Day4 Energy Revenues Increase 1008% on 5.4 MW Shipped in 2007



    
    Secured contracts now at 153.2 MW for 2008 through 2010
    

    BURNABY, British Columbia, March 31 /CNW/ -- Day4 Energy Inc. (TSX: DFE),
a manufacturer of superior performance solar electric modules, today reported
its 2007 fourth quarter and year-end financial results.
    For the twelve months ended December 31, 2007, Day4 produced and shipped
a total of 5.4 MW, or $22.0 million worth, of product to customers in Europe
and North America including $8.0 million in Q4 alone. Due to the fourth
quarter acquisition of the Company's European distributor, resulting
recognizable revenue for fiscal 2007 in accordance with Canadian GAAP was
$20.9 million compared to $1.9 million for the prior year. The balance of the
value of the product shipments was recognized as finished goods inventory on a
consolidated basis as of December 31st, 2007.
    Following five years of research and development and commercial
preparation, 2007 was the first full year of commercial production and sales
for the Company.  In 2007 the Company established its first product, the 48MC
photovoltaic module for grid-tie solar electric systems as a leading
performance product in North American and European markets. By December 31,
2007 Day4 had received contracts for 103 MW for delivery in 2008 through 2010.
This total has since risen to 153.2 MW as of March 30, 2008.

    2007 Highlights

    
    -- 5.4 MW total produced in first full year of commercial production
    -- Revenue increased ten times to $20.9 million from $1.9 million in 2006
    -- Secured significant sales contracts for delivery through 2010
    -- Completed three financings totaling $128 million
    -- $105M working capital at December 31, 2007
    -- Finalized plans for 28 MW expansion in 2008 (Phase I) to 40 MW of
       annual production capacity, and further 50 MW (Phase II) for 90 MW
       total annual capacity by the end of 2008
    -- Created a foundation of a robust, diversified sales channel partner
       distribution network in both Europe and North America
    -- Operating loss of $11.0 million, or 53% of revenue, compared to an
       operating loss of $3.8 million, or 203% of revenue, for 2006
    


    Fourth Quarter Highlights

    
    -- Shipped $8.0 million worth of product from Burnaby, BC
    -- Revenues increased 590% to $6.9 million from $1.0 million for the
       fourth quarter of 2006
    -- Supplied 1.1 MW to German electrical utility, Day4's largest
       installation to date
    -- Expanded to full utilization of existing 12 MW of annual capacity
    -- Completion of $100 million IPO on the Toronto Stock Exchange in
       December 2007
    -- Acquired German distributor, Day4 Systems GmbH, providing strong access
       to European markets
    -- Substantial reduction in adjusted gross loss during the quarter and at
       year end, average finished goods inventory below average selling prices
    


    Highlights Subsequent to Year End 2007

    
    -- Transitioning towards positive gross margins
    -- Secured sales contracts for additional 3 MW deliverable in 2008
    -- Total pre-sold deliveries for 2008 reaches 32.2 MW, at March 28, 2008
    -- Secured additional contracts for 2009 and 2010 of 16 MW and 31 MW
       respectively
    -- Total contracts as of March 28, 2008 reaches 153.2 MW for delivery in
       2008 through 2010
         (*) 32.2 MW deliverable in 2008
         (*) 55 MW deliverable in 2009
         (*) 66 MW deliverable in 2010
    -- Commenced occupancy of new Phase I 28 MW expansion facility
    -- Negotiations underway to lease additional facilities for Phase II 50 MW
       expansion facility
    
    "In 2007 we made the successful transition from R&D to
commercialization," stated George Rubin, Day4's President and COO. "At the
beginning of 2007 we laid out three core objectives. I am pleased to report
that we successfully achieved each of them.  First, we generated significant
interest in our unique PV technology and established a foundation of a robust
sales channel partner network in both the North American and European markets,
creating a substantial order book.  Second we increased production levels to
fully utilize our existing capacity by year end, and advanced our proprietary
manufacturing processes to the point where we can proceed with a rapid scale
up though near term internal production build-up but most importantly via
third party outsourced manufacturing strategy.  Third, we successfully
completed three financings, raising over $128 million to fund our growth
targets. Phase I expansion of our new production facility has commenced and is
on track. We have further commenced discussions with a number of manufacturing
partners as per outsourced production of PV modules based on our proprietary
technology."
    
    2007 Financial Review
    
    For the year ended December 31, 2007, total recognized revenue increased
ten times, to $20.9 million, as compared to $1.9 million, in 2006. The
substantial growth in PV module sales reflected both increased demand and a
full year of operations, as opposed to the five month commercial production
period during the start-up phase in 2006, Day4's first commercial production
period. Geographically sales revenues were split by 65% to Europe and 35% to
North America.
    By year end the Company had a large backlog of sales contracts for 2008
deliveries and production capacity of 12 MW fully utilized.  The successful
completion of UL and IEC product certifications during 2007 also assisted the
Company's ability to sell into new markets.  Day4's total module production
for 2007 was 5.4 MW compared to 0.5 MW in the last five months of 2006.
    Gross margin improved consistently throughout 2007. Year over year gross
margin improved by nearly three times from a loss of 62% in 2006 to a loss of
22% for 2007. Volume production increases, improved production processes,
machine efficiencies, and production staff training and experience are all
contributing to gross margin improvements. The strengthening of the Canadian
dollar against both the Euro and the US dollar during the year had a negative
impact on gross margin. A foreign exchange hedging program has been
implemented to mitigate such impacts.
    Gross margin improvements continued in the fourth quarter. After
adjusting for a one time fourth quarter write down for accumulated volume of
18 months of off-specification inventory of $0.9M, fourth quarter gross margin
was a loss of 13%. Management anticipates a transition towards positive gross
margin in early 2008.
    "As we grow our annual volume purchases with our suppliers, we will be
able to facilitate larger commitments that enable the use of dedicated
production lines to produce exclusive Day4 PV cell designs," said Mr. Rubin.
"With dedicated PV cell lines we will be able to economically facilitate the
production of our higher efficiency, generation II PV cell designs which, when
incorporated into our module technology, could offer up to 20% greater average
efficiency and a cost reduction of similar magnitude on a per rated watt
basis. Accumulating evidence of superior field performance of our products
further helps the market to recognize the value of our proprietary technology
that can go far beyond the measured watts of production rated power."
    Total operating expenses increased significantly, reflecting the
increased investment in manufacturing expansion and resources to support the
Company's growth, including marketing, sales, and administration. Sales and
marketing expenses rose to $1.9 million in 2007, compared to $0.2 million for
the prior year. 2007 was the first year of significant sales and marketing
activity as we expanded our staff and resources to execute our business plans
and strategy.  G&A expenses were $3.2 million for 2007, versus $1.0 million
for the prior year.
    Capital expenditures for fiscal 2007 were $5.5 million compared to $1.9
million for the prior year.  Substantially all of the capital expenditures for
the year were incurred for production machinery and equipment.
    Day4 Energy reported an EBITDA loss of $10.2 million, or $0.51 per share.
Adjusted for a total of $2.9 million of non-cash expenses of fair value
accounting for the September 2007 convertible debenture and settlement
thereof, and expenses not expected to recur, including financing costs and a
September 30th net realizable value write down of inventory, the Company's
adjusted net loss was $11.0 million, or $0.55 per share.
    The net loss for fiscal 2007 was $13.9 million, or $0.70 per share,
compared to $3.9 million, or $0.27 per share, for 2006.
    The expected losses for the year reflect firstly, the increased gross
losses from product sales, and secondly from increased overheads reflecting
growth in staff and operational resources, financing costs, inventory write-
downs and non-cash accretion expenses incurred in the year. Losses are
expected to continue until the end of 2008 at which time the Company aims to
have completed its 2008 production expansion plans and move towards positive
EBITDA.
    At December 31, 2007 cash and short term investments were $93.3 million,
compared to $0.2 million at December 31, 2006. Working capital at December 31,
2007 was $105 million. This increase during the year reflects three financings
completed during the year providing proceeds of $128.1 million, after
financing issuance costs totaling $9.3 million.  These cash inflows were
offset by operating and investing activities of $67.9 million.
    A third generation of proprietary manufacturing machines was placed into
production in the third quarter of 2007, improving process cycle time by 30%.
Manufacturing efficiency improvements continue in 2008 where Day4 is
undertaking a two phase production capacity expansion. The first phase will
increase annual capacity from 12 MW to 40 MW by the end of the second quarter.
The second phase will increase annual production capacity to 90 MW by the end
of the fourth quarter 2008.
    In 2007 Day4 expanded its supply contracts for PV cells by increasing
commitments to suppliers, and by expanding the number of suppliers to three by
year end.  The Company is continuing to expand the number of suppliers, and
the volume of PV cells purchased from suppliers to meet projected sales
requirements.  For 2008 through 2009 Day4 already has sufficient supply
contracted to substantially meet its sales contract commitments.
    At November 30, 2007 Day4 closed the acquisition of its distributor in
Europe, Day4 Systems GmbH.  The acquisition streamlines Day4's sales and
distribution channel in Europe through a strong local presence and direct
access to customers. This acquisition is also expected to improve gross
margins.
    Detailed financial results and management's discussion and analysis can
be found on SEDAR at: http://www.sedar.com.
    
    Caution Regarding Forward-Looking Statements
    
    This news release contains forward-looking statements that relate to our
current expectations and views of future events.  These forward-looking
statements include, among other things, statements relating to our
expectations regarding our revenues, expenses, cash flows and future
profitability; our expectations of transitioning towards positive gross
margins in early 2008; our expectations of moving towards positive EBITDA by
the end of 2008; our plans for and timing of expanding our manufacturing
capacity; our ability to proceed with a rapid scale-up through build-up and
third party outsourcing of manufacturing; our ability to mitigate the impact
of foreign exchange through hedging; our ability to access dedicated
production lines to economically facilitate production of higher efficiency PV
cell designs; and our expectations of improving gross margins and obtaining
strong access to European markets though the acquisition of Day4 Systems.
    The forward-looking statements contained in this news release are based
on assumptions, which include, but are not limited to, our ability to expand
our annual PV module manufacturing capacity; our ability to secure raw
materials at acceptable prices and qualities; our ability to achieve increased
PV cell and PV module efficiencies; our ability to expand our existing product
line; our ability to attract customers and develop and maintain customer and
supplier relationships; our ability to diversify our suppliers; our ability to
effectively manage foreign exchange risks; our ability to protect our
intellectual property rights and to not infringe on the intellectual property
rights of third parties; and our ability to comply with applicable
governmental regulations and standards going forward.
    Such forward-looking statements are subject to risks, uncertainties and
other factors, including those listed in our Annual Information Form filed
with Canadian securities regulatory authorities, many of which are beyond our
control and each of which contributes to the possibility that our forward-
looking statements will not occur or that actual results, performance or
achievements may differ materially from those expressed or implied by such
statements. These risks, uncertainties and other factors include, but are not
limited to, the impact of general economic, market or business conditions; our
limited operating history; the current industry-wide shortage of high-purity
silicon; risks relating to the protection of our intellectual property and
intellectual property infringement claims by third parties; our dependence on
a limited number of PV cell suppliers; government subsidies and economic
incentives for PV power could be reduced or eliminated; we may be unable to
achieve higher PV module efficiencies; our dependence on a limited number of
customers and our lack of long-term purchase contracts; demand for PV modules;
technological changes in the PV power industry could render our products
uncompetitive or obsolete; unexpected warranty expenses; fluctuations in
exchange rates; product liability claims; compliance with environmental
regulations; and other factors, many of which are beyond our control.
    The forward-looking statements made in this news release relate only to
events or information as of the date indicated above. Except as required by
law, we undertake no obligation to update or revise publicly any forward-
looking statements, whether as a result of new information, future events or
otherwise, after the date on which the statements are made or to reflect the
occurrence of unanticipated events.
    
    About Day4 Energy
    
    Headquartered near Vancouver, British Columbia, Day4 Energy Inc. designs,
manufactures and sells photovoltaic (PV) modules based on its patented Day4
Electrode technology, a proprietary method of contacting and interconnecting
solar cells. The Day4 Electrode produces PV panels of high power density,
increased lifetime and uncompromised aesthetic appearance. The advanced solar
module construction method increases the performance of conventional silicon
panels and enables the next-generation of PV innovation. Day4 partners with
the industry's leading PV cell producers to deliver IEC and UL certified
commercial and residential solar products to customers throughout Europe and
North America. Day4 is listed on the Toronto Stock Exchange under the symbol
"DFE".

    For more information, please visit http://www.day4energy.com.

    
     Contacts:
     Cory Pala
     Investor Relations
     Day4 Energy Inc.
     Phone: (416) 657-2400
     CPala@Day4Energy.com
    
    Please see the audited financial statements at http://www.sedar.com for
the accompanying notes to the financial statements following below:



    
    Day4 Energy Inc.
    Consolidated Balance Sheets
    As at December 31, 2007 and 2006
                                                        2007           2006
                                                           $              $
    Assets
    

    
    Current assets
    Cash and cash equivalents                     53,093,136        233,773
    Restricted cash                                1,322,140              -
    Short-term investments                        40,232,996              -
    Accounts receivable                            3,559,391        104,764
    Investment tax credits receivable              1,165,000        515,000
    Other receivables                              2,486,811        483,592
    Inventory                                     15,168,541      4,600,009
    Prepaid expenses                                 547,444        356,573
    

    117,575,459      6,293,711

    
    Intangible assets                                828,969              -
    Property, plant and equipment                  7,078,998      2,293,304
    

    125,483,426      8,587,015

    Liabilities

    
    Current liabilities
    Accounts payable and accrued liabilities      10,438,525      4,211,480
    Income taxes payable                             830,000              -
    Short-term debt                                  821,213              -
    Deferred revenue - current                        89,442              -
    

    12,179,180      4,211,480

    
    Long-term debt                                         -        870,271
    Deferred revenue                                 102,186              -
    Deferred lease inducement                         11,245         33,739
    

    12,292,611      5,115,490

    Shareholders' Equity

    
    Share capital
    Authorized
      Unlimited number of common shares
      Unlimited number of preferred shares
    

    
    Issued and outstanding
     36,373,116 (2006 - 14,950,500)
     common shares                               129,935,370      9,175,744
    

    
    Contributed surplus                            1,439,491        731,879
    Warrants                                       2,633,987        687,306
    Deficit                                      (20,818,033)    (7,123,404)
    

    113,190,815      3,471,525

    125,483,426      8,587,015




    
    Day4 Energy Inc.
    Consolidated Statements of Operations, Comprehensive Loss and Deficit
    For the years ended December 31, 2007 and 2006
                                                        2007           2006
                                                           $              $
    Revenue
    Sales                                         20,955,792      1,890,679
    

    Cost of goods sold                            25,333,450      3,068,346

    Gross loss                                    (4,377,658)    (1,177,667)

    
    Expenses
    General and administrative                     3,232,635      1,035,888
    Research and development                       1,815,343      1,361,474
    Less:   Investment tax credits
     and government assistance                      (650,000)      (199,734)
    Selling and marketing                          1,914,956        236,718
    Depreciation                                     304,077        227,846
    Amortization                                      23,685              -
    

    6,640,696      2,662,192

    Loss before other income (expense)           (11,018,354)    (3,839,859)

    
    Other income (expense)
    Foreign exchange gain (loss)                      40,355       (127,288)
    Interest and other income                        415,246         53,997
    Interest expense                                (518,197)        (3,743)
    Financing issuance cost                       (1,049,268)             -
    Accretion expense on convertible debentures   (1,351,348)             -
    Accretion expense on IRAP-TPC loan              (131,643)             -
    Fair value on IRAP-TPC Loan                       67,799              -
    Fair value loss on warrants                     (344,785)             -
    

    (2,871,841)       (77,034)

    Loss and comprehensive loss for the year     (13,890,195)    (3,916,893)

    Deficit - Beginning of year                   (7,123,404)    (3,206,511)

    Fair value adjustment on IRAP-TPC loan           195,566              -

    Deficit - End of year                        (20,818,033)    (7,123,404)

    Net loss per share - basic and diluted             (0.70)         (0.27)

    
    Weighted average number of shares
     outstanding - basic and diluted              19,934,029     14,338,788
    



    
    Day4 Energy Inc.
    Consolidated Statements of Cash Flows
    For the years ended December 31, 2007 and 2006
                                                        2007           2006
                                                           $              $
    

    
    Cash flows from operating activities
    Loss and comprehensive loss for the year     (13,890,195)    (3,916,893)
      Items not affecting cash
        Stock-based compensation                   1,029,616        424,463
        Accretion expense                          1,351,348              -
        Accretion - IRAP-TPC loan                    131,643              -
        Fair value - IRAP-TPC loan                   (67,799)             -
        Fair value loss on warrants                  344,785              -
        Unrealized foreign exchange (gain) loss     (524,800)       108,266
        Depreciation and amortization                782,622        451,385
        Deferred lease inducement                    (22,494)       (22,494)
    Changes in non-cash working capital items
      Accounts receivable                         (1,009,768)       (59,918)
      Investment tax credits receivable             (650,000)        97,539
      Other receivables                           (2,212,146)      (216,684)
      Inventory                                   (9,629,659)    (4,547,471)
      Prepaid expenses                              (190,871)       258,134
      Accounts payable and accrued liabilities     5,328,535      3,711,203
      Deferred revenue                              (600,275)             -
      Taxes payable                                  830,000              -
    

    (18,999,458)    (3,712,470)

    
    Cash flows from investing activities
    Purchase of short-term investments           (40,000,000)     2,900,000
    Restricted cash                               (1,322,140)             -
    Purchase of property, plant and equipment     (5,181,831)    (1,937,826)
    Business acquisition - net of cash acquired   (2,396,921)             -
    

    (48,900,892)       962,174

    
    Cash flows from financing activities
    (Repayment of) proceeds from
     shareholder loan                               (203,440)       203,440
    Proceeds from IRAP loan                          556,034        546,589
    Proceeds from convertible debentures          16,827,000              -
    Proceeds from issuance of common shares      102,992,370      1,675,000
    Proceeds from conversion of warrants             218,750        400,000
    Proceeds from exercise of options                351,727              -
    

    120,742,441      2,825,029

    
    Impact of foreign exchange on
     cash and cash equivalents                        17,272         60,253
    

    Increase in cash and cash equivalents         52,859,363        134,986

    
    Cash and cash equivalents - Beginning
     of year                                         233,773         98,787
    

    Cash and cash equivalents - End of year       53,093,136        233,773

    
    Supplemental cash flow information
    Cash paid for interest                               452              -
    Cash received for interest                       100,191         52,369
    

    
    Non-cash transactions
    Conversion of warrants to common shares          325,763        287,591
    Issuance of common shares on stock
     options exercised                               329,450              -
    Conversion of convertible debenture
     to common shares                             16,241,566              -
    Issuance of shares for equipment                 300,000              -
    




For further information:

For further information: Cory Pala, Investor Relations, +1-416-657-2400,
 CPala@Day4Energy.com, or Dr. John MacDonald, Chairman & CEO, 
jmacdonald@day4energy.com, or George Rubin, President & COO, 
grubin@day4energy.com, John Stonier, VP Finance, JStonier@Day4Energy.com,  all
of Day4 Energy Inc., +1-604-759-3294; or Rosalind Jackson of Antenna Group, 
+1-415-977-1923, rosalind@antennagroup.com, for Day4 Energy Web Site:
http://www.day4energy.com

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