ARISE Technologies Reports 2008 First-Quarter Results
Thu May 15, 5:00 PM
- Company continues to make excellent progress in executing its
strategic plans to become a global leader in solar technology
- Milestones including completion of new PV cell production plant in
Germany; securing silicon wafer supply; signing two major, long-term
agreements for PV cell sales; and putting its Silicon Feedstock Mini
Pilot Plant into operation
- R&D investment rises to $1.5 million in the quarter as company
focuses on advancing its PV cell technology and high-purity silicon
manufacturing process
WATERLOO, ON, May 15 /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 first quarter ended March 31, 2008. Financial results conform to Canadian generally accepted accounting principles (GAAP) and all currency amounts are in Canadian dollars.
"ARISE Technologies continues to make excellent progress in executing our strategic plans to become a global leader in solar technology," said Bart Tichelman, President and Chief Executive Officer. "Among our many achievements so far in 2008, particularly outstanding is the completion of our PV (photovoltaic) cell manufacturing plant in Bischofswerda, Germany. In the incredibly short period of just 16 months, our team took this project from conception to commercial production. We are now ramping up the output on Line 1 to the planned annual rate of 35MW.
"Other notable accomplishments in the first quarter of this year and subsequently, include signing our first and second major long-term sales contracts for the PV cells to be produced in Germany; build out of our Silicon Feedstock Mini Pilot Plant in Waterloo; forging important development collaboration agreements; signing four additional agreements for the supply of silicon wafers; announcing plans to move forward with a major increase in our previously announced PV cell production plans and the manufacture of PV silicon that will use our proprietary methods to achieve 7N+ (99.99999%) high purity; and entering into a bought deal agreement that is expected to raise approximately $45.1 million through the issue of common shares," he said.
"We have established terrific momentum in our business and look forward to reporting on ARISE's further progress throughout 2008," Mr. Tichelman added.
First-Quarter Highlights
- Construction of the company's PV cell manufacturing plant in Germany
continued and neared completion on schedule and on budget toward the
April 2008 commissioning.
- The company appointed Bart Tichelman as President and Chief Executive
Officer; company-founder Ian MacLellan assumed the position of Chief
Technology Officer and Vice-Chair of the Board.
- ARISE became McMaster University's industry partner in carrying out
its three-year, $4.1 million solar technology research project aimed
at substantially increasing traditional PV cell efficiencies. ARISE
will contribute about $2 million in cash and in-kind funding to the
project with the balance being provided by the university and the
province of Ontario.
- ARISE became the University of Toronto's industry partner for four
projects to develop high-efficiency solar technologies. ARISE will
contribute one-third of the funding for the five-year, $15 million
project with the balance coming from the university and the province
of Ontario.
- ARISE Germany signed its first major, long-term PV cell sales
contract with SOLON AG of Germany. ARISE will provide SOLON AG with
212 megawatts of PV cells over a five-year period with shipments
commencing in the 2008 second quarter.
- The company's Silicon Feedstock Mini Pilot Plant went operational at
its Waterloo facility. This is a significant step in moving from the
laboratory to production-scale for the proprietary methods that ARISE
is developing for the Silicon Feedstock process.
- With the signing of four supply agreements for silicon wafers, in
addition to two previously announced contracts, ARISE secured
approximately 80 percent of its requirements to meet its production
plans for 2008. Several of these agreements are for multiple years.
The company expects that the balance of its needs will be met on a
high-priority, best-efforts basis by the six suppliers with which it
has contracted and is continuing discussions with these and other
companies to cover its needs in 2008 and future years at competitive
costs.
Subsequent Highlights
- On April 16, ARISE's new German plant began commercial production of
PV cells on the first of its manufacturing lines. The addition of a
second line, planned for the first quarter of 2009, will increase the
plant's annual capacity to 80MW. The facility can accommodate up to
three production lines and the company expects to construct other
manufacturing buildings on its 13-hectare site in Bischofswerda.
- On April 10, ARISE announced that it is increasing the PV cell
production target for its German facilities from the 360MW by the end
of 2012 to 560MW on 12 manufacturing lines. The company also
announced that it has ordered the production equipment for Line 2 to
meet the planned first-quarter 2009 manufacturing start-up. It also
stated that it plans to establish a new, high-purity silicon plant in
Canada in 2011, ramping up to a target output rate of 10,000 tonnes
per year. In the meanwhile, ARISE plans to expand the output rate of
its Waterloo high-purity silicon pilot plant from 50 tonnes per year
in 2009 to 400 tonnes annually in 2010.
- 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 5, the company announced a bought-deal offering under which
the underwriters will purchase 20,500,000 common shares from ARISE
for gross proceeds to the company of $45.1 million. Ian MacLellan
also is selling 500,000 shares as a part of the offering and partial
use of proceeds will be to repay a loan to the company. The offering
is expected to close on or about May 20, 2008. ARISE intends to use
the net proceeds to secure additional silicon wafers and to fund its
PV cell and high-purity silicon research and development programs, as
well as for its silicon pilot production facility and general
corporate purposes.
Financial Highlights
ARISE Technologies is making rapid progress toward becoming a significant developer and manufacturer of PV cells and high-purity silicon. At this stage of its growth, the company is investing significant funds in the development of its business and does not expect to be profitable. With commercial production of PV cells begun in April 2008, the company's revenue through the first quarter of this year was generated solely by its Systems Division, which mainly is focused on building solar farms and rooftop installations in Ontario.
Sales for the 2008 first quarter were $175,377, down from $186,801 in the 2007 period. All sales in both periods were generated by the Systems Division. The company expects to begin reporting sales of its PV cells in the second quarter of 2008.
Operating expenses were $5.28 million in the first-quarter 2008, compared with $1.33 million in the 2007 quarter, reflecting ARISE's commitment to PV cell research and development and its high-purity silicon development program, as well as the ramp-up for PV cell production at its new plant in Germany. Operating expenses include R&D costs of $1.51 million in the 2008 quarter, compared with $0.44 million a year earlier. General and administrative expenses rose to $3.11 million in the 2008 first quarter from $0.82 million the 2007 period. The increase reflects higher payroll costs and professional fees, as well as significantly higher stock-based compensation costs. The operations of ARISE Germany, established in March 2007, accounted for $0.78 million of the first-quarter 2008 administrative expenses. Reflecting the company's efforts to increase its profile with potential customers, including feasibility costs for currently in-process solar farm projects, ARISE's selling and marketing expenses rose to $0.54 million in the 2008 first quarter from $0.06 million in 2007 period.
The net loss for the 2008 first quarter was $5.38 million (a loss of $0.05 per basic and diluted share), compared with a net loss $1.32 million (a loss of $0.04 per basic and diluted share) in the 2007 first quarter.
As at the end of the 2008 first quarter, ARISE had positive working capital of $16.0 million. Cash and equivalents was $6.59 million at end of the first quarter, down from $37.91 million at the 2007 year-end. The decrease is mainly attributable to inventory purchases and inventory prepayments for silicon wafers. The company's inventory at the end of the 2008 first quarter was $27.54 million, compared with $0.86 million at the 2007 year-end. Under the terms of an agreement signed March 11, 2008, the company contracted to purchase approximately 33MWs of silicon wafers between July 2008 and December 2011. The company made a prepayment of about $10 million under the agreement. On March 17, 2008, ARISE purchased silicon wafers for approximately $26 million. Also on March 17, ARISE entered into an inventory credit facility agreement for $14 million with Commerzbank AG. This agreement is in addition to credit facilities previously provided by Commerzbank AG.
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 percent. 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 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
March 31, December 31,
2008 2007
------------- -------------
Assets
Current assets
Cash and cash equivalents $ 6,592,757 $ 37,908,430
Accounts receivable 145,190 254,025
Inventory 27,534,870 855,588
Government assistance receivable 10,799,581 6,096,333
Other receivables 2,418,444 1,477,584
Prepaid expenses 2,862,552 412,270
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50,353,394 47,004,230
Capital assets, net 23,154,615 14,402,403
Long term deposits 12,609,913 5,181,347
Other assets, net 53,084 53,086
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$ 86,171,006 $ 66,641,067
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Liabilities
Current liabilities
Bank loans $ 17,474,418 $ 1,087,835
Accounts payable and accrued liabilities 14,453,328 8,980,796
Deferred revenue 2,320,924 47,263
Unearned government assistance 138,551 2,713,078
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34,387,221 12,828,972
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Shareholders' Equity (Deficiency)
Capital stock 75,316,634 72,857,557
Contributed surplus 5,031,114 4,140,849
Deficit (28,563,963) (23,186,311)
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51,783,785 53,812,095
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$ 86,171,006 $ 66,641,067
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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 March 31,
2008 2007
------------- -------------
Sales $ 175,377 $ 186,801
Cost of goods sold 158,195 170,352
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Gross profit 17,182 16,449
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Expenses
Research and development 1,511,984 443,201
General and administrative 3,109,707 819,937
Selling and marketing 544,173 63,428
Depreciation of capital assets 114,965 866
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5,280,829 1,327,432
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Operating loss (5,263,647) (1,310,983)
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Other expenses (income)
Interest expense (income), net (275,560) 4,718
Foreign exchange loss 387,933 -
Other expense 1,632 -
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114,005 4,718
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Net loss and comprehensive loss (5,377,652) (1,315,701)
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Deficit, beginning of year (23,186,311) (11,579,274)
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Deficit, end of year $(28,563,963) $(12,894,975)
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Loss per share - basic and diluted $ (0.05) $ (0.04)
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ARISE Technologies Corporation
Consolidated Statements of Cash Flows
Unaudited
3 months ended March 31,
2008 2007
------------- -------------
Cash flows from operating activities
Net loss for the year $ (5,377,652) $ (1,315,701)
Items which do not involve cash:
Depreciation of capital assets 110,769 866
Amortization of other assets 4,224 1,788
Issuance of capital stock for services - 214,488
Employee stock-based compensation 1,395,745 166,073
Non-employee stock-based compensation 99,879 -
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(3,767,035) (932,486)
Decrease (increase) in:
Accounts receivable 108,835 27,197
Inventory (26,679,283) 18,121
Other receivables (901,047) -
Prepaid expenses (2,490,094) (84,531)
Accounts payable and accrued liabilities 5,472,534 (212,326)
Deferred revenue 2,273,660 (11,830)
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(25,982,430) (1,195,855)
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Cash flows from financing activities
Issuance of capital stock for cash - 1,392,550
Exercise of warrants and options 1,853,717 473,509
Share subscription receivable - 1,878,600
Proceeds from bank loans 16,386,582 -
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18,240,299 3,744,659
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Cash flows from investing activities
Purchase of capital assets (15,223,110) (316,101)
Change in other assets (4,222) (5,922)
Change in long term deposits (7,428,566) -
Government assistance (917,644) -
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(23,573,542) (322,023)
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Net cash flow (31,315,673) 2,226,781
Cash and cash equivalents, beginning of year 37,908,430 198,222
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Cash and cash equivalents, end of year $ 6,592,757 $ 2,425,003
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Supplemental disclosures of cash flows:
Interest paid $ 48,232 $ 4,718
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Income taxes paid $ - $ -
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ContactsARISE 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
172.67 (1.31%)