $    491,815
    Cost of goods
     sold                2,045,970       274,654     2,204,165       445,006
    -------------------------------------------------------------------------
    Gross profit        (1,300,623)       30,360    (1,283,441)       46,809
    -------------------------------------------------------------------------

    Expenses
      Research and
       development       1,500,273     1,585,532     3,012,257     2,028,733
      General and
       administrative    3,475,869     1,907,525     6,585,577     2,727,462
      Selling and
       marketing           494,932       110,906     1,039,105       174,334
      Depreciation of
       capital assets      243,732         4,152       358,695         5,018
    -------------------------------------------------------------------------
                         5,714,806     3,608,115    10,995,634     4,935,547
    -------------------------------------------------------------------------

    Operating loss      (7,015,429)   (3,577,755)  (12,279,075)   (4,888,738)
    -------------------------------------------------------------------------

    Other expenses
     (income)
      Interest expense
       (income), net       320,346      (120,876)       44,787      (116,158)
      Foreign exchange
       gain               (863,666)      (40,854)     (475,733)      (40,854)
      Other expense         35,224             -        36,856             -
    -------------------------------------------------------------------------
                          (508,096)     (161,730)     (394,090)     (157,012)
    -------------------------------------------------------------------------

    Net loss and
     comprehensive
     loss               (6,507,333)   (3,416,025)  (11,884,985)   (4,731,726)
    -------------------------------------------------------------------------

    Deficit, beginning
     of period         (28,563,963)  (12,894,975)  (23,186,311)  (11,579,274)
    -------------------------------------------------------------------------

    Deficit, end of
     period           $(35,071,296) $(16,311,000) $(35,071,296) $(16,311,000)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share -
     basic and
     diluted          $      (0.05) $      (0.06) $      (0.10) $      (0.10)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                       ARISE Technologies Corporation
                    Consolidated Statements of Cash Flows
                                  Unaudited

                        3 months ended June 30,     6 months ended June 30,
                           2008          2007          2008          2007
                      --------------------------- ---------------------------
    Cash flows from
     operating
     activities
      Net loss for
       the year       $ (6,507,333) $ (3,416,025) $(11,884,984) $ (4,731,726)
      Items which do
       not involve
       cash:
        Depreciation
         of capital
         assets            240,137         4,152       350,903         5,018
        Amortization
         of other
         assets              3,569         1,759         7,792         3,547
        Issuance of
         capital stock
         for services            -             -             -       214,488
        Employee
         stock-based
         compensation    1,360,010       842,814     2,755,756     1,008,887
        Non-employee
         stock-based
         compensation       75,953             -       175,835             -
    -------------------------------------------------------------------------
                        (4,827,664)   (2,567,300)   (8,594,698)   (3,499,786)
      Decrease
       (increase) in:
        Accounts
         receivable       (571,982)      (24,365)     (463,146)        2,832
        Inventory          328,814      (282,655)  (26,350,469)     (264,534)
        Other
         receivables    (4,308,516)            -    (5,249,375)            -
        Prepaid
         expenses          350,676    (5,266,477)   (2,099,606)   (5,351,008)
        Accounts
         payable and
         accrued
         liabilities    (5,364,009)    5,752,322       108,525     5,539,996
        Deferred
         revenue         1,739,414        (1,470)    4,013,074       (13,300)
    -------------------------------------------------------------------------
                       (12,653,267)   (2,389,945)  (38,635,695)   (3,585,800)
    -------------------------------------------------------------------------

    Cash flows from
     financing
     activities
      Issuance of
       capital stock
       for cash, net    42,581,348    23,147,609    42,581,348    24,540,159
      Exercise of
       warrants and
       options             681,759     1,530,038     2,535,476     2,003,547
      Share
       subscription
       receivable                -             -             -     1,878,600
      Proceeds from
       bank loans        9,705,502             -    26,092,084             -
      Issuance of
       long term debt    6,546,646             -     6,546,646             -
    -------------------------------------------------------------------------
                        59,515,255    24,677,647    77,755,554    28,422,306
    -------------------------------------------------------------------------

    Cash flows from
     investing
     activities
      Purchase of
       capital assets  (11,978,101)   (6,785,291)  (27,201,212)   (7,101,392)
      Change in other
       assets              (19,418)      (16,734)      (23,640)      (22,656)
      Change in long
       term deposits    (6,488,719)            -   (13,917,285)            -
      Government
       assistance        7,215,912             -     6,298,267             -
    -------------------------------------------------------------------------
                       (11,270,326)   (6,802,025)  (34,843,870)   (7,124,048)
    -------------------------------------------------------------------------
    Net cash flow       35,591,662    15,485,677     4,275,989    17,712,458

    Cash and cash
     equivalents,
     beginning of
     period              6,592,757     2,425,003    37,908,430       198,222
    -------------------------------------------------------------------------

    Cash and cash
     equivalents, end
     of period        $ 42,184,419  $ 17,910,680  $ 42,184,419  $ 17,910,680
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental
     disclosures of
     cash flows:
    Interest and
     stand-by fees
     paid             $    483,633  $        555  $    531,866  $      5,273
    -------------------------------------------------------------------------
    Income taxes paid $          -  $          -  $          -  $          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00017494E




For further information:

For further information: ARISE Technologies Corporation, 65 Northland
Road, Waterloo, Ontario, Canada, N2V 1Y8, Dave Chornaby, Chief Financial
Officer, (519) 772-5732, Dave.Chornaby@arisetech.com, www.arisetech.com

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