MONTREAL, QUEBEC – Orbite Technologies Inc. (TSX: ORT) (OTCQX: EORBF) (“Orbit” or the “Company”) announces its financial and operating results for the first quarter ended March 31, 2017.
FIRST QUARTER HIGHLIGHTS
By early 2017, nearly 2 tonnes of the first high purity alumina (“HPA”) 4N5 + was produced entirely from the company’s HPA plant, thereby validating the Orbite process. The increase in production at the HPA plant continued in the first quarter of 2017.
However, later in the quarter, operations had difficulty continuing to increase production at the HPA plant and maintain consistent and continuous feeding rates at a level of one tonne per day (“Tpj”) and experienced problems with the electrical heating system of the decomposer and the calciner.
These and other developments have led Orbite to conclude that the current electrical heating system of the decomposer and calciner is not robust enough to reliably achieve the design capacity of 3 tpd of the calcination system but is rather Limited to about 1-1.2 tpd.
This is an equipment problem and not a process problem. The Orbite process has been proved; Aluminum chloride crystals hexahydrate equivalent to 5N + were produced and 4N7 HPA was produced using crystals of purity equivalent to 4N7.
On March 31, 2007, the Company announced that there were significant problems with the electric heating system of the calcination system supplied to its HPA plant and that it had a solution to solve these problems, which required costs Capital expenditures and overtime to remedy the situation. The Company also announced the suspension of operations, the default under the Company’s credit facilities and the existence of uncertainty that could give rise to significant doubt as to the adequacy of the going concern assumption .
On April 3, 2009, the Company filed a notice of intention to make a proposal to its creditors under the Bankruptcy and Insolvency Act (“BIA”). Following this announcement, the TSX (the “TSX”) suspended the trading of the Company’s common shares and commenced a delisting review to determine whether Orbite continues to meet the listing criteria Of the TSX.
On April 17, 2007, the TSX announced the delisting of Orbite securities as of the close of trading on May 16 for non-compliance with the TSX requirements.
On May 1 , 2006, the Company announced that it had successfully migrated from the protection of creditors under the BIA to the protection provided by the Companies’ Creditors Arrangement Act (“CCAA”) and that The initial order provides for the suspension of all proceedings until 29 May next. It also announced that:
Following a meeting with its supplier of calcination equipment, both parties agreed to set up a task force and an action plan to resolve the problems identified as quickly as possible;
Investissement Quebec and Canada Economic Development (as announced on May 5) both confirmed that they intend to maintain the loan agreements under current conditions and were prepared to support Orbite in its restructuring efforts ;
The Cap-Chat plant was now under maintenance, maintenance and control, and in order to further limit its outflows, the equivalent of 39 full-time employees out of 81 were temporarily laid off.
On May 5, 2008, the Company announced that it had entered into an amendment to the credit facilities with Midcap Financial (“MidCap”) which essentially repairs the Company’s obligations under the credit facilities at the beginning of 2018 in exchange for The release to MidCap of the US $ 3 million in restricted cash, to be applied to the partial repayment of one of the term loans and monthly debt service payments on the credit facilities until January 1 2018. The amendment also provides for forbearance by MidCap to exercise its rights and remedies under the credit facilities provided certain conditions are met.
(Compared to the first quarter of 2016, all amounts are denominated in Canadian dollars, unless otherwise indicated)
The Company recorded a loss before net income of $ 4.1 million for the first quarter, up from a loss of $ 2.6 million for the corresponding period in 2016.
Net loss increased $ 2.2 million to $ 3.9 million, primarily due to a $ 1.1 million increase in HPA plant operation costs, and $ 0.5 million decrease in other income and $ 0.7 million in net financial income. The increase in the HPA plant’s operating costs is mainly due to a general increase in operating costs due to the increase in the production rate and the repair and maintenance of the Calcination provided.
As at March 31, 2017, the Company’s cash and short-term investments totaled $ 3.5 million and its negative working capital (current assets less current liabilities) was $ 2.5 million (6.5 Millions of dollars excluding restricted cash on MidCap’s credit facilities).
Cash provided by operating activities was $ 5.1 million compared to $ 0.05 million for the same quarter last year. The increase is mainly due to the HPA plant’s operating costs and the decrease in accounts payable and accrued liabilities.
Cash inflows from financing activities increased by $ 2.7 million to $ 9.2 million in the first quarter of 2017, mainly due to the increase in net proceeds received from non- Convertible debenture issue of February 2017.
Cash flows from investing activities decreased by $ 3.5 million to $ 2.9 million in the first quarter of 2017, primarily due to lower investment in the HPA.
Continuity of exploitation
The financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and meet its liabilities in the normal course of operations.
The recent developments announced above indicate the existence of uncertainty that could give rise to significant doubts as to the merits of the going concern assumption.
The financial statements do not reflect the adjustments that would be required if the going concern assumption were not appropriate. If the going concern assumption was not appropriate for these financial statements, adjustments to the carrying value of assets and liabilities, recognized expenses and the presentation of items in the statement of financial position Would then be necessary. These adjustments could be significant.
Conference Call on Quarterly Results
Orbite management will not hold its usual conference call on the quarter’s results.
Source: Technologies Orbite inc.