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ARISE Technologies Corporation Reports 2007 Year-End Results
(Canada Newswire English Via Thomson Dialog NewsEdge) Attention Business/Financial Editors
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- Company confirms it is on schedule to start production in April of
photovoltaic (PV) cells at new manufacturing plant in Germany.
- Reports progress throughout the year in carrying out its strategic
plans, including the forging of important development partnerships
and successful funding and financing agreements.
- R&D investment rises to $3.8 million in 2007 from $0.6 million in
2006 as the company leverages its development agreements and focuses
on developing proprietary technologies for high-efficiency PV cells.
>>
WATERLOO, ON, March 18 /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 year and fourth quarter ended December 31, 2007. Financial results conform to Canadian generally accepted accounting principles (GAAP) and all currency amounts are in Canadian dollars.
"As we issue this announcement of our 2007 financial results, we are only weeks away from meeting our scheduled production start up of photovoltaic (PV) cells at our new manufacturing plant in Bischofswerda, Germany on which construction began last August. This is indicative of the exciting progress that ARISE Technologies made during 2007 and is continuing to make in the first few months of this year," said Bart Tichelman, President and Chief Executive Officer.
"During the year, we completed three successful equity financings, further strengthened our management team in a number of senior positions, including a new Chief Financial Officer, and concluded a number of strategic partnership agreements that should contribute to the future success of ARISE as a leader in our industry. Our pace of progress quickened toward the end of 2007 and has continued in the first quarter of 2008," he said.
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Fourth-Quarter 2007 Highlights
- ARISE Germany, the company's wholly owned subsidiary, received from
Saechsische AufbauBank two payments totaling $6.2 million of a
$17.9 million incentive grant to the company in support of its new
German PV cell manufacturing plant.
- ARISE added a second wafer supplier, signing an agreement with Sino-
American Silicon.
- The company signed letters of intent for solar farms in Ontario that,
if completed, will require installing 44MW of PV systems over the
next two to three years in six projects.
- The company signed a contribution agreement with Sustainable
Development Technology Canada (SDTC) under which SDTC is funding
about one-third of the eligible project costs up to $6.4 million, on
the successful completion of milestones. SDTC's contribution is
leveraged by a $13.2 million funding commitment from a consortium,
led by ARISE. The high-purity silicon to be produced using the
silicon feedstock process that ARISE is developing is essential to
achieving high-efficiency PV cells.
- Effective December 21, 2007, ARISE graduated from the TSX Venture
exchange to listing on the Toronto Stock Exchange
- In October, ARISE completed a $34.5 million bought deal common share
offering.
- In September, ARISE Germany completed definitive agreements
establishing credit facilities of up to $67.9 million with
Commerzbank AG.
Subsequent Highlights
- The company further strengthened its management team with the
appointment of Bart Tichelman as President and Chief Executive
Officer, as 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 approximately $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 contracted to supply from its new PV cell plant SOLON
AG of Germany with 212 megawatts of PV cells over a five-year period.
Shipments are to commence in the 2008 second quarter.
- The company's Silicon Feedstock Mini Pilot Plant went operational at
its Waterloo facility. This is considered a significant step in
moving from the laboratory to production-scale for the proprietary
technology that ARISE is developing for the Silicon Feedstock
process.
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Financial Highlights
As ARISE Technologies is an emerging developer and manufacturer of PV cells, with production scheduled to begin in April 2008, it is investing significant funds in the development of its business. During this development and start-up period, the company does not expect to be profitable. Prior to starting up PV cell manufacturing, the company's revenue is being generated solely by its Systems Division, which is focused mainly on the grid connected market in Ontario.
Revenue for 2007 was $1.162 million, up 59.2 percent from $0.7 million in 2006. Fourth-quarter 2007 revenue was $0.314 million, more than double the $0.151 million in the prior-year period. All 2007 revenue is the result of sales by the Systems Division. The increased revenue for the 2007 fourth-quarter and for the year is attributable to the West Toronto Initiative for Solar Energy (WISE) program, which in June 2007 selected ARISE as its vendor. The company expects the Ontario incentive program to increase the use of solar energy supplied to the public electrical grid. The grid connect market will continue to be a significant opportunity for further sales.
The net loss for 2007 was $11.5 million ($0.18 per share), including $4.1?million ($0.04 per share) in the fourth quarter. In 2006, the company's net loss amounted to $2.9 million ($0.11 per share), including $0.9 million ($0.04 per share) in the fourth quarter.
A significant factor contributing to the increased loss in 2007 was higher research and development (R&D) expense, mainly for the company's silicon and PV programs. R&D expenses for fiscal 2007 and the fourth quarter of 2007 were $3.8 million and $0.7 million, respectively, compared with $0.6?million and $0.2 million in the comparable 2006 periods.
The company's general and administrative expenses also markedly increased in 2007 to $7.3 million, including $3.1 million in the fourth quarter. This compares with $2.1 million in 2006, including $0.6 million in the fourth quarter. The increases are the result of higher payroll and professional fees, as well as significantly higher stock-based compensation costs. The operations of ARISE Germany, established in March 2007, required $1.9 million in 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 in 2007 to $0.8 million from $0.3 million in 2006. Fourth-quarter 2007 selling and marketing expenses were $0.4 million, compared with less than $63,000 in the prior-year period.
At the 2007 year-end, ARISE had positive working capital of $34.3?million. Cash and equivalents was $37.9 million at the 2007 year-end, up from $9.0 million as at September 30, 2007, and compared with a little more than half a million dollars at the end of 2006. The increases reflect the financing activity during 2007, including net proceeds from the sale of equity amounting to $58.7 million, plus $4.4 million from the exercise of warrants and options. Total net proceeds for the year were $63.1 million.
The company believes that its cash and equivalents on hand together with its various funding and financing agreements will enable it to meet its near-term requirements. To secure silicon wafers required for its PV plant, the company may have to stock-pile and pay for available supply in advance of needing it for production and/or make prepayments on supply agreements as has become industry practice. Management anticipates being able to offset some of the funds required for such inventory with customer prepayments thereby limiting the impact of wafer stock-piling and prepayments on existing working capital. The company anticipates that any additional capital, if needed, will be sourced through a combination of additional debt and equity.
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 Technology Division is developing a leading, high-efficiency photovoltaic cell based on proprietary technology. The division is completing construction of its first manufacturing plant, located in Bischofswerda, Germany and expects to begin shipping to PV module makers in April 2008. The PV Silicon Technology Division is focusing on improving PV cell efficiency to make the technology more cost-effective and also to reduce or eliminate supply constraints. The PV Systems Division builds solar farms in Ontario and will be leveraging ARISE's vertical integration capability.
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.
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ARISE Technologies Corporation
Consolidated Balance Sheets
As at December 31,
2007 2006
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Assets
Current assets
Cash and cash equivalents (Note 7) $ 37,908,430 $ 198,222
Accounts receivable 254,025 179,927
Share subscription receivable - 1,878,600
Inventory 855,588 374,262
Government assistance receivable
(Note 16) 6,096,333 -
Prepaid expenses 1,949,081 36,648
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47,063,457 2,667,659
Capital assets, net (Note 8) 14,402,403 83,841
Long term deposits (Note 8) 5,181,347 -
Other assets, net 53,086 13,241
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$ 66,700,293 $ 2,764,741
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Liabilities
Current liabilities
Bank loans (Note 9) $ 1,087,835 $ -
Accounts payable and accrued liabilities
(Note 10) 8,980,796 885,808
Deferred revenue 47,263 66,028
Unearned government assistance (Note 16) 2,713,078 -
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12,828,972 951,836
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Commitments and contingencies (Notes 14
and 19)
Shareholders' Equity (Deficiency)
Capital stock (Note 12a) 72,857,557 11,433,506
Contributed surplus (Note 12b) 4,140,849 1,958,673
Deficit (23,127,085) (11,579,274)
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53,871,321 1,812,905
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$ 66,700,293 $ 2,764,741
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Approved by the board
(signed) Bart Tichelman ............. Director
(signed) Harold Alexander ........... Director
ARISE Technologies Corporation
Consolidated Statements of Loss and Deficit
12 months ended December 31,
2007 2006
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Sales $ 1,162,055 $ 730,147
Cost of goods sold 1,087,008 591,942
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Gross profit 75,047 138,205
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Expenses
Research and development 3,838,052 578,639
General and administrative 7,253,416 2,065,063
Selling and marketing 821,053 251,729
Depreciation of capital assets 25,374 2,559
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11,937,895 2,897,990
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Operating loss (11,862,848) (2,759,785)
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Other expenses (income)
Gain on lawsuit settlement and disposal
of capital assets - (50,573)
Interest expense (income), net (581,626) 95,354
Foreign exchange loss 199,588 -
Amortization of warrants 0 92,375
Other expense 67,000
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(315,038) 137,156
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Net loss for the year (11,547,810) (2,896,941)
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Deficit, beginning of year (11,579,274) (8,682,333)
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Deficit, end of year $(23,127,085) $(11,579,274)
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Loss per share - basic and diluted
(Note 13) $ (0.18) $ (0.11)
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ARISE Technologies Corporation
Consolidated Statements of Cash Flows
12 months ended December 31,
2007 2006
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Cash flows from operating activities
Net loss for the year $(11,547,811) $ (2,896,941)
Items which do not involve cash:
Depreciation of capital assets 25,375 2,559
Amortization of other assets 9,292 12,854
Non-cash expense associated with warrants - 92,375
Issuance of capital stock for services 214,488 2,187,472
Stock-based compensation 2,078,289 601,641
Fair value of options to non-employees 152,361 -
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(9,068,006) (39)
Decrease (increase) in:
Accounts receivable (74,098) (139,122)
Inventory (481,326) (283,667)
Prepaid expenses (1,912,433) (23,506)
Accounts payable and accrued liabilities 8,094,988 (1,334,729)
Deferred revenue (18,765) (2,359)
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(3,459,640) (1,783,422)
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Cash flows from financing activities
Issuance of capital stock for cash 61,210,096 3,736,952
Share issuance costs (4,435,432) -
Exercise of warrants and options 4,386,424 368,975
Share subscription receivable 1,878,600 (1,878,600)
Repayment of notes payable - (160,357)
Proceeds from bank loans 1,087,835 -
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64,127,523 2,066,970
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Cash flows from investing activities
Purchase of capital assets (26,708,880) (80,748)
Change in other assets (49,137) (7,100)
Change in long term deposits (5,181,347) -
Government assistance 8,981,689 -
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(22,957,675) (87,848)
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Net cash flow 37,710,208 195,700
Cash and cash equivalents,
beginning of year 198,222 2,522
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Cash and cash equivalents, end of year $ 37,908,430 $ 198,222
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Supplemental disclosures of cash flows:
Interest paid $ 27,147 $ 229,997
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Income taxes paid $ - $ -
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%SEDAR: 00017494E
ARISE 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
Copyright ? 2008 Canada Newswire Ltd. All Rights Reserved.
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