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
    -------------------------------------------------------------------------
                                                  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
    -------------------------------------------------------------------------
                                              $  100,105,805  $  105,027,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                 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
    -------------------------------------------------------------------------
                                                  65,369,093      68,243,257
    -------------------------------------------------------------------------

    Long term deferred revenue                     5,102,893       5,556,409
    Long term debt                                         -               -
    Long term capital lease payable                5,765,256       6,321,971
    -------------------------------------------------------------------------
                                                  10,868,149      11,878,380
    -------------------------------------------------------------------------

    Total liabilities                             76,237,242      80,121,637
    -------------------------------------------------------------------------

                             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)
    -------------------------------------------------------------------------
                                                  23,868,563      24,905,865
    -------------------------------------------------------------------------

                                              $  100,105,805  $  105,027,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                       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
    -------------------------------------------------------------------------
    Gross loss                                      (610,832)    (10,208,695)
    -------------------------------------------------------------------------

    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
    -------------------------------------------------------------------------
                                                   4,213,715       5,072,364
    -------------------------------------------------------------------------

    Operating loss                                (4,824,547)    (15,281,059)
    -------------------------------------------------------------------------

    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)
    -------------------------------------------------------------------------
                                                  (2,165,922)       (521,644)
    -------------------------------------------------------------------------

    Net loss and comprehensive loss               (2,658,625)    (14,759,415)

    Deficit, beginning of period                (106,768,588)    (65,495,184)
    -------------------------------------------------------------------------

    Deficit, end of period                    $ (109,427,213) $  (80,254,599)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share - basic and diluted        $        (0.02) $        (0.12)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                       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
    -------------------------------------------------------------------------
    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)
    -------------------------------------------------------------------------
                                                      (6,800)    (15,234,202)
    -------------------------------------------------------------------------
    Net cash outflow                                (290,110)    (14,431,512)

    Cash and cash equivalents, beginning of
     period                                          401,565      21,119,152
    -------------------------------------------------------------------------

    Cash and cash equivalents, end of
     period                                   $      111,455  $    6,687,640
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental disclosures of cash flows:
    Interest and stand-by fees paid           $      646,664  $      470,690
    -------------------------------------------------------------------------
    Income taxes paid                         $            -  $            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00017494E

SOURCE ARISE TECHNOLOGIES CORPORATION

For further information: 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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ARISE TECHNOLOGIES CORPORATION

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