Carmanah Announces Financial Results for 2003

March 10, 2004
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Vancouver, BC, Canada – (October 21, 2004) – Carmanah Technologies Corporation (TSX VE: CMH; Berlin and Frankfurt Stock Exchanges: QCX), is pleased to announce its audited results for the years ended December 31, 2003 and 2002.

Highlights for 2003:

  • Annual revenue up 42% over 2002 to $9,220,018
  • Net earnings of $22,843 and operating income of $111,798 (EBITDA of $260,936)
  • Q4 revenue of $3.3 million, up 74% over Q4 2002
  • Q4 revenue up $1 million (43%) over Q3 2003
  • Record outstanding orders of $1.1 million at year end
  • Revenue growth (42%) outpaced expenditure growth (26%)
  • Aggressive investment continued in both R&D and business development for new markets

“2003 was a year where Carmanah received strong validation for its products in new markets in addition to its core marine market,” states Art Aylesworth, Carmanah’s CEO. “More than $2 million of our product was sold into the International aviation market, and our investments made to introduce solar LED technology into the UK transit industry paid dividends in terms of a $1.6 million order. We also saw continued growth in our core marine lighting business and pivotal approvals from North American Coast Guard authorities.”

In the last quarter of 2003, Carmanah also completed its first major transaction by acquiring AVVA Technologies Inc. to further expand the Company’s LED-based technology and expedite the route to market for roadway technologies.

“2003 was a very successful year,” states Aylesworth. “In the context of our business plan, Carmanah’s efforts during that time firmly established our Company, our technology, and our ability to enter new and varied markets. The momentum created during the year leaves Carmanah well positioned for its anticipated growth in future years.”


Carmanah’s total revenues for the 12 months ended December 31, 2003 increased 42% to $9,220,018 compared with $6,468,899 for the preceding year. Revenues were derived from the sale of its existing product line of solar powered light-emitting diode hazard and safety lights to marine, roadway and aviation markets, and from the sale of new products primarily consisting of the illuminated bus shelters and bus stops to transit markets. The acquisition of AVVA Technologies Inc., late in the fiscal year contributed to Q4 revenues, representing 8% of total 2003 sales. Sales were sourced through a worldwide distribution network and direct sales efforts in these key market segments and territories.

While Carmanah continued to enjoy exceptional growth in 2003, the decline of the US dollar impacted the Company’s revenues, as a significant portion of its sales were in US dollars. The US dollar declined from an average rate of 1.57 in year 2002 to an average rate of 1.40 in year 2003, resulting in a reduction of approximately $800,000 in Carmanah’s reported revenues.

Management is pleased to announce that outstanding orders at the end of 2003 were at a record high of $1.1 million. This was approximately 140 times the outstanding orders at the end of 2002, and was the result of strong sales momentum in the later half of 2003, particularly in December.

Carmanah’s gross profit margin was 51% of sales, compared to previous year’s 56%. Once again, the difference was linked to the shift in the US dollar. The Company’s cost of goods were sourced primarily in Canadian dollars. Gross margin becomes affected when US dollar sales are booked at a declining exchange rate. To mitigate the erosion of margins in 2003, Carmanah raised its pricing and sold in currencies other than the US dollar where possible. The Company also took advantage of its revenue growth to negotiate more favourable volume pricing on component supply.

Wages and benefits expense represents Carmanah’s Sales and Marketing, Operations and Finance departments. For the year ended December 31, 2003, wages and benefits increased 26% to $1,919,084, compared with $1,517,416 in 2002. This increase was the result of an increase in new hires to support sales growth. As a percentage of sales, wages and benefits expense represents 21% of sales in 2003, compared with 23% of sales in 2002. Carmanah had 26 Full-Time Equivalents (FTE’s) in these departments during fiscal 2003, compared with 23 FTE’s in 2002. Carmanah had 53 Full-Time Equivalents (FTE’s) in the entire company during fiscal 2003, compared with 41 FTE’s in 2002.

Office and administration expenses in 2003 were $871,994, representing a 27% increase over 2002 at $684,531. During the entire 2003 fiscal year, Carmanah was operating out of approximately 19,205 square feet, whereas the Company operated out of this total space for only the latter half of 2002. The first half of 2002 comprised approximately 8,841 square feet. The increase in space for the entire fiscal year 2003, as well as the increased staffing levels, resulted in greater rent, utilities and general office costs. Given the sales growth experienced in 2003 however, the total office and administration expenses in 2003 actually decreased slightly as a percentage of sales to 9% of total sales in 2003, as compared to 11% of total sales in 2002.

During 2003, research and development expenses of $787,309 represented a 45% increase over $543,051 in the previous year. The continued investment in (1) research for existing product enhancements and (2) new product development has enabled Carmanah to turn out prototypes and products at a faster rate. This ability to keep up with market demands for technology enhancements and new product offerings has rewarded the Company with its current sales momentum. Carmanah will continue to be proactive with its investment in research and development as the Company works with key market segments on new opportunities. As a percentage of sales, research and development expenses grew at a consistent level in 2003 over 2002, with total research and development expense for both years representing 8% of total sales.

Sales and marketing expenses in 2003 were $753,360, representing a 41% increase over 2002 at $533,041. The Company continued to increase sales and marketing activities for new and existing product lines throughout its worldwide marketplace. In addition, a significant portion of the overall sales and marketing investment was allocated to markets and products where the Company has identified future revenue opportunity. Sales and marketing expense continued to grow as a percentage of sales at a consistent level, with sales and marketing expense representing 8% of total sales for both 2003 and 2003 fiscal years.

Net earnings for 2003 before income tax, depreciation and amortization (EBITDA) were $260,936, compared with $384,393 for 2002. There were two expense adjustments booked in 2003 that have no comparatives in 2002: a one-time write-down of a pre-reverse takeover (“RTO”) receivable in the amount of $111,502, and an adjustment for stock-based compensation resulting from stock options exercised by non-employees in the amount of $27,288. Furthermore, the impact of the US dollar slide on recorded sales also affected Carmanah’s income. The Company recorded net earnings of $22,843.

Carmanah’s cash balance at December 31, 2003 was $1,693,069, compared to $679,100 at December 31, 2002. Net cash usage from operations and investing activities was $948,766. Financing for the Company’s operations was funded primarily from a private placement during 2003 in the amount of $1,480,000, and the exercise of warrants and stock options in the amount of $595,029. Net working capital at the end of 2003 was $4,168,728, with a current ratio of 2.9:1 and $104,981 of non-current debt obligations.

The overall performance of Carmanah for 2003 was consistent with the objectives setout in the Company’s business plan. Carmanah’s revenue growth (42%) continues to outpace its expenditures (26%), even with the impact of the decline in the US dollar. The Company maintained profitability without any capitalization of development costs and after writing down a pre-RTO debt. The Company’s performance confirms that the planned investment in 2002 in areas of R&D, sales, marketing, and infrastructure, supported its ability to meet its 2003 objectives and to develop momentum for 2004 and future years.

About Carmanah

Carmanah is an award winning alternative energy manufacturer specializing in patented solar-powered LED lighting solutions for the marine, aviation, transit, roadway, railway and mining markets. The company currently has more than 80,000 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

On Behalf of the Board of Directors

Carmanah Technologies Corporation

Praveen Varshney, Director

For further information, please contact:

Carmanah Contacts:

Mr. Praveen Varshney, Director

Tel: (604)629-0264

Toll-Free: 1-866-629-0264

Mr. Mark Komonoski

Investor Relations

Tel: (403)861-8384

Toll-Free: 1-800-665-3749

Media:Mr. David Davies

Tel: (250)382-4332

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.


Consolidated Balance Sheets

(Expressed in Canadian dollars)

December 31, 2003 and 2002

    2003 2002
Current assets:
Cash and cash equivalents $ 1,693,069 $ 679,100
Accounts receivable 2,698,061 1,366,780
Inventories 1,904,872 1,057,666
Prepaid expenses and deposits 53,376 43,513
Current portion of
  advances receivable
6,349,378 3,173,903
Advances receivable 111,500
Equipment and leasehold improvements 871,683 471,079
Intangible assests, net 190,320 34,154
Goodwill 3,072,173
Future income taxes 190,114
$ 10,673,668 $ 3,790,636
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and
  accrued liabilities
1,648,841 947,014
Bank loan 383,332 140,000
Deferred revenue 71,228 11,042
Current portion of
  long-term debt
21,814 21,684
Current portion of obligations under capital lease 55,435 48,015
2,180,650 1,167,755
Long-term debt 33,325 55,139
Obligations under capital leases 71,656 49,566
2,285,631 1,272,460
Shareholders’ equity:
Share capital 8,831,345 3,256,336
Contributed surplus 298,197 26,188
Deficit (741,505) (764,348)
8,388,037 2,518,176
$ 10,673,668 $ 3,790,636


Consolidated Statements of Operations and Deficit

(Expressed in Canadian dollars)

Years ended December 31, 2003 and 2002

    2003 2002
Sales $ 9,220,018 $ 6,468,899
Cost of Sales 4,455,250 2,808,745
4,764,768 3,660,154
Operating Expenses:
Wages and benefits 1,919,084 1,517,416
Office and administration 871,994 684,531
Research and development 787,309 543,051
Sales and marketing 753,360 533,041
Bank charges and interest 91,537 49,086
Amoritization of:
   Equipment and leasehold improvements 209,416 140,014
   Deferred development costs 216,895
   Intangible assets 20,270 9,091
$ 4,652,970 $ 3,693,125
Operating loss 111,798 (32,971)
Interest and other income 30,954 51,364
Write-down of advances receivable (111,502)
Earnings before income taxes 31,250 18,393
Income tax expense (recovery):
Future 8,407 (18,000)
Net earnings (loss) 36,393 (676,498)
Deficit, beginning of year (764,348) (800,741)
Deficit, end of year (741,505) (764,348)
Earning (loss) per share –
   basic and diluted
$ 0.00 $ 0.00
Weighted average number
   of shares outstanding
   Basic 22,826,155 19,650,884
   Diluted 23,743,404 20,562,279