RS TECHNOLOGIES PROVIDES OPERATIONAL UPDATE

CALGARY, Dec. 23 /CNW/ - RS Technologies Inc. ("RS" or the "Company") (RS - TSX), a technology innovator and manufacturer of advanced composite products for infrastructure markets, today, further to its news release dated November 1, 2010, provided the following operational update.

Status of Working Capital

RS anticipates that it has sufficient working capital to continue as a going concern until the middle of January 2011. In order to continue as a going concern, and not taking into account any funds generated through sales of existing inventory, RS anticipates that it will be required, during the first quarter of 2011, to secure funds of approximately $1.0 million per month for its working capital needs and utilize the proceeds as to approximately $400,000 to fund ongoing corporate overhead, $400,000 to enable RS to continue its ability to manufacture RStandard® modular utility poles, and $200,000 to enable RS to complete manufacturing equipment and process improvements at RS's Tilbury, Ontario manufacturing facility in order to reduce costs of manufacturing.  Management of RS is currently in the process of pursuing further cost reduction strategies in order to continue operations. In the event that RS is unable to secure additional funds for its working capital needs, it will be unable to continue as a going concern beyond the middle of January 2011.

Status of Committed Equity Facility Agreement ("CEF Agreement") with Haverstock Master Fund, Ltd. ("Haverstock")

RS and Haverstock have jointly applied for exemptive relief from applicable Canadian securities regulators in connection with certain aspects of the committed equity facility (the "CEF").  The facility cannot be drawn down until RS and Haverstock have received such exemptive relief and RS has filed and had a receipt issued for its final shelf prospectus and has filed the related prospectus supplement in connection with the facility and the pricing supplement for each drawdown. RS is experiencing difficulty obtaining a receipt from applicable securities commissions for its final short form base shelf prospectus to be filed in connection with the CEF given the short term nature of RS's existing working capital.  RS is attempting to secure additional financing through means other than the CEF such that it will be in a position to obtain a receipt for a final short form base shelf prospectus.  There is no assurance that RS and Haverstock will be able to obtain all regulatory approvals necessary for RS to implement the CEF.  Even if such approvals are obtained, the trading price of the common shares of RS will determine the amount of funds that may be raised pursuant to CEF due to the limitations on the number of common shares that may be issued pursuant to the CEF Agreement. Based on the 11,148,650 common shares of RS currently issued and outstanding, RS will only be able to issue up to an aggregate of 2,229,730 common shares pursuant to the CEF (representing 20% of the issued and outstanding common shares of RS). Based on the volume weighted average trading price of the common shares of RS for the five trading days ended December 22, 2010 of $1.04 per share, RS would only be able to access an aggregate of approximately $2.14 million pursuant to the CEF. In accordance with the limitations set forth in the CEF Agreement, the Corporation will only be able to access this capital in maximum amounts of $500,000 which amounts may be further reduced in accordance with the limitations set forth within the CEF Agreement.

Search for a Strategic Partner

RS currently intends to use the proceeds from any financing which it is able to complete, together with any funds received from sales of its RStandard® poles from existing inventory, in order to provide RS and its advisor, Macquarie Capital Markets Canada Ltd., with the necessary time to complete the ongoing search for a strategic partner for RS. RS, together with its financial advisor, are actively engaged in seeking a strategic partner for RS to provide RS with a long-term solution for its working capital needs. There is no assurance that RS and its financial advisor will be successful in completing a transaction with a strategic partner.

Commercial Update

RS today provided the following commercial update:

  • In December 2010, RS received four orders from utilities in Scandinavia for three transmission projects and one distribution application, which all together will require an estimated 15 shipping containers.
  • While realizing repeat sales of poles for communication applications in Atlantic Canada, the Company also shipped its first significant transmission pole order to the region.
  • The Company fulfilled its second order to Mexico's Federal Electricity Commission (CFE), again for six truckloads of RStandard poles to serve in emergency restoration situations.
  • Benefitting from the ability to create custom sized poles and structures from standard modules, RS received and shipped an entire transmission pole order to the west coast in a seven day time frame.
  • RS has and continues to respond to an increasing number of requests for quotation, demonstrating the growing acceptance of its composite poles by end users.
  • RStandard poles have been added to the engineering standards of several major Canadian utilities in 2010.
  • RS now has distributors and/or representatives in North America, the Caribbean, Scandinavia, Russia, Australia and New Zealand and Latin America.
  • The Company is continuing with both pilot and commercial scale projects and its poles have now been purchased and installed by over 200 customers globally.

About RS

RS is an ISO 9001:2008 certified technology innovator that develops advanced composite material products for infrastructure markets. The composite products manufactured using the company's proprietary resins and processes are typically lighter, more durable and longer-lasting than competing products made from the traditional building blocks of wood, steel or concrete. RS's flagship product is its award-winning RStandard® composite pole. The pole is used as transmission and distribution poles to carry electric grids and as communication structures for various uses including wireless networks and microwave communications systems.

For the latest on RS's developments, go to the company's website at www.grouprsi.com.

"RStandard" is a registered trademark of RS.

Reader Advisory

Certain information set forth in this news release, including management's assessment of RS's future plans and operations and the anticipated duration of time which RS's current working capital will enable RS to continue as a going concern, contains forward-looking statements which are based on RS's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause RS's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, RS not securing additional funds for its working capital needs to continue as a going concern beyond the middle of January 2011;  RS and Haverstock not obtaining all necessary regulatory approvals necessary for RS to implement the CEF or RS otherwise not being able to raise enough money pursuant to the CEF to sustain its operations; RS's lack of revenues and unpredictability of future revenues; the uncertainty of the profitability of existing and contemplated products of RS; RS's ability to raise capital on acceptable terms when needed; RS's ability to attract and retain key employees; competition from established competitors with greater resources; the uncertainty of the developing markets in which RS operates; the risks associated with rapidly changing technology; RS's reliance on third parties to supply raw materials and the cost of such raw materials; intellectual property risks, foreign exchange rate fluctuations and changes in general economic, market and business conditions. Many of these risks and uncertainties are described in RS's annual information form for the year ended December 31, 2009 and other documents RS files with the Canadian securities authorities. The forward-looking statements are made as of the date hereof and RS assumes no obligation to update or revise such statements to reflect new events or circumstances except as required by applicable securities laws.

SOURCE RS Technologies Inc.

For further information: For further information:

RS Technologies Inc.
Laurien Abel, Investor Relations and Communications
Tel: (403) 219-8000 Fax: (403) 219-8001
Email: info@grouprsi.com

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