Westport Reports Steady Progress on Path to Profitability.VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography -- Westport Westport, residential town (1990 pop. 24,407), Fairfield co., SW Conn., on Long Island Sound at the mouth of the Saugatuck River; settled 1645–50, inc. 1835. It serves as a popular residence for New York City commuters. Westport has a summer theater. Innovations Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : WPT WPT World Poker Tour WPT Waypoint WPT Wisconsin Public Television WPT Watson Poker Tour WPT Wonderlic Personnel Test WPT Wavelet Packet Transform WPT Wireless Power Transmission WPT Windfall Profit WPT Wireless Personal Terminal WPT Word Processing Technician ) today reported results for its second fiscal quarter ended September September: see month. 30, 2004 and provided an update on operations. Westport's consolidated net loss for the three months ended September 30, 2004 improved by 40% to $5.8 million ($0.09 loss per share) from $ 9.8 million ($0.17 loss per share) during the same period last year on consolidated revenues of $6.0 million and $6.9 million respectively. Loss per share improved by 18% from the $0.11 loss per share in the previous quarter. Net loss was lower primarily because of reduced expenses year over year and quarter over quarter as Westport is progressing on its plans to match spending with available funding and market timing. Other favourable items in the quarter included a foreign exchange gain of $0.4 million resulting from the appreciation of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents making US dollar warranty liabilities less costly in Canadian dollars. In the second quarter, product revenues were $3.6 million, down from $6.3 million in the same quarter last year on shipments of 152 units compared to 288 units in the same quarter last year. Parts revenue for the quarter increased to $2.4 million compared to $0.7 million for the same quarter last year, reflecting the change in parts accounting from January January: see month. 1, 2004. Cash used in operations for the second quarter before working capital changes improved to $3.7 million, down 52% and 20%, respectively, compared to $7.7 million in the same period last year and $4.7 million in the previous quarter. Within this number, Cummins This article is about the diesel engine manufacturer. For other uses, see Cummins (disambiguation). Cummins Inc. (NYSE: CMI) is a maker of diesel and natural gas engines whose corporate headquarters is located in Columbus, Indiana. Westport Inc. (CWI CWI - Centrum voor Wiskunde en Informatica ) operating cash use in the quarter was $1.1 million compared to $1.2 million in the previous quarter. Excluding CWI, Westport's operating cash used in the three months ended September 30, 2004 was $2.6 million compared to $3.5 million in the previous quarter as the result of continued partner and government funding support and the timing of research and development spending. At the end of September 30, 2004, cash, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , net of accounts payable, totaled $27.3 million compared to $17.5 million at June June: see month. 30, 2004 with $15.3 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). received from the equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. closed in the quarter. "Our company made excellent progress this quarter and our continued focus on managing the transition to a mature company with sustainable cash flows is clearly working," said David Demers Demers is a surname, and may refer to:
Business Programs Update CWI In the second quarter, CWI continued its expansion into the Asian market and diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. outside of China with the announcement of a Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. for the supply of 100 B series engines to a consortium of bus operators in Metro Manila For the capital city of the Philippines, see . Metropolitan Manila (Filipino: Kalakhang Maynila) or the National Capital Region (NCR) (Filipino: Pambansang Punong Rehiyon in the Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. . In addition, CWI announced the signing of an agreement with Cummins India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. Limited (CIL (Common Intermediate Language) The ECMA version of the Microsoft Intermediate Language (MSIL). See CLI. 1. (project) CIL - Component Integration Laboratories. 2. (language) CIL - Common Intermediate Language. ), granting CIL an exclusive license to manufacture, sell, and service CWI's B Gas International (BGI BGI Barclays Global Investors BGI Bainbridge Graduate Institute BGI Bureau Gravimétrique International BGI Borland Graphic Interface (File Name Extension) BGI Bridgetown, Barbados - Grantley Adams International ) natural gas engines throughout India for a period of six years. In the Philippines agreement, Chinese Original Equipment Manufacturers will produce transit buses A transit bus (also known as a commuter bus) in the United States is usually operated by an urban-suburban bus line, a governmental public transit agency, or a contractor. A transit bus is normally used on public transit routes. powered by CWI natural gas engines for service in Metro Manila. These will be the first CWI engines manufactured in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and exported from China in Chinese buses. With an increasing focus on energy security and air quality issues and with a local source of natural gas, the Philippines will continue to be one of CWI's target markets in Asia along with China and India. Under the terms of its agreement with CIL, CWI will work with CIL to produce a low cost product that will compete in the Indian market with other locally produced products. CWI's share of the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market also continues to grow. Santa Monica Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. , California's transit fleet, was added to the growing North American list of cities that are purchasing CWI engines. CWI currently supplies approximately 65% of natural gas engines sold in transit applications in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Hugh Foden, CWI's President, commented "While transit engine shipments continue to be volatile from period to period, our sales backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. is stronger in the October to March timeframe of this fiscal year than was the case in the previous six months. This quarter saw some scheduled shipments deferred due to uncertainty around the regulatory environment in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, after the US Supreme Court required a review of these programs. CWI's goal for the full fiscal year remains to achieve breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations on a full fiscal year basis, which would require us to achieve strong numbers for the next two quarters." Westport Program Highlights During the quarter, Westport advanced its relationships with key partners. In September, Westport signed a new joint partnership and funding agreement Funding Agreement Illiquid insurance contracts that provide guaranteed principal repayment and interest payments for a predetermined period of time. Notes: Funding agreements are marketed to mutual fund companies and municipal reinvestments. with Isuzu for the application of Westport's Compressed Natural Gas Compressed Natural Gas (CNG) is a substitute for gasoline (petrol) or diesel fuel. It is considered to be an environmentally "clean" alternative to those fuels. It is made by compressing natural gas (which is mainly composed by methane (CH4 Direct Injection engine (CNG-DI) technologies on Isuzu commercial ELF vehicles. The new vehicles will use Westport's electronic, directly actuated ac·tu·ate tr.v. ac·tu·at·ed, ac·tu·at·ing, ac·tu·ates 1. To put into motion or action; activate: electrical relays that actuate the elevator's movements. 2. , high-pressure natural gas fuel injectors a device for actively injecting fuel into an internal-combustion engines by directly forcing the liquid fuel into the combustion chamber at an appropriate point in the piston cycle; - an alternative to a Metaphorically, the term on-board is often used to refer to some piece of technology that is integrated in a moving vehicle, for example: In a gasoline engine, the means used for producing an electric spark to ignite the fuel-air mixture in the cylinders to produce the motive force. The ignition system consists of a storage battery recharged by a generator, an induction coil, a device to . Westport heavy-duty programs also advanced, with the development of a new technology development and demonstration program for its HPDI HPDI High Pressure Direct Injection truck technology with the US Department of Energy's National Renewable Energy Laboratory The National Renewable Energy Laboratory (NREL), located in Golden, Colorado, as part of the U.S. Department of Energy, is the United States' primary laboratory for renewable energy and energy efficiency research and development. . This program, which also involves a significant funding agreement, provides the base of support to take the HPDI technology to the next generation. There has been an increasing interest in developing internal combustion engines Internal combustion engine A prime mover, the fuel for which is burned within the engine, as contrasted to a steam engine, for example, in which fuel is burned in a separate furnace. fueled by hydrogen and hydrogen-blended fuel. Westport is now involved in major hydrogen technology projects in Europe, North America and Asia. Westport announced that it has been awarded a program from the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. government to deploy 4-6 demonstration hydrogen-natural gas (HCNG) blended fuel buses on the streets of Vancouver. In July, Westport also announced it had signed a Memorandum of Understanding with China's Tsinghua University History Tsinghua University was established in Beijing in 1911 on the site of a former royal garden belonging to a prince, and was funded by an indemnity which to co-research and demonstrate technologies using Hydrogen-Compressed Natural Gas (HCNG) in public bus fleets in Beijing and other Chinese cities. "We are pleased with the confidence in our technologies shown by our partners through increased commitment and funding," said Dr. Michael Gallagher Michael Gallagher is the name of several different people:
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "We are continuing to advance our technologies while managing our research and development expenditures. We are very pleased to deliver on our commitments to progress the company on our path to commercial profitable operations, with continuing quarter- to- quarter improvements in our performance." Westport Innovations Inc. is a leading developer of gaseous gas·e·ous adj. 1. Of, relating to, or existing as a gas. 2. Full of or containing gas; gassy. fuel engine technologies. Its joint venture with Cummins Inc., Cummins Westport Inc., manufactures and sells a wide range of engines for commercial transportation applications such as trucks and buses. Westport has technology development alliances in place with a number of leading engine manufacturers, including Ford, MAN, Isuzu, and BMW BMW in full Bayerische Motoren Werke AG German automaker. Founded as an aircraft engine manufacturer in 1916, the company assumed the name Bayerische Motoren Werke and became known for its high-speed motorcycles in the 1920s. to develop engines that operate using cleaner-burning fuels such as natural gas, propane propane, CH3CH2CH3, colorless, gaseous alkane. It is readily liquefied by compression and cooling. It melts at −189.9°C; and boils at −42.2°C;. , hydrogen and blended fuels such as HCNG. Westport has scheduled a public conference call for Tuesday, November 2, 2004 at 8 am (Pacific Time) to discuss the quarterly results. To access the conference call by telephone, please call 1 877-563-8311 no later than 7:55 am on November 2. Alternatively, the webcast of the conference call can be accessed through the Westport web site at www.westport.com by following the link on the Investor Information menu. Replays will be available in streaming audio A one-way audio transmission over a data network. It is widely used on the Web as well as company networks to play audio clips and Internet radio. Computers in home networks stream audio (mostly music) to digital media hubs connected to home theaters. shortly after the conclusion of the conference call. To view the financials and management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial , please point your browser browser Software that allows a computer user to find and view information on the Internet. The first text-based browser for the World Wide Web became available in 1991; Web use expanded rapidly after the release in 1993 of a browser called Mosaic, which used to the following link: http://www.westport.com/investor/financial.php. Note: This document contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. about Westport's business, operations, technology development or to the environment in which it operates, which are based on Westport's estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond Westport's control. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Westport disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Consolidated Financial Statements
(Expressed in Canadian dollars)
WESTPORT INNOVATIONS INC.
For the three and six months ended September 30, 2004 and 2003
WESTPORT INNOVATIONS INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)
--------------------------------------------------------------------
September 30, March 31,
2004 2004
--------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents (note 3) $ 1,316,202 $ 2,105,161
Short-term investments 26,407,235 18,678,441
Accounts receivable (note 7) 3,740,755 5,073,384
Prepaid expenses and other current
assets 1,118,056 532,848
--------------------------------------------------------------------
32,582,248 26,389,834
Long-term investments 12,206,286 12,206,286
Equipment, furniture and leasehold
improvements 32,803,734 32,584,544
Accumulated amortization (24,700,455) (21,879,862)
--------------------------------------------------------------------
8,103,279 10,704,682
Intellectual property and other
intangible assets (note 6(c)) 4,865,586 3,314,160
Accumulated amortization (2,870,320) (2,466,310)
--------------------------------------------------------------------
1,995,266 847,850
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$ 54,887,079 $ 50,148,652
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 4,173,441 $ 3,743,467
Demand instalment loan 2,729,737 3,206,755
Current portion of long-term debt
obligations 139,008 214,413
Current portion of warranty
liability 4,291,979 3,814,163
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11,334,165 10,978,798
Long-term debt obligations 1,057,871 1,041,846
Warranty liability 3,293,995 4,059,744
Shareholders' equity:
Share capital:
Issued: 73,888,139 (2004 -
64,340,430)
common shares (note 4) 230,374,173 213,965,067
Other equity instruments (note 6) 4,518,123 3,007,665
Additional paid in capital (notes 2
and 5) 2,543,231 91,770
Deficit (198,234,479) (182,996,238)
--------------------------------------------------------------------
39,201,048 34,068,264
--------------------------------------------------------------------
$ 54,887,079 $ 50,148,652
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Commitments and contingencies (note 6(c))
See accompanying notes to consolidated financial statements.
WESTPORT INNOVATIONS INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
--------------------------------------------------------------------
Three months ended Six months ended
September 30 September 30
------------------------ -------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product revenue $ 3,617,359 $ 6,265,362 $ 10,098,594 $ 9,805,589
Parts revenue 2,363,745 650,455 4,706,657 1,467,722
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5,981,104 6,915,817 14,805,251 11,273,311
Cost of
revenues and
expenses:
Cost of revenue 4,205,200 4,804,686 10,729,997 7,610,347
Research and
development
(notes 6 and 7) 4,103,632 7,140,283 9,137,244 13,764,124
General and
administrative
(note 6) 1,450,442 1,379,999 2,975,314 2,598,058
Sales and
marketing
(note 6) 875,041 1,636,718 1,817,713 3,026,987
Foreign
exchange (gain)
loss (388,178) 71,543 (321,265) (834,311)
Amortization 1,566,125 1,713,648 3,224,603 3,371,379
Bank charges
and interest on
capital leases 75,813 72,513 147,377 174,993
--------------------------------------------------------------------
11,888,075 16,819,390 27,710,983 29,711,577
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Loss before
undernoted 5,906,972 9,903,573 12,905,732 18,438,266
Interest and
other income 70,458 153,170 160,644 357,642
--------------------------------------------------------------------
Loss for the
period 5,836,513 9,750,403 12,745,088 18,080,624
Deficit,
beginning of
period as
reported 192,397,966 153,604,618 182,996,238 145,274,397
Cumulative
adjustment for
change in
accounting
for stock-based
compensation
(note 2) - - 2,493,153 -
--------------------------------------------------------------------
Deficit,
beginning of
period as
adjusted 192,397,966 153,604,618 185,489,391 145,274,397
--------------------------------------------------------------------
Deficit, end of
period $198,234,479 $163,355,021 $198,234,479 $163,355,021
--------------------------------------------------------------------
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Basic and
diluted loss
per share $ 0.09 $ 0.17 $ 0.20 $ 0.33
Weighted
average common
shares
outstanding 65,078,800 56,739,110 64,876,888 54,042,398
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See accompanying notes to consolidated financial statements.
WESTPORT INNOVATIONS INC.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
--------------------------------------------------------------------
Three months ended Six months ended
September 30 September 30
------------------------ -------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash provided
by (used in):
Operations:
Loss for the
period $ (5,836,513)$ (9,750,403)$(12,745,088)$(18,080,624)
Items not
involving cash:
Amortization 1,566,125 1,713,648 3,224,603 3,371,379
Stock based
compensation
expense (note
6(a)) 215,537 35,195 472,582 163,290
Deferred rent
expense 55,962 - 110,478 -
Accretion of
TPC warrants
(note 7(b)) 285,714 285,715 571,428 571,428
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(3,713,175) (7,715,845) (8,365,997) (13,974,527)
Change in
non-cash
operating
working
capital:
Accounts
receivable 74,906 3,959,576 1,332,629 1,671,166
Prepaid
expenses and
other current
assets (643,126) (243,519) (585,208) (195,722)
Accounts
payable and
accrued
liabilities 1,212,350 (1,140,444) 429,974 (4,065,168)
Warranty
liability (577,047) 203,011 (287,933) (383,534)
--------------------------------------------------------------------
(3,646,092) (4,937,221) (7,476,535) (16,947,785)
Investments:
Purchase of
equipment,
furniture,
and leasehold
improvements (94,578) (487,132) (219,190) (1,646,770)
Purchase of
short-term
investments,
net (11,296,700) (15,927,263) (7,728,794) (3,932,271)
--------------------------------------------------------------------
(11,391,278) (16,414,395) (7,947,984) (5,579,041)
Financing:
Issue of common
shares, net of
issuance costs 15,156,755 22,077,797 15,282,436 22,077,797
Repayment of
demand
instalment loan (238,509) (241,229) (477,018) (657,895)
Repayment of
long-term debt
obligations (108,706) (135,006) (169,858) (245,517)
--------------------------------------------------------------------
14,809,540 21,701,562 14,635,560 21,174,385
--------------------------------------------------------------------
Increase
(decrease) in
cash and cash
equivalents (227,830) 349,946 (788,959) (1,352,441)
Cash and cash
equivalents,
beginning of
period 1,544,032 1,279,612 2,105,161 2,981,999
--------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 1,316,202 $ 1,629,558 $ 1,316,202 $ 1,629,558
--------------------------------------------------------------------
--------------------------------------------------------------------
Supplementary
information
Interest paid $ 46,134 $ 58,541 $ 95,658 $ 157,188
Non-cash
transactions:
Shares issued
on exercise of
performance
share units - - 1,003,629 -
Shares to be
issued on
acquisition of
intellectual
property and
other
intangible
assets (note
6(c)) - - 1,551,426 -
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See accompanying notes to consolidated financial statements.
WESTPORT INNOVATIONS INC.
Notes to Consolidated Financial Statements (unaudited)
(Expressed in Canadian dollars)
Three and six months ended September 30, 2004 and 2003
1. Basis of presentation: The unaudited consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. as at September 30, 2004 and the unaudited consolidated statements of operations and deficit and cash flows for the three and six months ended September 30, 2004 and 2003 have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting for interim financial statements. The accompanying unaudited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge do not include all information and footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." disclosures required under Canadian generally accepted accounting principles for annual financial statements. These financial statements have been prepared, except as disclosed in note 2, on a basis consistent with, and should be read in conjunction with, the consolidated financial statements and notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. for the fiscal year ended March 31, 2004. Certain comparative figures have been reclassified to conform with the basis of presentation adopted in the current year. These consolidated financial statements have been presented on a going concern basis, which assumes the realization of assets and the settlement of liabilities in the normal course of operations. To date, the Company has financed its operations primarily by equity financing and margins on the sale of products and parts. If, the Company does not have sufficient funding from internal or external sources, it may be required to delay, reduce or eliminate certain research and development programs, and forego acquisition of certain equipment. The future operations of the Company are dependent upon its ability to produce, distribute and sell an economically viable product to attain profitable operations. In the opinion of management, all adjustments (consisting solely of normal recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. ) considered necessary for a fair presentation of the financial position, results of operations and cash flows as at September 30, 2004 and for all periods presented, have been included. 2. Accounting policies: In November 2003, the Accounting Standards Board The role of the Accounting Standards Board (ASB) is to issue accounting standards in the United Kingdom. It is recognised for that purpose under the Companies Act 1985. It took over the task of setting accounting standards from the Accounting Standards Committee (ASC) in 1990. ("AcSB") amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. Handbook
This article is about reference works. For the subnotebook computer, see .
The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period. Effective for the Company's fiscal year beginning April 1, 2004, the Company adopted these amended recommendations of HB 3870. As permitted by HB 3870, the Company has retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adopted the fair value method of accounting for these awards without restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior periods. Adoption of amended HB 3870 resulted in an increase to the opening deficit and share capital as of April 1, 2004 of $2,493,153 and $67,753 respectively to reflect the cumulative effect of the change on prior periods with a corresponding increase in additional paid in capital of $2,425,400. Prior to adoption of amended HB 3870, the Company recognized stock based compensation for options granted to employees and directors using the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. method which had resulted in no stock-based compensation expense related to such grants. 3. Cash and cash equivalents: A total of $651,550 in cash has been set aside as security for certain capital lease and other long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. obligations. This amount will be reduced as the principal amounts owing on these obligations are paid down. 4. Share capital: On September 10, 2004, the Company entered into a bought deal financing agreement with a syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism of investment dealers for 9,000,000 units consisting of 9,000,000 common shares and 4,500,000 common share purchase warrants (the "Warrants"). The units were priced at $1.80 per unit for gross proceeds of $16,200,000 and net proceeds of $15,309,000, which is being used for research and development expenditures and general corporate purposes. On September 29, 2004, the financing successfully closed. Each Warrant entitles the holder to acquire, on or before March 29, 2006, one common share of the Company upon payment of $2.10 per share. 5. Share purchase options:
--------------------------------------------------------------------
Six months ended Six months ended
September 30, 2004 September 30, 2003
---------------------- ----------------------
Share Weighted Share Weighted
options average options average
exercise exercise
price price
--------------------------------------------------------------------
Outstanding,
beginning of
year 3,254,688 $ 3.93 3,811,909 $ 4.61
Granted 315,919 2.00 740,387 1.63
Exercised (73,360) (1.89) (35,124) (1.50)
Cancelled (483,568) (4.02) (260,880) (13.31)
--------------------------------------------------------------------
Outstanding,
end of year 3,013,679 $ 3.76 4,256,292 $ 3.64
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--------------------------------------------------------------------
Exercisable,
end of year 2,534,357 $ 4.07 3,645,951 $ 3.72
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Effective April 1, 2004, the Company recognizes stock-based compensation for employees using the fair value method (note 2). The Company adopted this policy retroactively without restatement. Had compensation cost for the three and six months ended September 30, 2003 for employee share options granted on or after April 1, 2002 been determined based on fair value at the grant dates of the share options and charged to operations over the vesting period of the options consistent with the recommendations in amended HB 3870, net loss and net loss per share for the three and six months ended September 30, 2003 would be as follows:
September 30, 2003
----------------------------
Three months Six months
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As reported:
Net loss $ 9,750,403 $ 18,080,624
Net loss per share
Basic and diluted $ 0.17 $ 0.33
Stock based compensation $ 35,195 $ 163,290
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Pro-forma:
Net loss $ 10,076,486 $ 18,817,574
Net loss per share
Basic and diluted $ 0.18 $ 0.35
Stock based compensation $ 361,278 $ 900,240
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The fair value of options granted for purposes of stock-based compensation has been determined using the Black-Scholes option pricing formula using the following weighted average assumptions: expected dividend yield Expected dividend yield Total amount of dividends received during the life of a futures contract or total dividends received for holding a particular stock one year. See: Current yield. - nil%; expected stock price volatility - 71.69% (2003 - 93.43%); risk free interest rate - 3.51% (2003 - 3.14%); expected life of options - 4 years (2003 - 4 years). The average fair value of options granted for the three and six months ended September 30, 2004 was $1.10 (2003 - $1.21) and $1.12 (2003 - $1.10). 6. Other equity instruments:
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September 30, March 31,
2004 2004
--------------------------------------------------------------------
(Unaudited)
Value assigned to performance share
units (a) $ 1,252,412 $ 1,864,808
Value assigned to TPC warrants (b) 1,714,285 1,142,857
Shares to be issued (c) 1,551,426 -
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$ 4,518,123 $ 3,007,665
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a) Share units: Pursuant to the Company's 2003 Share Unit Plan (the "2003 Plan"), the Company may issue up to 2,500,000 common shares with each unit ("Unit") exercisable into one common share of the Company for no additional consideration. Any employee, contractor, director or executive officer of the Company who is selected by the Board of Directors of the Company is eligible to participate in the 2003 Plan. The Executive Plan sets out provisions where the Units will be granted to the Company's executive management if specific performance milestones are achieved as established by the Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. and Compensation Committee in consultation with the Company's management. These performance milestones are focused on achievement of key cash management, profitability and revenue growth objectives. Each Unit vests 1/3 on the grant date and 1/3 on each anniversary thereafter for a period of two years. During the three and six months ended September 30, 2004, 6,969 and 1,197,728 Units have been granted by the Company. During the three and six months ended September 30, 2003, nil and 78,225 Units were granted. During the three and six months ended September 30, 2004, nil and 474,349 Units were exercised and as at September 30, 2004 there are 1,104,879 performance share units outstanding. The stock-based compensation associated with the 2003 Plan and the stock option plan, is included in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. as follows:
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Three months ended Six months ended
September 30 September 30
------------------------ -------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
Research and
development $ 46,050 $ 24,017 $ 104,421 $ 29,501
General and
administrative 164,547 11,178 345,061 133,789
Sales and
marketing 4,940 - 23,100 -
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$ 215,537 $ 35,195 $ 472,582 $ 163,290
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b) TPC (Transaction Processing Performance Council, San Francisco, CA, www.tpc.org) An organization devoted to benchmarking transaction processing systems. In order to derive the number of transactions that can be processed in a given time frame, TPC benchmarks measure the total performance of warrants: Under the terms of the agreement with Technology Partnerships Canada ("TPC"), warrants with a fair value of $4,000,000 based on the Black-Scholes pricing model will be issued on September 30, 2006. The value of the warrants is being recognized on a straight-line basis to September 30, 2006. For the three and six months ended September 30, 2004, accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the totaling $285,714 (2003 - $285,714) and $571,428 (2003 - $571,428), respectively, has been included in research and development expenses. c) Shares to be issued: On July 3, 2002, the Company purchased substantially all of the assets of GVH GVH graft-versus-host. Entwicklungsgesellchaft fur Verbrennungsmotoren and Energietechnik mbH ("GVH"), of Dortmund, Germany. Additional consideration relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the GVH acquisition of up to Euros 3,850,886 (approximately $5,789,000) may be payable when three pre-defined milestones are achieved and announced. This contingent consideration was excluded from the purchase equation. Two of the three milestones relate to the issuance of patents regarding hot surface ignition ignition, apparatus for igniting a combustible mixture. The German engineer Nikolaus A. Otto, in his first gas engine, used flame ignition; another method was heating a metal tube to incandescence. . The third milestone relates to the Company entering into an agreement with an engine manufacturer to commercialize hot surface ignition technology. This contingent consideration will be paid for through the issuance of shares of the Company. The shares will be issued and priced only when the pre-defined milestones are achieved and not before July 3, 2006. If any milestone is achieved prior to July 3, 2006, the Company will accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. a corresponding amount to be paid as an increase to Intellectual Property, and as an increase to Shareholders' Equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , classified as shares to be issued. In April 2004, one of the milestones was achieved and up to Euros 962,722 ($1,551,426 Canadian) worth of shares are currently issuable after July 3, 2006. This amount has been accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. as shares to be issued with a corresponding increase in intellectual property. 7. Research and development expenses: Research and development expenses are recorded net of program funding received or receivable. For the three and six months ended September 30, 2004 and 2003, the following research and development expenses had been incurred and program funding received or receivable:
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Three months ended Six months ended
September 30 September 30
------------------------ -------------------------
2004 2003 2004 2003
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Research and
development
expenses $ 5,637,621 $ 9,606,218 $12,216,442 $19,238,361
Program funding (1,533,989) (2,465,935) (3,079,198) (5,474,237)
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Total research
and development
expense $ 4,103,632 $ 7,140,283 $ 9,137,244 $13,764,124
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In the three and six months ended September 30, 2004, program funding is comprised mainly of funding from TPC and South Coast Air Quality Management District The South Coast Air Quality Management District (SCAQMD), formed in 1976, is the air pollution agency responsible mainly for regulating stationary sources of air pollution for most of Los Angeles, San Bernardino, Riverside County, and all of Orange county. , which was used to fund research and demonstration projects including the adaptation of the Company's technology to diesel engines. In the three and six month period ended September 30, 2003, program funding is comprised mainly of funding from TPC which was used to fund research projects including the adaptation of the Company's technology to diesel engines. At September 30, 2004, $2,948,797 (March 31, 2004 - $2,508,874) of funding earned by the Company based on the terms of various funding agreements has not yet been received and is included in accounts receivable. 8. Investment in Cummins Westport Inc.: The consolidated financial statements include the Company's 100% share of the revenues, expenses, assets and liabilities of the joint venture, Cummins Westport Inc., as follows:
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September 30, March 31,
2004 2004
--------------------------------------------------------------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 730 $ 574
Accounts receivable 366,093 2,676,956
Prepaid expenses and other current
assets 430,776 187,190
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$ 797,599 $ 2,864,720
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Current liabilities:
Accounts payable and accrued
liabilities $ 1,742,925 $ 650,720
Current portion of warranty
liability 4,291,979 3,814,163
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$ 6,034,904 $ 4,464,883
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Long-term liabilities:
Warranty liability $ 3,293,995 $ 4,059,744
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Three months ended Six months ended
September 30 September 30
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2004 2003 2004 2003
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product revenue $ 3,274,404 $ 6,117,720 $ 9,604,128 $ 9,522,367
Parts revenue 2,363,745 650,455 4,706,657 1,467,722
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5,638,149 6,768,175 14,310,785 10,990,089
Cost of
revenues and
expenses:
Cost of revenue 3,863,905 4,623,853 10,237,192 7,272,881
Research and
development 1,651,545 5,194,281 3,701,969 11,058,720
General and
administrative 377,903 225,674 830,024 367,489
Sales and
marketing 871,111 1,208,525 1,822,437 2,213,065
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6,764,464 11,252,333 16,591,622 20,912,155
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Loss for the
period $ 1,126,315 $ 4,484,158 $ 2,280,837 $ 9,922,066
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9. Segmented information: The Company currently operates in one operating segment which involves the research and development and related commercialization of engines and fuel systems operating on gaseous fuels. The majority of the Company's equipment, furniture and leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. are located in Canada. For the three and six months ended September 30, 2004, 66% (2003 - 91%) and 60% (2003 - 86%) respectively of the Company's revenue was from sales in North America, 3% (2003 - 7%) and 22% (2003 - 12%) respectively from sales in China, and 31% (2003 - 2%) and 18% (2003 - 2%) respectively from the rest of the world. |
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