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Carmanah earns $263,422 in Q1 2005


2005-04-21 11:49 ET - News Release

Mr. Praveen Varshney reports

CARMANAH ANNOUNCES FINANCIAL RESULTS FOR Q1 2005

Carmanah Technologies Corp. has released its first quarter results for the three months ended March 31, 2005, and 2004.

Highlights for the quarter:


record first quarter 2005 revenues of $4,849,542;
record first quarter 2005 orders booked of $6,089,305;
record order backlog at the end of the first quarter in the amount of $2,839,576;
year-to-date gross profit margin at 52 per cent, consistent with the average gross profit margin for 2004;
first quarter 2005 net income of $263,422; and
first quarter 2005 EBITDA (earnings before interest, taxes, depreciation and amortization) of $325,190.

"With a record $4.8-million in product delivered and over $6-million in orders booked during our first quarter, Carmanah is on track towards realizing its sales goals for 2005," states Art Aylesworth, Carmanah`s chief executive officer. "We are seeing a more balanced contribution of revenues from each of our vertical markets. In particular light-emitting diode signs, aviation products and transit each experienced exceptional growth."

Summary of results

Carmanah`s total revenues for the three months ended March 31, 2005, were $4,849,542, compared with $4,113,701 for the same period in 2004. Revenues were derived from the sale of solar-powered LED lighting illumination products to the marine, aviation, transit and roadway markets, as well as from the sale of LED edge-lit signs to point-of-purchase and gaming markets. Sales were sourced through both a worldwide distribution network and direct sales efforts.

The company is seeing positive sales momentum developing this quarter with the size and number of orders ramping up quickly through the latter part of this quarter. The company took in a record $6,089,305 in orders booked during the quarter, representing a 50-per-cent increase over bookings from the same period 2004. This also resulted in the company closing the first quarter of 2005 with record outstanding orders in the amount of $2,839,576.

Carmanah`s gross profit margin achieved in the first quarter was 52 per cent of sales, compared with 53 per cent for the same period in 2004 (annual gross profit margin for the 2004 fiscal year was 52 per cent).

Wages and benefits expense for the three months ended March 31, 2005, increased 28 per cent to $1,030,499, compared with $804,941. As a percentage of sales, wages and benefits expense represented 21 per cent of sales in the first quarter of 2005, compared with 20 per cent of sales in the first quarter of 2004. In support of planned growth and expansion throughout the balance of 2005, the company has been focused on broadening and strengthening its executive and middle management teams, resulting in increased senior staffing levels. Furthermore, the company has invested in staffing its United Kingdom office and continues to hire administrative staff in support of increased volumes and sales growth.

Office and administration expenses in first quarter 2005 were $450,890, representing an 83-per-cent increase over same period in 2004 of $246,802. The company`s investment in opening a London office through December, 2004, contributed approximately $60,000 to this variance. A severance expense added a further $37,197. Management expects that as the company`s sales forecast is met during the year, these expenses as a percentage of sales will come down.

During the first quarter 2005, research and development expenses of $363,225 represented a 7-per-cent increase over $337,903 in the comparative quarter. The continued investment in research for existing product enhancements and 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 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 decreased in the first quarter of 2005 to 7 per cent of sales, compared with the first quarter of 2004 at 8 per cent of total sales.

Sales and marketing expenses in first quarter 2005 were $357,625, representing a 22-per-cent increase over same period in 2004 of $293,773. 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 significant future revenue opportunity. Sales and marketing expense maintained at a consistent level of 7 per cent of total sales for both the 2005 and 2004 quarters.

The company used a portion of its carry forward investment tax credits, tax losses and SRED pools in order to minimize any current tax expense. The future income tax effect arising from the use of these items has been offset against available tax losses not previously recognized.

Net earnings for the first quarter of 2005 were $263,422 (5 per cent of sales), compared with $369,492 (9 per cent of sales) in the first quarter of 2004. The company started 2005 aggressively setting up its United Kingdom branch operations, hiring management and support staff, and setting up infrastructure required to carry it through the year. The upfront costs incurred from this resulted in a fairly significant increase in the first quarter of 2005 operating expenses as a percentage of sales, compared with the same period in 2004. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $325,190 for the three months ended March 31, 2005, as compared with $483,135 for the same period in 2004.

Carmanah`s cash, cash equivalents and short-term investments at March 31, 2005, were $8,769,662, compared with $7,751,411 at Dec. 31, 2004. Net cash usage from operations and investing activities was $61,058. During the quarter, the company raised $1,085,620 from the exercise of warrants and stock options. Net working capital at the end the first quarter of 2005 was $13,019,439, with a current ratio of 8.9:1 and $11,202 of non-current debt obligations.


CONSOLIDATED STATEMENT OF
OPERATIONS AND DEFICIT
Three months ended March 31

2005 2004

Sales $ 4,849,542 $ 4,113,701

Cost of sales 2,322,113 1,947,147
----------- -----------
2,527,429 2,166,554
----------- -----------
Operating
expenses

Wages and
benefits 1,030,499 804,941
----------- -----------
Office and
administration 450,890 246,802

Research and
development 363,225 337,903

Sales and
marketing 357,625 293,773

Bank charges
and interest 18,618 29,527

Amortization
of equipment
and leasehold
improvements 74,691 79,039

Intangible
assets 10,869 9,625
----------- -----------
2,306,417 1,801,610
----------- -----------
Operating
income 221,012 364,944

Other income

Interest and
other income 42,410 4,548

Earnings
before
income taxes 263,422 369,492

Income tax
expense
(recovery)

Current 114,000 206,000

Future (114,000) (206,000)
----------- -----------
Net earnings 263,422 369,492
----------- -----------
(Deficit),
beginning
of period,
as previously
reported (322,384) (741,505)
----------- -----------
Adjustment
to reflect
change in
accounting
for stock
compensation
expense - (173,702)

(Deficit),
beginning
of period,
restated (322,384) (915,207)

(Deficit),
end of
period $ (58,962)$ (545,715)
=========== ===========
Earnings
per share --
basic and
fully
diluted $ 0.01 $ 0.01
=========== ===========

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Carmanah to acquire Soltek Powersource for $10-million


2005-05-25 18:43 ET - News Release

Mr. David Davies reports

CARMANAH TECHNOLOGIES CORPORATION TO ACQUIRE SOLTEK POWERSOURCE LTD.

Carmanah Technologies Corp. and Soltek Powersource (SPS) Ltd. have entered into a definitive agreement whereby Carmanah will acquire all the issued and outstanding shares of SPS, a leading privately held manufacturer/supplier of solar power systems for industrial, government, residential and retail applications.

With approximately 60-per-cent market share, SPS is the largest Canadian supplier of solar systems and solar-related equipment. In its most recently completed fiscal year ended Aug. 31, 2004, the company achieved revenues of approximately $17.5-million and EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $1.2-million. SPS has maintained strong gross margins throughout its market expansion and has been profitable since inception in 1988. SPS currently employs 65 people and is headquartered in Victoria, B.C., with additional offices in Alberta, Ontario and California.

Carmanah has agreed to acquire SPS for $10-million of which $6-million will be paid in cash from existing funds and $4-million equivalent in common shares (based on the 30-day weighted average trading share price for the 30 trading days immediately preceding the date of this announcement). An additional contingent payment of up to $2-million in common shares (priced as above) may also be payable if SPS reaches specified revenue (prorated between $9-million and $12-million) and an EBITDA minimum of 5.5 per cent of revenue for the six-month period ending Dec. 31, 2005. The transaction is scheduled to close June 30, 2005, subject to completion of due diligence and the approval of Carmanah`s board of directors. The purchase price is subject to an adjustment based on SPS`s net working capital meeting a $3-million target at closing. Most of the shares issued in respect of this acquisition will be subject to an escrow agreement allowing for the prorated release of shares over a two-year period from the date of closing. The transaction is expected to be accretive to the company immediately.

"With this acquisition, Carmanah will become the largest solar company in Canada," states chief executive officer, Art Aylesworth. "The synergies we see from this purchase are extensive. We anticipate a new range of co-developed solar/LED general illumination products, including security lighting, street lighting and sign lighting, for applications in all of the markets we currently serve. We also foresee an entirely new product line of standardized `plug-and-play` solar power sources that would take advantage of SPS`s existing range of `solar engines` and Carmanah`s world-leading energy management technology."

In addition, Carmanah and SPS will share marketing and sales infrastructure to further broaden their combined sales reach. "Our two companies have complementary expertise -- Carmanah with its self-contained packages and proprietary LED technology, and SPS with its larger solar power systems," states Mr. Aylesworth. "We also have overlapping customer bases, including government agencies, traffic OEMs, and resellers. Our combined sales staff will have a significant range of products to offer customers across many geographic and vertical markets."

"At a time when the demand for solar solutions in North America is rising at an unprecedented rate, the opportunities in front of SPS are many. None, however, are greater than our wish to continue to expand on the operations we have in the United States where our business is growing rapidly," states SPS chief executive officer, David Egles. "We feel like the timing is right for a deal such as this and we look forward to the possibilities that will arise from the combined entity and its considerable market strength." From an operational standpoint, SPS will gain access to capital, enabling it to expand to meet growing demand. Carmanah will also be applying its engineering and design experience to enhance margins on proprietary SPS technologies.

Finally, the combined purchasing power and market share will make Carmanah a formidable player in solar power markets both domestically and internationally. This energy sector is growing rapidly; in fact, the solar photovoltaic industry worldwide grew by an unprecedented 62 per cent in 2004 to $6.5-billion, and it is predicted to grow 300 per cent to $18.5-billion by 2010. "With the expansion of renewable energy and sustainability mandates worldwide, as well as the obligations associated with international pollution reduction agreements such as the Kyoto accord, the timing for our acquisition couldn`t be better," states Mr. Aylesworth.

Upon completion of the purchase, SPS founders David Egles and Michael Cannon will join Carmanah`s executive, bringing with them more than 20 years of experience in the solar industry.

Audio conference call

Mr. Aylesworth, chief executive officer of Carmanah, will be hosting a teleconference call on Thursday, May 26, 2005, at 8 a.m. Pacific Time (11 a.m. Eastern Time) to discuss the details of the acquisition. To participate, North American callers can dial toll-free: 1-877-793-3791. International callers from overseas will need to dial the international access code normally used to reach North America and then dial the global toll-free number: 800-7701-8885 (do not add a "1" in front of the global toll-free number unless it is part of the international access code). All callers must dial in no later than five minutes prior to the start time. Technical assistance is available at 416-470-1140.

About Soltek Powersource Ltd.

SPS is a leading designer, manufacturer and supplier of renewable energy solutions. In addition to acting as a master reseller for a number of world-leading equipment suppliers, SPS offers a range of proprietary solar power and alternative energy systems used by commercial, government and private customers worldwide. SPS is headquartered in Victoria, B.C., with branch offices in Alberta, Ontario and California.

We seek Safe Harbor.

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Monday, June 13, 2005
(No.2005-06-17)

CARMANAH PROVIDES i-SHELTER(TM) SOLAR-POWERED LED LIGHTING FOR BUS SHELTERS IN SEATTLE, WASHINGTON

Auszug aus dieser Meldung:


On May 10 of this year the Washington State legislature overwhelmingly passed bills SB 5101 and SB 5111, which have been called the most progressive renewable energy legislation ever passed in a U.S. state. Comparable legislation in Japan has made that country the world`s largest photovoltaic consumer. "In coming years all eyes may be on Washington State as a solar energy leader," states Aylesworth. "We are proud to have established a strong foothold in this region, helping to make a world-renowned `green` city even greener and showcasing the potential of solar power for other U.S. locations.

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Carmanah Technologies agreement for Soltek Powersource


2005-06-23 20:50 ET - Property Agreement

The TSX Venture Exchange has accepted for filing documentation with respect to a share purchase agreement dated May 25, 2005, between Carmanah Technologies Corp. and Soltek Powersource Ltd., Go Power! Electric Inc., SPS Energy Solutions, Inc., Conel O`Regan, Rosemary Cannon, Derek Frohloff, Mike Cannon, Dave Egles and Jackie Spaens. The company has agreed to acquire Soltek Powersource Ltd., a leading manufacturer and supplier of solar power systems for industrial, government, residential and retail applications, headquartered in Vancouver, B.C., with additional branch offices in Alberta, Ontario and California.

In consideration the company will pay the vendors $6-million cash and issue 1,503,756 common shares (deemed value of $2.66 per share). Up to an additional $2-million in common shares (751,879 common shares) may be payable to the vendors upon achieving certain revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) targets prior to Dec. 31, 2005.

For further information please refer to the company`s news release dated May 25, 2005.

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Carmanah spotlights $387,217 in earnings for Q2


2005-07-11 17:12 ET - News Release

Mr. Praveen Varshney reports

CARMANAH ANNOUNCES RECORD FINANCIAL RESULTS FOR Q2 2005; REVENUES INCREASE 87% TO $6.5 MILLION; PROFIT OF $387,000

Carmanah Technologies Corp. has released its results for the three and six months ended June 30, 2005, and 2004.

Highlights for the quarter:


record second quarter 2005 revenues of $6,542,507, representing an 87-per-cent increase over second quarter 2004;


2005 year-to-date revenues at record $11,392,049, representing a 50-per-cent increase over the same six-month period in 2004;


sales order backlog of $1.64-million at close of quarter;


net income for the quarter of $387,217 (6 per cent of sales) as compared with a net loss of $156,189 in 2004; and


year-to-date net earnings of $650,639 (6 per cent of sales) as compared with $213,303 (3 per cent of sales) in 2004.

"We are very pleased with Carmanah`s performance for the first six months of 2005," states Carmanah`s chief executive officer, Art Aylesworth. "We are on target with management`s expectations, and all vertical markets are now contributing significantly to the company`s revenues. In particular, we are seeing a breakout year in the sales of our transit shelter and bus stop lighting products with more than $1.8-million in sales in second quarter 2005 alone."

It should be noted that Carmanah`s results for the first six months of 2005 do not include revenues from the company`s acquisition of Soltek Powersource Ltd. which closed effective July 1, 2005. Combined revenues will be reflected in the company`s third quarter results.

Summary of results

Revenues

Carmanah`s revenues for the three months ended June 30, 2005, were $6,542,507 as compared with $3,504,092 for the same period in 2004, representing an 87-per-cent increase. Revenues for the six months ended June 30, 2005, were $11,392,049, as compared with $7,617,793 for the same period in 2004, representing a 50-per-cent increase.

Revenues were derived from the sale of solar-powered LED lighting illumination products to the marine, aviation, transit and roadway markets, as well as from the sale of LED edge-lit signs for point-of-purchase, branding, wayfinding and architectural applications. Sales were realized through both a worldwide distribution network and direct sales efforts.

Carmanah`s transit division achieved record sales for second quarter 2005, in the amount of $1,864,003, representing 28 per cent of Carmanah`s total sales for the period. This amount is equivalent to the total transit sales achieved during all of 2004. Carmanah is pleased to see another one of its emerging vertical markets increase its contribution to revenues, providing a more balanced source of revenues to the company.

Gross profit margin

Carmanah`s gross profit margin in second quarter was 46 per cent, compared with 57 per cent for the same period in 2004 and compared with a 52-per-cent annual average for 2004. For the six months ended June 30, 2005, gross profit margin was 49 per cent, compared with 55 per cent for the same period in 2004. The decrease in gross profit margin is primarily attributed to the increased contribution from the company`s transit division. Although the transit division contributed the highest percentage to overall sales, it did so at a lower gross profit margin than all of the company`s other divisions. In particular, the company delivered orders to some key transit customers at significantly lower margins for strategic purposes. As this market vertical matures, Carmanah anticipates that it can strengthen its gross margin through improved manufacturing processes and more efficient materials purchasing.

Wages and benefits

Wages and benefit expenses for the three months ended June 30, 2005, increased 16 per cent to $1,202,770, compared with $1,039,298 for the same period in 2004. For the six months ended June 30, 2005, wages and benefits expense increased 21 per cent to $2,233,269, compared with $1,844,239 for the same period in 2004. In support of planned growth and expansion, the company has broadened and strengthened its executive and middle management teams, resulting in increased senior staffing levels in 2005, over 2004. Furthermore, the company has invested in staffing its U.K. office and continues to hire administrative staff in support of increased volumes and sales growth. As a percentage of sales, total wages and benefits for the six months ended June 30, 2005, were 20 per cent, down from 24 per cent for the same period in 2004.

Office and administration

Office and administration expenses in first quarter 2005, were $453,658, representing a 77-per-cent increase over same period in 2004 of $256,083. For the first six months of 2005, office and administration expenses were $904,548, an 80-per-cent increase over $502,885 for the same period on 2004. The increase through first and second quarters is due primarily to overall growth and expansion in facilities and resources. The company expanded its Victoria facility to include an additional 6,000 square feet for LED illuminated roadway sign manufacturing and opened an office in London, England (in late 2004). These expansions resulted in increased rent and facility costs as well as general office, administration and information technology in support of new hires for these facilities.

Research and development

During second quarter 2005, research and development expenses of $486,787 represented a 35-per-cent increase over $360,078 in the comparative quarter for 2004. For the six months ended June 30, 2005, research and development expenses of $850,012 represented a 22-per-cent increase over the same period in 2004.

The company continues to invest in research and development in support of all verticals. In the marine sector, the company is completing development of a remodelled 700 series lantern that provides lighting to up to four nautical miles. In the roadways sector, the development team continues to work toward improvements to the design and manufacturing specifications of its roadway signs. In the transit sector, the engineering team is developing new, lower-cost design solutions for the company`s i-Shelter solar illuminated bus shelter product.

As a percentage of sales for the six months ended June 30, 2005, research and development expenses decreased to 7 per cent of sales, compared with 9 per cent of sales for the same period in 2004.

Sales and marketing

Sales and marketing expenses in second quarter 2005, were $418,478 representing a 13-per-cent increase over same period in 2004 of $369,772, and for the six months ended June 30, 2005, was $776,103 representing a 17-per-cent increase over $663,545 in the same period for 2004. The company continued to increase sales and marketing activities for new and existing product lines throughout its worldwide marketplace. Sales and marketing expense for the six months ended June 30, 2005, is 7 per cent of total sales, down from 9 per cent for the same period 2004.

Income tax

The company used a portion of its carry forward investment tax credits, tax losses and SRED pools in order to minimize any current tax expense. The future income tax effect arising from the use of these items has been offset against available tax losses not previously recognized.

Earnings

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $476,243 for the three months ended June 30, 2005, as compared with a loss of $31,123 for the same period in 2004, and for the six months ended June 30, 2005, EBITDA was $801,433 as compared with $452,012 for the same period in 2004.

Net earnings for the three months ended June 30, 2005, were $387,217 (6 per cent of sales), compared with a net loss of $156,189 in 2004. Net earnings for the six months ended 2005 were $650,639 (6 per cent of sales) compared with $213,303 (3 per cent of sales) in 2004.

Carmanah is starting to see some of its general operating expenses grow at a slower rate than its sales, resulting in total operating expenses declining as a percentage of sales. Total operating costs in second quarter 2005, represented 41 per cent of total sales, down from 48 per cent in first quarter 2005. In addition, for the six months ended June 30, 2005, operating costs represented 44 per cent of total sales compared with 52 per cent for the same period in 2004.

Balance sheet highlights

Carmanah`s cash, cash equivalents and short-term investments at June 30, 2005, were $8,592,174, compared with $7,751,411 at Dec. 31, 2004. Net cash usage from operations and investing activities was $809,061, which included over $300,000 in leasehold improvements and equipment for the new roadways sign manufacturing facility. During the six months ended June 30, 2005, the company raised $1,193,693 from the exercise of warrants and stock options. Net working capital for the six months ended June 30, 2005, was $13,241,671, with a current ratio of 5:1 and $7,798 of non-current debt obligations.

Subsequent events

Subsequent to June 30, 2005, effective July 1, 2005, the company acquired all of the issued and outstanding shares of Soltek Powersource Ltd. (SPS), a leading manufacturer/supplier of solar power systems for industrial, government, residential and retail applications. Carmanah paid $6-million in cash from existing funds and 1,503,756 in common shares at $2.66 per share. An additional contingent payment of up to $2-million worth of common shares at $2.66 may also be payable if SPS reaches specified revenue targets (prorated between $9-million and $12-million) and an EBITDA in excess of 5.5 per cent of revenue for the six-month period ending Dec. 31, 2005. Principal vendors have been issued 300,000 performance warrants with an exercise price of $2.79, being the weighted average trading price on the closing date of June 30, 2005, conditional upon SPS reaching increased revenue targets (prorated between $12-million and $14-million) and an EBITDA in excess of 5.5 per cent of revenue for the six months ending Dec. 31, 2005. The shares issued to the principal vendors will be held in a pooling agreement providing for the pro rata release of the shares over a two-year period after closing.

We seek Safe Harbor.

[weissnichtbescheid]

Der Carmanah-Kurs hat in Kanada die 3 Dollar-Grenze überschritten!

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NP says Carmanah Technologies a leading light


2005-07-26 08:09 ET - In the News

The National Post reports in its Tuesday edition that Carmanah Technologies is a leading Canadian solar power and advanced lighting company and has a market cap of about $100-million. The Post`s Peter Evans writes that Carmanah`s core business is making solar-powered light-emitting diodes. Carmanah employs nearly 200 people throughout British Columbia, the company saw its revenue increase by more than 70 per cent in 2004 to $15-million, consistent with a historical average five-year growth rate of 68 per cent per year. With $593,000 in net earnings in fiscal 2004, Carmanah has also crossed the threshhold into profitability. Carmanah stock has likewise performed well -- up 43 per cent over the past year. In May, Carmanah made a big move for a small company, finalizing the acquisition of privately held Soltek Power Systems for $10-million. Carmanah`s main source of revenue is from LEDs, while Soltek`s core business is making the panels that power them. The deal looks like a good match because the two companies share a customer base yet their product lines have little overlap. Canaccord Capital analyst Sara Elford says she believes "the growth potential for Carmanah is excellent."

[weissnichtbescheid]

Carmanah helps relight U.S. Gulf Coast


2005-09-12 17:17 ET - News Release

Mr. David Davies reports

CARMANAH RUSHES TO FILL ORDERS FOR HURRICANE REBUILDING

Carmanah Technologies Corp. has been rushing to fill orders for hundreds of lights to rebuild facilities destroyed by hurricane Katrina on the U.S. Gulf Coast.

In the week following the hurricane, Carmanah received orders for over 500 of its solar-powered LED marine, railway and aviation lights. To meet the demand, the company has diverted all of its inventory and production to the hurricane region, said Carmanah`s chief executive officer, Art Aylesworth. "Carmanah has been in full-production mode all week and has been shipping lights daily to the Gulf Coast," stated Mr. Aylesworth. "All of Carmanah`s marine distributors worldwide have volunteered to forego shipments so that everything in stock and all production can be rushed to the hurricane zone. When we finish filling orders for hurricane relief, we will be busy catching up on backorders for our distributors."

Most of the orders have been for Carmanah`s 700 Series marine navigation lights, which have been sent to the U.S. Coast Guard in Mobile, Ala., for distribution to affected areas of Louisiana, Mississippi and Alabama. Also, CSX Corporation ordered 100 Carmanah Model 601 lights to mark railroad bridges along its hardest-hit 100-mile stretch of track between Pascagoula, Miss., and New Orleans. Aviation lights are being ordered to mark helicopter pads.

Other orders continue to arrive as agencies assess their rebuilding needs. Transportation infrastructure along the Gulf Coast was significantly damaged. A preliminary estimate of damages to the Port of New Orleans and other public ports of Louisiana totals $1.7-billion (U.S.). Together, the shipping facilities of the Louisiana coast represent the largest U.S. port and the fifth largest global port.

We seek Safe Harbor.

[weissnichtbescheid]

Carmanah Technologies Corp
Symbol CMH
Shares Issued 35,438,052
Close 2005-11-10 C$ 3.40
Recent Sedar Documents



Carmanah Q3 income drops as revenue soars


2005-11-10 17:27 ET - News Release

Mr. Art Aylesworth reports

CARMANAH ANNOUNCES RECORD FINANCIAL RESULTS FOR Q3 2005

Carmanah Technologies Corp. has released its results for the three and nine months ended Sept. 30, 2005, and 2004.

Highlights for the quarter:


record third quarter 2005 revenues of $12,195,908, representing a 164-per-cent increase over third quarter 2004;


2005 year-to-date revenues at a record $23,587,957, represent a 93-per-cent increase over the same nine-month period in 2004;


record sales order backlog in excess of $4-million at the close of the quarter;


record third quarter 2005 EBITDA (earnings before interest, taxes, depreciation and amortization) of $657,200, representing a 37-per-cent increase over third quarter 2004;


net earnings of $222,470 for third quarter 2005 and record earnings of $873,109 for the nine months ended Sept. 30, 2005, representing a 38-per-cent increase over the same nine-month period in 2004; and


successful completion of the acquisition of Soltek Powersource Ltd.

Summary of results

The third quarter of 2005 saw the company complete the acquisition of Soltek Powersource Ltd. effective July 1, 2005. "The Soltek acquisition not only brought obvious immediate financial benefits to Carmanah, it substantially broadened the scope of the company on all fronts," states Carmanah`s chief executive officer, Art Aylesworth. "We have more than doubled the potential market for our products, our customer base, as well as the range of products we have to offer.

"The integration of two similar-sized companies has certainly taken a high degree of energy and management time. However, from all early indications, it would appear that this acquisition will deliver the desired and anticipated result. We have clearly positioned the company in a way that will leverage and grow our brand in the global market for renewable and energy-efficient technologies for years to come.

"We are excited about this acquisition, pleased with the results of this first integrated quarter, and extremely optimistic about the opportunities for Carmanah going forward."

Overview of operations

With the inclusion of Soltek Powersource Ltd., Carmanah`s business activities for third quarter 2005 have expanded to include design, manufacture and/or distribution of three technology groups: solar-powered LED lighting, solar power systems and LED illuminated signage.

Carmanah`s Solar LED Lighting Group provides a variety of energy-efficient lighting products for marine, aviation, transit, roadway and industrial worksite applications. The company`s Solar Power Systems Group offers a wide range of renewable energy system solutions to industrial, residential and recreational power applications. The LED Sign Group designs and manufactures energy-efficient LED edge-lit signs for corporate identity, point-of-purchase and architectural applications.

Results of operations

Sales

Carmanah`s sales for the three months ended Sept. 30, 2005, increased to $12,195,908, representing an increase of 164 per cent from the same period in 2004 at $4,628,383.

It is important to note that the Solar LED Lighting Group received a number of significant orders near the end of the quarter, which are reflected in the company`s record sales order backlog of more than $4-million (the order backlog at the beginning of the quarter was $1.6-million). Approximately 90 per cent of the company`s sales order backlog is orders for solar-powered LED lighting products. Sales orders booked for the quarter were in excess of $14-million.

Sales for the nine months ended Sept. 30, 2005, in the amount of $23,587,957, represent a 93-per-cent increase of $11,341,781 over sales for the same period ending 2004 in the amount of $12,246,176. This increase is attributed to the contribution from Soltek, the sales growth in Carmanah`s mature markets, as well as the continued growth in the company`s emerging vertical markets.

Gross profit margin

Carmanah`s gross profit margin in third quarter was 34 per cent, compared with 52 per cent for the same period in 2004 and compared with 46 per cent for previous second quarter 2005. For the nine months ended Sept. 30, 2005, gross profit margin was 41 per cent, compared with 54 per cent for the same period in 2004. This shift in gross margin is primarily due to the significant increase in sales contributed by the Soltek acquisition ($6,893,372 at 27-per-cent gross margin). Other factors affecting the gross margin are the increasing sales in Carmanah`s solar LED transit lighting products (typically averaging 40-per-cent gross margin) as well as the fluctuations between Canadian and U.S. currencies.

In response to currency fluctuations, Carmanah has implemented a natural hedge through increasing the percentage of goods purchased in U.S. dollars. During the nine-month period, the company also entered into forward contracts to secure current exchange rates for a future date.

At the time of the Soltek acquisition, Carmanah management estimated that the resulting gross margin for the combined companies would be approximately 38 per cent to 40 per cent. As Carmanah works through the integration and the normalization of business processes, management expects these targets to be achieved.

Wages and benefits

Wages and benefit expenses for the three months ended Sept. 30, 2005, increased $1,220,938 to $2,143,824, compared with $922,886 for the same period in 2004. For the nine months ended Sept. 30, 2005, wages and benefits expense increased $1,609,969 to $4,377,094, compared with $2,767,125 for the same period in 2004. This increase is primarily attributed to an $851,685 wage and benefits expense resulting from the acquisition of Soltek.

Carmanah has also invested in increasing its senior staffing levels in 2005 over 2004, to provide more strength and support across its executive and middle management teams. Furthermore, the company has invested in staffing its U.K. office and continues to hire administrative staff in support of increased volumes and sales growth. As a percentage of sales, total wages and benefits for the nine months ended Sept. 30, 2005, were 19 per cent, down from 23 per cent for the same period in 2004.

Office and administration

Office and administration expenses in first quarter 2005 were $746,623, representing a 140-per-cent increase over same period in 2004 of $310,746. For the first nine months of 2005, office and administration expenses were $1,651,171, a 103-per-cent increase over $813,631 for the same period in 2004. The acquisition of Soltek contributed to 69 per cent of the increase for third quarter 2005 and 36 per cent year-to-date, with the addition of $300,046 in office and administration expenses for each of the respective periods. The balance of $537,494 in office and administrative expenses year-to-date is due primarily to overall growth and expansion in facilities and resources. Carmanah expanded its Victoria facility to include an additional 6,000 square feet for LED illuminated roadway sign manufacturing and opened an office in London, England (in late 2004). These expansions resulted in increased rent and facility costs as well as general office, administration and information technology in support of new hires for these facilities. As a percentage of sales, office and administration expenses for the nine months ended Sept. 30, 2005, were consistent with the same period in 2004 at 7 per cent. The company will continue to expand its facilities to support manufacturing and warehousing needs at all major locations, including Victoria, B.C.; Calgary, Alta.; Santa Cruz, Calif.; and London, England, recently finalizing leases for expansion at three of these four locations. Although management has traditionally been frugal in this area of operations, this expansion was deemed necessary in preparation for the anticipated growth in the next 12 to 24 months.

Research and development

During third quarter 2005, research and development expenses were $103,773, representing a 72-per-cent decrease from $365,153 in the comparative quarter for 2004. This $261,380 decrease in the quarter is due in part to a $103,000 SRED tax credit, and a $60,000 recovery of an accrual booked earlier in the year for anticipated project costs that were achieved under budget. In addition, Carmanah incurred a reduction in head count to its research and development department with two staff moving away, and two staff transitioning to the company`s quality department. For the nine months ended Sept. 30, 2005, research and development expenses of $953,785 represented a 10-per-cent decrease from the same period in 2004. This is due to the adjustment for SRED tax credits booked in 2005, which have no comparison in 2004.

Sales and marketing

Sales and marketing expenses in third quarter 2005 were $425,805, representing a 26-per-cent increase over same period in 2004 of $337,287, and for the nine months ended Sept. 30, 2005, was $1,201,908 representing a 20-per-cent increase over $1,000,832 in the same period for 2004. Carmanah continued to increase sales and marketing activities for new and existing product lines throughout its worldwide marketplace, and is expanding its sales and marketing efforts to include Soltek customers and verticals. Sales and marketing expenses for the nine months ended Sept. 30, 2005, were 5 per cent of total sales, down from 8 per cent for the same period 2004.

Income tax

Income tax expense for the nine months ended Sept. 30, 2005, totals $227,405. This amount comprises current tax expense of $305,888 related primarily to the taxable income of Soltek postacquisition. A future income tax recovery of $78,483 relates primarily to the recognition of future income tax assets on current and past tax losses.

Earnings

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $657,200 for the three months ended Sept. 30, 2005, as compared with $480,822 for the same period in 2004. For the nine months ended Sept. 30, 2005, EBITDA was $1,411,242 as compared with $876,695 for the same period in 2004.

Net earnings for the three months ended Sept. 30, 2005, were $222,470, compared with $418,592 for the same period in 2004. Net earnings for the nine months ended 2005 were $873,109, representing an increase of 38 per cent over the same period in 2004 at $631,895.