AURORA SOLAR TECHNOLOGIES INC. AURORA SOLAR TECHNOLOGIES INC.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
Stated in Canadian Dollars
DATE: 29 NOVEMBER 2023
TABLE OF CONTENTS | |
Highlights, Significant Events and Transactions During The Period | |
Significant Events and Transactions Subsequent to the Period End | |
Related Party Transactions | 9 |
Off-Balance Sheet Arrangements | 9 |
Additional GAAP and Non-GAAP Measures | 9 |
Financial Instruments and Risk Factors | 11 |
Other Risk Factors and Uncertainties | 14 |
Investor Relations Activities | 15 |
Management | 15 |
Approval | 15 |
A Cautionary Tale | 15 |
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
TO OUR SHAREHOLDERS
The following information should be read in conjunction with the unaudited Condensed Interim Consolidated Financial Statements of Aurora Solar Technologies Inc. ("the Company", or "Aurora") for the three and six months ended 30 September 2023 and 2022, and the related notes attached thereto, which were prepared in accordance with International Financial Reporting Standards ("IFRS"), except for certain non-GAAP information as noted and where a reconciliation to IFRS is provided. This discussion covers the three and six months ended 30 September 2023 and 2022 and the subsequent period up to the date of the issuance of this Management Discussion and Analysis ("MD&A"). All amounts are expressed in Canadian dollars, unless otherwise indicated.
Additional information about the Company, including the audited annual Consolidated Financial Statements, and the notes thereto, for the years ended 31 March 2023 and 2022, prepared in accordance with IFRS, can be found on SEDAR at www.sedar.com.
Discussion of the Company, its operations and associated risks are further described in the Company's filings, available for viewing at www.sedar.com. A copy of this MD&A will be provided to any applicant upon request.
FORWARD-LOOKINGSTATEMENTS
Certain statements contained in this MD&A may be deemed to be "forward-looking statements". All statements in this discussion other than statements of historical facts, that address future events or developments that the Company expects, are forward-looking statements. Forward-looking statements reflect current expectations of management regarding future events and operating performance as of the date of the MD&A. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, investors are cautioned that such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements relate to future events or future performance and reflect the Company's current estimates and expectations or beliefs regarding future events and include, without limitation, information or statements concerning the Company's expectations of financial resources availability to fund operations; general business and economic conditions; the Company's ability to successfully execute its plans and intentions; the Company's ability to obtain financing at reasonable terms though the sale of equity and/or debt commitments; dependence on a small number of key personnel; the Company's ability to attract and retain skilled staff; political instability; market competition; future supply and demand, ability to procure inventory, production capabilities and price of products; the timing and amount of estimated future production; costs of production; government regulation, operations, limitations of insurance coverage; the timing and possible outcome of pending litigation; delays in obtaining governmental approvals or financing or in the completion of development activities; and the ability of the Company to continue as a going concern. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
1 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
Although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events, or results to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. These and other factors should be considered carefully, and thus, readers should not place undue reliance on the Company's forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. These forward-looking statements are made as of the date hereof.
GENERAL
The Company was incorporated under the laws of the Province of British Columbia, Canada on 26 October 2006. The Company develops and markets imaging measurement and quality control systems for materials and data characterization through machine vision and predictive learning (Artificial Intelligence) in the solar wafer and cell manufacturing industries.
On 25 August 2022, Aurora acquired 100% of the outstanding share capital of BT Imaging Pty. Ltd. ("BTi"), a global leader in photoluminescence (PL) imaging tools and instruments for photovoltaic ("PV") material inspection and quality control. BTi was incorporated in 2007 in the State of New South Wales, Australia as a private limited company to commercialize imaging technology originally developed at the University of New South Wales School of Photovoltaic and Renewable Energy Engineering. BTi is a globally recognized leader in PL imaging products for the solar manufacturing industry with a world-wide installed basis with the majority of the tier one and two producers along with leading research organizations. The purpose of this strategic acquisition was to transform the Company by combining metrology expertise and intellectual property with machine vision and artificial intelligence ("AI") to create a smart factory platform based on proprietary imaging tools and predictive learning capabilities.
The majority of solar panels or modules seen on rooftops and large-scale "solar energy farms" are made from purified silicon that is formed into ingots, sawn into silicon wafers and then produced to create solar cells. In solar cell research and design applications, conducted in academic, government and industrial laboratories throughout the world, BTi's R series products are used to inspect and characterize wafer materials, examine experimental and production design results, and to verify electrical performance for comparison to design objectives for manufacturing purposes. BTi's R series products are state of the art metrology tools used to evaluate new cell materials and processing steps to improve cell efficiency, including multi-junction, perovskite and thin film solar cells. In silicon wafer production, the R series products are used to determine optimal wafer slicing locations in each ingot by sensing the extent and locations of impurities that can affect finished cell performance.
BTi's W series products are used later in wafer production or at the incoming stage of cell production for quality assurance and classification of the as-cut wafers. As chemical and thermal processes transform the wafers from inert substrates to energy-generating solar cells, BTi's C series products are utilized for inspection and quality control purposes. Aurora's DMTM and TCMTM products can also be used to measure and inspect during these stages of cell manufacturing to verify the material effects of these processes on partially or wholly finished cells. Solar cells are
2 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
then wired together and framed to form modules. Performance of finished modules is largely determined by the wafer material quality, the cell design and manufacturing quality control, and the module assembly quality control. BTi's M series products are used for module quality control and process optimization during production.
To improve manufacturing plant performance, the Company is able to combine BT Imaging's machine vision and non-contact PL metrology measurement products with the ability to characterize data to improve cell efficiency as a smart factory platform. Through machine vision, data provided from the Company's measurement and inspection products provides the means to perform real time diagnostics, control, and equipment optimization quickly and effectively. This imaging hardware and AI software platform can be deployed as a closed loop smart factory system to provide monitoring through machine learning and digitalization to translate measurements into actionable information to improve plant performance. The Company expects this AI or smart factory platform to provide advanced cell manufactures with a competitive advantage to rapidly and precisely understand when and how to control their production for optimal yield and to enhance cell efficiency.
The address of the Company's corporate and administrative office and principal place of business is #100 - 788 Harbourside Drive, North Vancouver, BC, V7P 3R7.
MARKET POSITION AND DEVELOPMENT
The Company's focus is on top-tier manufacturers of PV products who value the benefits of integrated measurement and process control systems and who have known capacity expansion plans. Currently the majority of the world's solar product manufacturing is conducted by Chinese companies in China and in other locations, primarily in the Southeast Asia region. In addition, new market opportunities are expected to emerge in Australia, North America, Asia Pacific and Europe. As such the combined business has sales and technical service facilities in China with sales, product development and technical support in Sydney, Australia and Vancouver, Canada.
The solar or PV energy industry is fast-growing with rapid technological advancements that is gaining importance within the energy sector. The pace of change is not slowing with new government initiatives recently announced in Australia, North America, Europe and China. Wafer, cell, and module configurations have all changed, with increasing sizes, advanced materials and performance demands. This changing industry landscape presents growth opportunities for the combined Company based on its contactless metrology systems that embrace emerging trends in automation, integrated facilities, and next generation of solar cells and modules. As a result of the BT Imaging acquisition, the Company is better positioned to bring its products and expertise deeper into the evolving PV supply chains based on emerging trends for new processing & manufacturing steps to drive automation & cell efficiencies.
3 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
HIGHLIGHTS, SIGNIFICANT EVENTS AND TRANSACTIONS DURING THE PERIOD
During the six months ended 30 September 2023, the Company secured a new high of twenty (20) product orders derived solely from the BTi business that is supported by strong customer deposits. Leadership's focus on corporate restructuring and reinvigorating the sales and technical capabilities of the combined business has led to improved financial and operating performance during the six months ended 30 September 2023, including an adjusted EBITDA1 of $82,569 as compared to the same period last year of ($1,346,052). During the three months ended 30 September 2023 the Company achieved an adjusted EBITDA of $116,468, as compared to the same period last year of $(486,120). These achievements validate the transition of the merged business. BTi continues to be a self-funding business.
On 15 September 2023, the Company provided a corporate update regarding the integration of BTi, and the PV solar energy product manufacturing market growth. The Company announced that it is capitalizing in this expanding PV market and that it has started to realize synergies, with the consolidated adjusted operating EBITDA1 improvement from a $(860,000) loss in the three months ended 30 June 2022 compared to a near breakeven deficit of $(34,000) reported in the three months ended 30 June 2023. The Company's sales for 2023 and the first five months of fiscal year 2024 are ahead of management's budget and BTi is generating sufficient cash flow to support an expanded product and market roadmap. The Company has increased engineering headcount to develop these new diversification opportunities, including product lifecycle improvements and inline production applications.
On 10 July 2023, the Company announced the formal creation of an advisory board that includes Budi Tjahjono a solar industry expert with strong manufacturing and supply chain experience and Wang Wei a specialist within the chemical and energy industry in China. The Company also announced the granting of an aggregate of 17,800,000 stock options to certain directors, officers, consultants, and employees. The stock options are exercisable at $0.05 per share, for a period of 5 years and vest over 3 years.
During the six months ended 30 September 2023, the Company announced the appointment of Mr. Brett Freeman as the Managing Director of BTi, based in Sydney, effective 14 August 2023. As part of Mr. Freeman's long-term incentive package, the Company announced a stock option grant of 8,500,000 options exercisable at $0.05 per share for a period of 5 years, vesting over three years.
During the six months ended 30 September 2023, the Company commissioned a third-party market survey to develop its product and market strategy. This survey focused on customers and strategic suppliers to assess competitive advantage of existing products and opportunities associated with machine learning and smart factory solutions that leverage the Company's core imaging products for in line production purposes.
On 22 June 2023, the Company provided a corporate update regarding the integration of BTi with efficiencies that included the closing of the Aurora Chinese office and maximizing synergies among sales, technical and administration teams. The Company announced that Aurora's key personnel are fully integrated within the BTi teams, that BTi's existing products remain in demand, and that the Company's sales are progressing well and within management expectations consistent with its forecasting at the time of acquisition. Working capital has been used to meet the
4 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
demand for sales and for the above referenced integration and acquisition costs and is expected to normalize during the first half of fiscal 2024.
During the six months ended 30 September 2023, representatives from both the Company and BTi attended the SNEC 16th Photovoltaic Power Generation and Smart Energy Conference held in Shanghai, China. The Company made a soft market launch and anticipates available to order of its new BTi R-Multi Junction ("R-MJ") product line and anticipates market readiness prior to the fiscal year ended. The Company believes the R-MJ to be a strategically positioned product for the characterization of next generation tandem solar cells. The Company also presented at the 50th IEEE Photovoltaic Specialists Conference ("PVSC") held in San Juan, Puerto Rico and attended for business development purposes EU PVSEC 2023 held in Lisbon, Portugal.
SIGNIFICANT EVENTS AND TRANSACTIONS SUBSEQUENT TO THE PERIOD END
Subsequent to the six months ended 30 September 2023, the Company announced that Mr. James Tunkey was appointed to the Board of Directors on 15 November 2023 replacing Mr. Gordon Deans as a board director. The Company also announced stock option grants to a director totalling 1,000,000 options exercisable at $0.05 for a five- year term, subject to the acceptance of the TSX Venture Exchange.
RESULTS OF OPERATIONS AND OVERALL PERFORMANCE
1 Defined in the "ADDITIONAL GAAP AND NON-GAAP MEASURES" section of this document.
The net loss and comprehensive loss attributable to the shareholders for the six months ended 30 September 2023 was $636,684 compared to the comprehensive loss of $2,240,148 during the six months ended 30 September 2022. Net of non-cash items the Company achieved an adjusted EBITDA of $82,569 for the 30 September 2023 period (30 September 2022-$(1,478,910)).
The reasons for the fluctuations are as follows *:
6 Months | 6 Months | 3 Months | 3 Months | ||||
Rounded (000's) | 2024 | 2023 | 2024 | 2023 | |||
Product sales | $ 4,665,000 | $ | 387,000 | $ | 2,743,000 | $ | 387,000 |
Variance increase (decrease) | 4,278,000 | 2,356,000 |
During the six months ended 30 September 2023, product sales were mostly derived from the Company's metrology tools and were consistent with management's expectations post-acquisition.
5 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
6 Months | 6 Months | 3 Months | 3 Months | ||||
Rounded (000's) | 2024 | 2023 | 2024 | 2023 | |||
Cost of sales | $ 2,129,000 | $ | 92,000 | $ | 1,195,000 | $ | 92,000 |
Variance increase (decrease) | 2,037,000 | 1,103,000 |
During the six months ended 30 September 2023, costs of sales increased as a result of the increased sales revenue. Cost of sales consists primarily of raw materials, direct labour, transportation costs and indirect overhead. Factors that affect the cost of sales include raw material prices, particularly high-quality specialized components, which are difficult to source and, the cost of continuous improvement for product technical advancements.
6 Months | 6 Months | 3 Months | 3 Months | |||||
Rounded (000's) | 2024 | 2023 | 2024 | 2023 | ||||
Sales and Marketing | $ | 695,000 | $ | 353,000 | $ | 415,000 | $ | 242,000 |
Variance increase (decrease) | 342,000 | 173,000 |
The increase in costs from the same comparable period last year is attributable to the combined operations net of restructuring synergies. During the six months ended 30 September 2023, the Company made technical presentations and business development initiatives at the SNEC 16th Photovoltaic Power Generation, and Smart Energy Conference in Shanghai, China, at the 50th IEEE PVSC held in San Juan, Puerto Rico and EU PVSEC 2023 held in Lisbon, Portugal. Sales and marketing costs will increase or decrease period over period based on business development activities and as commission and other third-party agency costs directly correspond to fluctuations in sales.
6 Months | 6 Months | 3 Months | 3 Months | ||||
Rounded (000's) | 2024 | 2023 | 2024 | 2023 | |||
General and administrative | $ 1,399,000 | $ | 751,000 | $ | 805,000 | $ | 392,000 |
Variance increase (decrease) | 648,000 | 413,000 |
The increase in costs from the same comparable period last year is attributable to the combined operations that have incremental higher revenues and greater complexity of operations net of cost savings derived from synergies. During the six months ended 30 September 2023, the Company reallocated merged resources to focus on key product, operational and sales growth strategies.
6 Months | 6 Months | 3 Months | 3 Months | |||||
Rounded (000's) | 2024 | 2023 | 2024 | 2023 | ||||
Research and development | $ | 375,000 | $ | 752,000 | $ | 209,000 | $ | 361,000 |
Variance increase (decrease) | (377,000) | (152,000) |
The decrease in costs from the same comparable period last year is attributable to the combined operations net of restructuring synergies, reallocating merged resources to support the operations of BTi and the closing of a remote office hosting Aurora specific R&D activities. During the six months ended 30 September 2023, the Company has been focused on short-term product lifecycle enhancements to support near-term sales and research and development to support machine vision and AI to support a smart factory platform.
- Aurora's acquisition of BTi closed 25 August 2022, and BTi's accounts were recognized subsequent to that date, for the comparable period ended 30 September 2022.
6 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
SELECTED ANNUAL INFORMATION
Financial Data for the past four annual periods:
Fiscal Year Ended | Mar-2023(2) | Mar-2022 | Mar-2021(1) | Mar-2020(1) | |
Rounded (000's) | |||||
Total Revenues | $ | 5,509,000 | - | 1,866,000 | 3,298,000 |
Loss from Continuing Operations | $ | (3,768,000) | (4,382,000) | (3,771,000) | (482,000) |
Loss and Comprehensive Loss for the Year | $ | (4,320,000) | (4,247,000) | (3,520,000) | (504,000) |
Loss per Share (Basic and Diluted) | $ | (0.02) | (0.03) | (0.03) | (0.01) |
Total Assets | $ | 9,422,000 | 3,189,000 | 3,816,000 | 3,551,000 |
Working Capital(3) | $ | 3,732,000 | 2,017,000 | 2,511,000 | 2,428,000 |
- For comparative purposes, information for the year ended 31 March 2021 was restated due to a change in presentation for Finance Cost which was formerly included in "Loss from Continuing Operations" and is now included in "Loss and Comprehensive Loss for the Year". There is no impact on net income, retained earnings, or assets and liabilities as a result of this change.
- The first fiscal year with the inclusion of 100% wholly-owned subsidiary, BTi.
- "Working Capital" is defined as current assets minus current liabilities.
FINANCIAL DATA FOR LAST EIGHT QUARTERS
The following table sets out selected unaudited quarterly financial information of the Company and is derived from the unaudited condensed interim consolidated financial statements prepared by management. The Company's condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards and are expressed in Canadian dollars.
Management has allowed Working Capital to remain greater than expected outflows in each quarter, despite variations in timing of sales orders.
7 | P a g e
AURORA SOLAR TECHNOLOGIES INC.
Canadian Dollars
FOR THE THREE AND SIX MONTHS ENDED 30 SEPTEMBER 2023 AND 2022
MANAGEMENT DISCUSSION AND ANALYSIS
OUTSTANDING SHARES
As of 30 September 2023, the Company had 222,194,076 common shares issued and outstanding. The fully diluted amount of 261,694,076 represents Nil warrants and options of 39,500,000.
As of the date of this MD&A, the Company had 222,194,076 common shares issued and outstanding. The fully diluted amount of 260,794,076 represents Nil warrants and options of 38,600,000.
During the six months ended 30 September 2023, the following options were exercised or forfeited:
30,000 options expired from the 23 April 2018 issuance; and 250,000 options expired from the 8 August 2018 issuance.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
The Company's Working Capital surplus on 30 September 2023, was $3,124,523 compared with $3,731,861 on 31 March 2023.
Cash used in investing activities during the period ended 30 September 2023 totalled $73,911 (30 September 2022
- provided by $1,902,525).
Cash used in financing activities during the period ended 30 September 2023 totalled $123,429 (30 September 2022 - provided by $1,047,816).
Actual future funding requirements may vary from those planned due to several factors, including timing of sales and changes in the pace of research and development with respect to current and future products and potential value enhancing transactions to support growth.
Management believes it will be able to raise debt or equity financing as required in the long-term, but recognizes the risks attached thereto. Historically the capital requirements of the Company have been met by equity subscriptions through the capital markets and most recently through the acquisition of self-funding entities, such as, the BTi transaction.
Although the Company has been successful in the past in obtaining financing through the capital markets, there can be no assurance that it will be able to obtain adequate financing in the future or that the terms of such financing may be favourable.
CAPITAL MANAGEMENT
The Company manages its capital structure and makes adjustment to it, based on the funds available to the Company, to support the development of the Company's measurement technology. The Company includes components of equity in its managed capital. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. Additional funds may be required to finance investments of the Company.
8 | P a g e
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Aurora Solar Technologies Inc. published this content on 29 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 December 2023 07:03:36 UTC.
