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Manufacturing Results
ARISE Technologies Corporation Reports 2007 Year-End Results
- 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 - ARISE Technologies Corporation, posted a net loss for 2007 of $11.5 million ($0.18 per share) and reaffirmed that it is dedicated to becoming a leader in high-performance, cost-effective solar technology.
Financial results for the year and fourth quarter ended December 31, 2007, follows. 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.
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.
>>
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.
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