Carmanah Announces Second Quarter Results

August 6, 2003
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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 second quarter results for the 3 month periods ended June 30, 2003 and 2002.

Carmanah’s total revenues for the three months ended June 30, 2003 increased to $1,608,024, compared to $1,513,733 for the same period in 2002. Due to sales timing, the Company also possessed a production backlog of $186,000 at the end of the quarter. Net income for the quarter was $(82,887) compared to $31,140 for the same period in 2002.

“This has been an interesting and challenging quarter for the Company”, states Art Aylesworth, Carmanah’s CEO. “On one hand the sales of our marine products were excellent and continue to meet or exceed forecasts. Sales in the secondary markets for our navigation and hazard markers, such as aviation, were also very positive. Interest in our technology in general continues to rise.

Three issues, however, have had an effect on our overall revenue growth and profitability for the quarter. First, the 11% upward shift in the Canadian dollar relative to the US dollar has cost the Company an equivalent reduction in top line revenues as most sales are in US dollars. Second, the general state of the US economy has delayed many significant deals in our pipeline, as capital purchases are pushed back due to tightened US budgets. Finally, we underestimated the time required to develop substantial ‘roll-out’ type sales in the transit market for our i-STOP(tm) and i-SHELTER(tm) product lines. Our targeted timelines for roll-out sales were based on how rapidly our transit clients were accepting field trial units.

To compensate for the upswing in the Canadian dollar, we have adjusted our pricing scheme and have focused attention at reducing our overall manufacturing costs. Regardless of US economic issues, we are confident that the overall opportunities for our technology in North America will outweigh the soft economy and sales will continue to grow. To assist our transit clients with purchase timing for their large-scale orders, we are working to provide financing alternatives that accommodate their budgetary constraints. We are optimistic that our significant investment into the transit market will be rewarded.”

It is important to note that Carmanah’s sales prospect pipeline remains at its highest level in the Company’s history. “There are a number of significant projects underway that should complete before the end of the year that will contribute to strong 2003 financial results. Carmanah has done a good job of introducing itself to several market sectors on a global scale and the space we’ve identified as ‘solar-powered LED lighting’ is clearly a rising star. The opportunities continue to expand and we are pleased with our development to-date”, states Aylesworth.


3 Months Ended June 30

Carmanah’s total revenues for the three months ended June 30, 2003 increased 6% to $1,608,024, compared to $1,513,733 for the same period in 2002. Revenues are derived from the sale of solar-powered LED (light emitting diode) hazard, safety and navigation lights. Sales are sourced through a worldwide distribution network and direct sales efforts in key market segments and territories.

Net income was $(82,887) compared to $31,140 for the same period in 2002. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $(14,174) compared with $143,158 for the same period in 2002.

Carmanah’s gross profit margin was 56% of sales, a 1% reduction over previous year’s 57% gross profit margin for the second quarter. This decrease was primarily the result of the decline of the US dollar, relative to the Canadian dollar, as the Company’s product pricing was pegged in US dollars. It is important to note that the 56% represented a 3.5% gain in gross margin over the 52.5% recorded during the first three months ended March 31, 2003. This gain was primarily due to adjustments made to the Company’s purchasing practices.

6 Months Ended June 30

Carmanah recorded a record $3,514,502 in revenues. This was an increase of 21% over the same period in 2002 at $2,894,777.

Direct cost of goods totaled $1,608,631 as compared to $1,248,166 for the six months ended June 30, 2002. Gross profit as a percentage of sales was 54% as compared to 56% during the same period in 2002.

Sales and marketing expenses in 2003 were $296,967, representing a 13% increase or $34,285 over 2002 at $262,682. Carmanah continues sales and marketing activities for new and existing product lines throughout its worldwide marketplace. It is important to note that much of the Company’s sales and marketing resources are invested in emerging markets, such as transit, aviation and roadways. These markets are expected to realize significant future revenues, but offer minimal contribution to the budget for 2003.

During the first half of 2003, research and development expenses of $344,722 represented an 8% increase over the previous year’s $319,693. The $344,722 research and development expense incurred to June 30, 2003 is net of eligible expenses recovered under a grant awarded to the Company by Sustainable Development Technology Canada. Under the terms of the agreement, the Company will be reimbursed for certain research and development costs incurred to develop and commercialize specific projects to a maximum contribution of $500,000. As at June 30, 2003, eligible research and development expenses in the amount of $124,690 were recovered. As a percentage of sales, research and development expenses for the six months ended June 30, 2003 were 13% (before grant recovery), whereas they were 11% for the same period in 2002.

Wages and benefits expense increased 34% to $878,169, compared with $655,972 for the same period in 2002. This increase is the result of an increase in sales and administrative staff in support of planned sales growth. The Company also hired a Vice President of Sales and Marketing in July 2002, whose wage cost is not reflected in the June 30, 2002 comparative figures.

Office and administration expenses were $345,265, representing a 32% increase over 2002 at $262,185. During the first half of 2002, Carmanah was operating out of one building. It has since expanded into an adjacent building, resulting in increased rent, utilities and general office costs.

Net income was $(69,972) compared to $6,560 for the same period in 2002. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $49,709, compared with $191,738 for the same period in 2002.

Carmanah’s cash and cash equivalents at June 30, 2003 were $1,561,375, compared to $679,100 at December 31, 2002. The increase is due primarily to receipt of funds raised on the issuance of 2,000,000 shares at $0.74, resulting in net proceeds of $1,264,519. Approximately $557,000 of the cash usage is the result of increased inventory levels, acquisition of capital equipment and leasehold improvements, and paying down the Company’s line of credit. The Company’s net working capital at June 30, 2003 is $3,399,648 (current ratio of 6.10:1) as compared to $2,006,148 (current ratio of 2.71:1) at December 31, 2002.

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

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

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

June 30, 2003 and December 31, 2002

(Unaudited – Prepared by Management)

    June 30,
Current assets:
Cash and cash equivalents $ 1,561,375 $ 679,100
Accounts receivable 1,027,955 1,366,780
Inventories 1,396,825 1,057,666
Prepaid expenses and deposits 55,950 43,513
Current portion of
  advances receivable
23,000 26,844
4,065,105 3,173,903
Advances receivable 90,502 111,500
Equipment and leasehold improvements 502,528 471,079
Patents 37,443 34,154
$ 4,695,578 $ 3,790,636
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and
  accrued liabilities
597,445 947,014
Bank loan 30,000 140,000
Deferred revenue 11,042
Current portion of
  long-term debt
10,858 21,684
Current portion of obligations under capital lease 25,014 48,015
Due to related parties 2,140
665,457 1,167,755
Long-term debt 55,139 55,139
Obligations under capital leases 49,566 49,566
Shareholders’ equity:
Share capital 4,695,350 3,256,336
Contributed surplus 64,386 26,188
Deficit (834,320) (764,348)
3,925,416 2,518,176
$ 4,695,578 $ 3,790,636


Consolidated Statements of Operations and Deficit

For the six months ended June 30, 2003 and 2002

(Unaudited – Prepared by Management)

    For the six months ended,
June 30,
    2003 2002
Sales $ 3,514,502 $ 2,894,777
Cost of Sales 1,608,631 1,248,166
1,905,871 1,646,611
Operating Expenses:
Wages and benefits 878,169 655,972
Office and administration 345,265 262,185
Research and development 344,722 319,693
Sales and marketing 296,967 262,682
Bank charges and interest 39,049 21,060
Amoritization of:
   Equipment and leasehold improvements 75,859 48,714
   Deferred development costs 111,249
   Patents and other intangible assets 4,773 4,155
$ 1,984,804 $ 1,685,710
Operating loss (78,933) (39,099)
Interest and other income 8,961 45,659
Net earnings (loss) for the period (69,972) 6,560
Deficit, beginning of period (764,348) (800,741)
Deficit, end period (834,320) (794,181)
Earning (loss) per share –
   basic and diluted
$ (0.03) $ 0.000
Weighted average number
   of shares outstanding
21,793,688 20,480,113