Vancouver, BC, Canada – (October 21, 2004) – Carmanah Technologies Corporation (TSX VE: CMH; Berlin and Frankfurt Stock Exchanges: QCX), Victoria, British Columbia, Canada – March 10, 2003 – Carmanah Technologies Corporation (TSX VE: CMH) is pleased to announce its audited results for the years ended December 31, 2002 and 2001.
Highlights for 2002:
- Annual revenue up 91% over 2001 to $6,468,899
- Net profit of $36,393, as compared to net loss in 2001 of $676,498
- Q4 revenue of $1.94 million up 127% over Q4 2001
- Q4 revenue up $309,000 (19%) over Q3 2002
- Average gross profit margin of 56%, up from 53% in 2001
- Revenue growth (91%) outpaced expenditure growth (46%)
- Aggressive investment in both R&D and business development for new markets continued
“Our company has made great strides over the past twelve months, as we continue to expand into many new market sectors”, stated Art Aylesworth, Carmanah’s CEO. “In 2002, we introduced new products into the global public transportation market, the North American railway market and the European roadway market. While continuing to increase our international sales in marine products, we are moving as quickly as we can to meet the worldwide demand for our core technology in a growing number of markets. I am proud of the job our team has done in growing the business aggressively while still managing our bottom line during this ‘ramp up’ year. 2002 was the most impressive year in Carmanah’s history and should provide a strong platform upon which we will build our future”.
SUMMARY OF RESULTS FOR 2002
Carmanah’s total revenues for the 12 months ended December 31, 2002 increased 91% to $6,468,899 compared with $3,373,453 for the preceding year. Revenues were derived from the sale of solar powered light-emitting diode hazard and safety lights. Sales were sourced through a worldwide distribution network and direct sales efforts in key market segments and territories. Revenue growth was achieved through increased investment in direct sales and marketing resources and activities. Sales increased throughout the company’s existing product lines and through the introduction of several new products.
Carmanah’s gross profit margin increased to 56% of sales, a 3% increase over previous year’s 53% gross profit margin. This increase was the result of an aggressive direct sales program. Products sold via direct sales methods were priced at retail, rather than at the wholesale pricing extended to distributors. Direct sales comprised 43% of total sales in fiscal 2002, compared with 22% in fiscal 2001.
Wages and benefits expense represents the Sales and Marketing, Operations and Finance departments. For the year ended December 31, 2002, wages and benefits increased 34% to $1,517,416, compared with $1,135,033 in 2001. This increase was the result of the implementation of a direct sales commission plan in 2002, as well as increase in new hires. Carmanah had 47 Full-Time Equivalent’s (FTE’s) in fiscal 2002, compared with 31 FTE’s in 2001.
Office and administration expenses in 2002 were $684,531, representing a 27% increase over 2001 at $539,360. During the 2002 year, the company moved its sales, operations, and engineering departments into an adjacent building, resulting in increased rent, utilities and general office costs. Given the sales growth experienced in 2002 however, the total office and administration expenses in 2002 were minimal; office and administration represented only 11% of total sales in 2002, as compared to 16% in 2001.
During 2002, research and development expenses of $543,051 represented a 100% increase over the previous year’s $271,485. However, the company did not defer any of its research and development expenses in 2002, whereas it deferred $231,202 in 2001. This adjustment explains the significant increase R&D expenses for 2002.
Sales and marketing expenses in 2002 were $533,041, representing a 166% increase over 2001 at $200,705. The company continued to increase sales and marketing activities for new and existing product lines throughout its worldwide marketplace. Focus was also placed on new market introduction as well as key trade shows and customer contact.
Net income (loss) for 2002 before income tax, depreciation and amortization (EBITDA) was $384,393, compared with ($335,652) for 2001. The 2002 EBITDA was primarily the result of increased sales, improved gross margins and lowered operating costs as a percentage of sales.
Carmanah’s cash balance at December 31, 2002 was $679,100, compared to $1,060,817 at December 31, 2001. Net cash usage from operations and investing activities for the year was $725,281. Financing for the company’s operations was funded primarily from the reserves of original funds raised in the 2001 reverse takeover and a private placement during 2002 in the amount of $237,600. Net working capital at year end for 2002 was $2,006,148, with a current ratio of 2.7:1 and $104,705 of non-current debt obligations.
The overall performance of Carmanah for 2002 was consistent with the objectives setout in the company’s business plan. Carmanah’s revenue growth (91%) outpaced expenditures (46%), resulting in a net profit for 2002 in the amount of $36,393 – without any capitalization of development costs. The company’s performance confirms that the planned investment in 2001 in areas of development, sales, marketing, and infrastructure supported its ability to meet 2002 objectives.
About Carmanah Technologies Inc.
Carmanah is an award winning alternative energy manufacturer specializing in patented solar-powered LED lighting solutions for the marine, transit, roadway, railway, aviation and mining markets. The company has more than 50,000 units installed in 110 countries. The shares of Carmanah Technologies Corporation (parent company) are publicly traded on the TSX Venture Exchange under the symbol “CMH” and on the Berlin and Frankfurt Stock Exchanges under the symbol “QCX”. For more information, please visit www.carmanah.com.
On Behalf of the Board of Directors
Carmanah Technologies Corporation
Praveen Varshney, Director
For further information, please contact:
Corporate Contacts:
Mr. Praveen Varshney, Director
Tel: (604)629-0264
Toll-Free: 1-866-629-0264
Media Contact:Mr. David Davies
Harbourwerks Communications
Tel: (250)382-4332
Investor Relations Contact:
Vanguard Shareholder Solutions
Tel: (604) 608-0824
Toll-Free: 1-800-567-6223
This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are described under the caption “Note Regarding Forward-looking Statements” and “Key Information – Risk Factors” and elsewhere in our Annual Report for the fiscal year ended December 31, 2001, as filed with the U.S. Securities and Exchange Commission and which are incorporated herein by reference. These risks and uncertainties are also described under the caption “Risk Factors” in our Annual Information Form dated December 31, 2001, as filed with the British Columbia Securities Commission and which are incorporated herein by reference. We do not assume any obligation to update the forward-looking information contained in this press release.
CARMANAH TECHNOLOGIES CORPORATION
Consolidated Balance Sheets
(Expressed in Canadian dollars)
December 31, 2002 and 2001
| 2002 | 2001 | ||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | $ 679,100 | $ 1,060,817 | |
| Accounts receivable | 1,366,780 | 382,846 | |
| Inventories | 1,057,666 | 587,439 | |
| Prepaid expenses and deposits | 43,513 | 26,777 | |
| Current portion of advances receivable |
26,844 | 49,472 | |
| 3,173,903 | 2,107,351 | ||
| Advances receivable | 111,500 | 111,500 | |
| Deferred development costs | – | 216,895 | |
| Equipment and leasehold improvements | 471,079 | 279,873 | |
| Patents | 34,154 | 29,487 | |
| $ 3,790,636 | $ 2,745,106 | ||
| Liabilities and Shareholders’ Equity | |||
| Current liabilities: | |||
| Accounts payable and accrued liabilities |
947,014 | 340,876 | |
| Bank loan | 140,000 | 30,000 | |
| Deferred revenue | 11,042 | – | |
| Current portion of long-term debt |
21,684 | 27,790 | |
| Current portion of obligations under capital lease | 48,015 | 25,800 | |
| Future income taxes | – | 18,000 | |
| 1,167,755 | 442,466 | ||
| Long-term debt | 55,139 | 17,143 | |
| Obligations under capital leases | 49,566 | 30,304 | |
| 1,272,460 | 489,913 | ||
| Shareholders’ equity: | |||
| Share capital | 3,256,336 | 3,029,746 | |
| Contributed surplus | 26,188 | 26,188 | |
| Deficit | (764,348) | (800,741) | |
| 2,518,176 | 2,255,193 | ||
| $ 3,790,636 | $ 2,745,106 | ||
CARMANAH TECHNOLOGIES CORPORATION
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
Years ended December 31, 2002 and 2001
| 2002 | 2001 | ||
| Sales | $ 6,468,899 | $ 3,373,453 | |
| Cost of Sales | 2,808,745 | 1,549,306 | |
| 3,660,154 | 1,824,147 | ||
| Operating Expenses: | |||
| Wages and benefits | 1,517,416 | 1,135,033 | |
| Office and administration | 684,531 | 539,360 | |
| Research and development | 543,051 | 271,485 | |
| Sales and marketing | 533,041 | 200,705 | |
| Bank charges and interest | 49,086 | 38,912 | |
| Amoritization of: | |||
| Equipment and leasehold improvements | 140,014 | 111,129 | |
| Deferred development costs | 216,895 | 217,588 | |
| Patents and other intangible assets | 9,091 | 12,129 | |
| $ 3,693,125 | $ 2,526,341 | ||
| Operating loss | (32,971) | (702,194) | |
| Interest and other income | 51,364 | 25,696 | |
| Earnings (loss) before income taxes | 18,393 | (676,498) | |
| Income tax expense (recovery): | |||
| Future | (18,000) | – | |
| Net earnings (loss) | 36,393 | (676,498) | |
| Deficit, beginning of year | (764,348) | (800,741) | |
| Deficit, end of year | (764,348) | (800,741) | |
| Earning (loss) per share – basic and diluted |
$ 0.00 | $ (0.04) | |
| Weighted average number of shares outstanding |
19,650,884 | 15,460,951 | |