ARISE Technologies Reports 2008 First-Quarter Results; - 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
Canada NewsWire, May 15, 2008 Thursday 5:00 PM Eastern Time
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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 |
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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 |
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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 |
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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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%SEDAR: 00017494E
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