Catch the Wind Reports Third Quarter 2011 Financial Results

- Company takes significant steps to reposition for future success -

CHANTILLY, VA, Nov. 28, 2011 /CNW/ - Catch the Wind Ltd. (TSXV: CTW), providers of laser-based wind sensor products and technology, today reported its financial results for the three-and nine-month periods ended September 30, 2011.  All figures are in U.S. dollars unless otherwise stated.

"Over the past several months, we have made a number of key corporate decisions and taken significant steps towards repositioning our Company for a successful future," said Dr. Jo Major, Jr., Chairman and Interim President and Chief Executive Officer.  "Most notably, we moved into our new facility, initiated our manufacturing plan for cost-effective volume production, improved product robustness and developed impressive new technological features.   We have also detailed our vision for the industry with a product roadmap premised on meeting the technological, economic and data needs of our various customers segments. At the same time, our facility move and decisions to bring all critical engineering functions in-house have dramatically reduced our overall cost structure to both preserve cash and take more of our revenues to the bottom line. We've also added both John Green and Fred Belen to our management team. With a strengthened team and our technical, manufacturing and supply chain assets in place, we are accelerating into the commercial phase of our evolution - shipping product and booking orders for the first quarter of 2012."

Selected Q3 2011 Financial and Operational Highlights

  • Leased, with an option to buy, a unit to a leading manufacturer of wind turbines for up to six months, marking the first lease agreement for a Vindicator® unit and creating a new source of cash flow
  • Signed a letter of intent to enter into a collaborative agreement with TechnoCentre éolien to install a Vindicator® unit on one of its REpower MM92 2.05 MW turbines located in Québec, which will validate the Vindicator® for use in cold weather and harsh winter conditions, broadening potential markets especially in Québec where over 3,000 MW of wind power is expected to be installed over the next three to four years
  • Completed an equity offering for aggregate proceeds of approximately CDN$15.1M
  • Moved corporate headquarters to Chantilly, Virginia
  • Shipped three units and recognized revenue of $348,000.
  • Appointed Dr. Jo Major, Jr. as non-executive Chairman of the Board of Directors
  • Appointed Dr. Jo Major, Jr. as interim President and Chief Executive Officer

Highlights Subsequent to Quarter-end

  • Updated expectations on shipments for the fourth quarter to between $0.9M and $1.1M
  • Appointed John Green as Chief Financial Officer
  • Appointed Frederick Belen as Vice President of Technology and Product Line Management
  • Catch the Wind withdrew its membership in Falcon Fifty LLC effective October 22, 2011
  • Catch the Wind terminated the consulting agreements of OADS employees and others effective October 5, 2011
  • Demonstrated superb wind assessment accuracy, with excellent correlation to multiple traditional wind measurement tools, in collaboration with AXYS Technologies and Grand Valley State University

Financial Performance
Catch the Wind recognized revenue of $348,000 for the three-month period ended September 30, 2011, compared with $7,500 for the same period in 2010.  Catch the Wind generates revenue from the sale and lease of its laser wind sensing products.  For the nine-month period ended September 30, 2011, the Company generated revenue of $738,000 compared with $7,500 for the same period in 2010.  Catch the Wind operated as a development stage company from its inception until June 15, 2010 and until this point, the Company had not recognized any revenues or commenced its principal commercial operations.

Analysis of the carrying value of inventory, property and equipment and intangible assets resulted in 3 significant charges reflected in the consolidated financial statements.  Inventory was written down $1.4 million as the Company made a strategic decision to no longer market the Racer's Edge, Windseeker and Vindicator Beta (Generation 1) products.  This decision also led to the write-off of approximately $5.0 million against intangible assets for Vindicator Beta project development costs.  The Company also had Property and Equipment impairment loss totaling approximately $2.5 million of which approximately $2.3 million was related to an impairment loss on the Falcon 50 aircraft.

Cost of sales for the three- and nine-month periods ended September 30, 2011 were $527,000 and $1.6 million, respectively compared to nil for the comparable periods in 2010, as there were no product sales in 2010.

Operating expenses after excluding $7.5 million in property and equipment and intangible asset impairment losses for the three-month period ended September 30, 2011 remained constant at $3.8 million compared to the three-month period ended September 30, 2010.

Operating expenses, after excluding $7.5 million in property and equipment and intangible asset impairment losses for the nine-month period ended September 30, 2011 were $13.9 million, up 28.1% from $10.8 million for the same period in 2010.  The increase in operating expenses is primarily due to an increase of $2.7 million in research and development costs.  It is important to note that expenditures for research and development efforts, while comparable on a period-to-period basis, are reflected differently in the comparative financial statements due to the Company's transition from a development stage company to a commercial enterprise in June 2010.  The research and development costs were partially offset by a decrease of $1.8 million in combined consulting, professional, and professional engineering fees and a $0.5 million reduction in the non-cash loss related to the change in fair value of the Company's warrant liability.

Net loss for the three-month period ended September 30, 2011 was $10.9 million, or $0.10 per share, compared with $3.7 million, or $0.07 per share, for the same period in 2010. Net loss for the nine-month period ended September 30, 2011 was $20.7 million, or $0.22 per share, compared with $10.8 million, or $0.19 per share, for the same period in 2010.

At September 30, 2011, Catch the Wind had a working capital balance of $8.4 million, including cash and cash equivalents of $9.3 million, compared with a working capital balance of $6.9 million, including cash and cash equivalents of $6.7 million, at December 31, 2010.

Catch the Wind has filed its financial statements for the three- and nine-month period ended September 30, 2011 and related Management's Discussion and Analysis (MD&A) with securities regulatory authorities.  Catch the Wind's financial statements, MD&A and related documents are available via SEDAR as well as through the Company's website, www.catchthewindinc.com.

Conference Call
Catch the Wind will host a conference call to discuss its Q3 2011 financial results on Tuesday, November 29, 2011 at 10:00 a.m. EST.

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191.  Please connect approximately 15 minutes prior to the beginning of the call to ensure participation.  A question and answer session for analysts and institutional investors will follow management's presentation.

A live audio webcast of the conference call will be available at www.catchthewindinc.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above web site for 30 days.

A taped rebroadcast will be available to listeners until 12 a.m. ET on Tuesday, December 6, 2011. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter pass code 28987853, followed by the number sign.

About Catch the Wind Ltd.
Catch the Wind Ltd. is a high-growth technology company headquartered in Chantilly, Virginia. The company was founded in 2008 to develop and manufacture the Vindicator® laser wind sensor.

Catch the Wind serves the commercial market sector for laser based wind sensor systems, recognized as the "gold standard" in wind measurement. The company is focused on becoming a major contributor in making clean, renewable wind energy more affordable and profitable. For more information, visit www.catchthewindinc.com.

Forward-Looking Information
This news release includes certain forward-looking statements within the meaning of Canadian securities laws. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this news release, include, but are not limited to, economic performance and future plans and objectives of Catch the Wind. Any number of important factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although Catch the Wind believes that the assumptions and factors used in making the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed timeframes or at all. Catch the Wind disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Catch the Wind Ltd.
Condensed Consolidated Interim Balance Sheets
(Unaudited)
                     
           September 30,     December 31,    January 1,  
          2011   2010   2010  
              (Note 5)   (Note 5)  
(Expressed in United States dollars)  Note  $     $     $   
                     
Assets                
                     
Current assets:              
  Cash and cash equivalents  4  9,329,036   6,746,467   10,616,065  
  Accounts receivable   217,970   202,157   119,627  
  Inventory  6  1,675,446   2,605,224   1,667,997  
  Prepaid expenses and other assets   553,483   228,262   107,719  
          11,775,935   9,782,110   12,511,408  
Non-current assets:              
  Property and equipment  7  3,118,634   5,794,514   6,466,248  
  Intangible assets  8  6,538   5,990,404   5,923,105  
  Other assets   4,064   81,109   77,045  
          3,129,236   11,866,027   12,466,398  
Total assets   14,905,171   21,648,137   24,977,806  
                     
Liabilities and Equity              
                     
Current liabilities:              
  Accounts payable and other liabilities   2,369,290   2,043,448   1,339,905  
  Warranty provision  13  56,250   31,250   -  
  Due to related party   16  17,071   74,388   355,685  
  Obligations under finance leases  12  75,780   188,064   166,206  
  Borrowings  17, 18  188,363   178,530   166,213  
  Deferred revenue and customer deposits   641,200   333,500   360,000  
          3,347,954   2,849,180   2,388,009  
Non-current liabilities:              
  Obligations under finance leases 12 4,781   41,467   212,934  
  Warrant liability  10 155,769   596,117   -  
  Borrowings  17, 18 4,073,000   4,215,527   4,394,057  
          4,233,550   4,853,111   4,606,991  
Total liabilities   7,581,504   7,702,291   6,995,000  
                     
Equity                
Equity attributable to owners of the Company:              
  Capital stock 9 12,252   8,049   5,488  
  Contributed surplus    56,447,679   42,739,096   31,266,174  
  Deficit   (48,702,553)   (28,930,873)   (13,481,028)  
Non-controlling interest   (433,711)   129,574   192,172  
Total equity   7,323,667   13,945,846   17,982,806  
Total liabilities and equity   14,905,171   21,648,137   24,977,806  
                     

 

Catch the Wind Ltd.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(Unaudited)  
                             
           Three months ended       Three months ended       Nine months ended       Nine months ended 
           September 30,       September 30,       September 30,      September 30, 
          2011     2010     2011     2010
                (Note 5)           (Note 5)
                             
(Expressed in United States dollars)  Note   $       $       $       $ 
                             
Revenue   348,000     7,500     738,000     7,500
                             
Expenses                      
  Cost of sales  6, 16  526,599     -     1,583,303     -
  Salaries and benefits   607,827     407,839     1,689,854     1,840,162
  General and administrative  16  624,967     604,501     2,209,469     1,946,856
  Inventory writedown  6  1,422,986     519,781     1,430,934     1,851,619
  Amortization of intangible assets  8  338,417     338,540     1,015,497     401,820
  Depreciation of property and equipment  7  153,107     191,413     471,223     523,700
  Sales and marketing   (991)     21,168     244,711     348,982
  Consulting fees   101,738     212,668     505,589     491,777
  Professional fees   330,929     410,017     932,278     1,354,789
  Professional engineering fees   16  102,108     790,236     582,839     1,985,677
  Research and development  16  384,243     717,747     3,724,826     999,843
  Finance costs   84,349     95,954     260,768     295,212
  Interest income   (2,711)     (3,414)     (4,824)     (17,106)
  Other income, net   17  (19,715)     -     (37,464)     -
  Gain on fair value of warrant liability  10  (965,614)     (562,748)     (713,728)     (1,187,803)
  Impairment of property and equipment 7 2,486,799     -     2,486,799     -
  Impairment of intangible assets 8 4,968,369     -     4,968,369     -
  Foreign exchange loss   72,434     2,943     79,509     6,436
          11,215,841     3,746,645     21,429,952     10,841,964
                             
Net loss and total comprehensive loss    (10,867,841)     (3,739,145)     (20,691,952)     (10,834,464)
                             
Net loss and total comprehensive loss attributable to:                    
  Owners of the Company   (10,176,903)     (3,679,532)     (19,771,680)     (10,612,796)
  Non-controlling interest   (690,938)     (59,613)     (920,272)     (221,668)
          (10,867,841)     (3,739,145)     (20,691,952)     (10,834,464)
                             
                             
Net loss per share - basic and diluted   (0.10)     (0.07)     (0.22)     (0.19)
                             
Weighted average number of common shares outstanding   106,527,100     54,806,165     89,265,679     56,454,536
                             


 

 

 

 

SOURCE Catch the Wind Ltd.

For further information:

Catch the Wind Ltd.      TMX Equicom
Claudia Jaques      Philip Dale
Vice President and General Counsel    Investor Relations
703-393-0754       416-815-0700 ext. 253
cjaques@catchthewindinc.com     pdale@equicomgroup.com

 

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