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Revolutionary Lighting Technology Makes Carmanah Technologies A Shining Success Story In The Making

By Marc Davis, Managing Editor

"There is nothing more powerful than an idea that's time has arrived," Albert Einstein.

Certainly that adage has translated into a booming business for one highly innovative Canadian company. Carmanah Technologies Corp. (TSX.V-CMH) is an award-winning world leader in the development and marketing of patented solar-powered LED (light emitting diode) lighting systems. These highly cost-efficient products are ideally suited to marine, road, rail, aviation and mass transit markets. The dome-shaped lights are portable, waterproof and extremely durable, resisting extreme weather conditions and even vandalism.

Due to the unique, revolutionary qualities of this lighting technology, Carmanah's (www.carmanah.com) sales have increased consistently since 1998 at an average annual rate of about 73%. With market penetration in 110 countries, the company is on-track for record sales of approximately Can. $6.2 million for fiscal 2002. And the second half of last year saw the company reach a milestone in the form of its first two back-to-back profitable quarters.

What SmallCapMedia likes the most about Carmanah's revenue growth, however, is the fact that sales to date only represent the 'tip of the iceberg.' Specifically, since its inception in 1994, Carmanah has focused on perfecting its technology while catering to the relatively small $500 million international maritime market. The company's navigational lights have been used to mark hazards and guide ship traffic on buoys in some of the busiest waterways in the world.

But as of 2002, Carmanah has stepped up to the next level by expanding into far more lucrative, vertically integrated markets, according to CEO Art Aylesworth.

"After perfecting the LED, solar panel, battery and power management of our lights to meet the tough standards of the marine navigation market, Carmanah has a product that is smaller, brighter, tougher, and more efficient than anything else on the market. It has a patented technology that could be applied almost anywhere," says Aylesworth.

"Our lights provide huge cost savings over existing lights and provide lighting where it was previously impossible for railways, roads and school crossings."

Indeed, Carmanah's lighting technology has already proved itself in the toughest of environments. In terms of durability and reliability, it has satisfied the exacting standards of both the U.S. and Canadian coast guards - two of its largest customers to date. This has led to contracts with foreign navies and other maritime authorities. Other key advantages of these alternative energy navigational lights include their no-maintenance design, superior performance, long life and cost-effectiveness. In fact, the company even supplied marine lanterns to the US Coast Guard to help in cordoning off the New York harbor after the events of 09/11. These floating lanterns are visible up to nearly two miles away, and powered only by the sun. Also, they are designed to operate for up to five years before they need so much as a bulb or battery replacement.

With 50,000 units sold to date, Carmanah's penetration of new markets will launch the company towards its next milestone. And that is to experience exponential explosive growth, particularly as a result of its recent entry into the global transportation market. This marketplace is worth in excess of $7 billion.

The company's most promising development to date in this arena is its illuminated solar-powered transit stops - a world's first. Launched in London and 10 major North American cities late last year, these "i-STOP" signs (as they are called) are being used on a trial basis. But their popularity seems sure to catch on.

The i-Stop uses high-intensity, light-emitting diodes (LEDs) for its lighting features, including a flashing beacon to notify bus drivers a passenger is waiting, an illuminated bus schedule and a security light that keeps passengers from waiting in the dark. It is also rugged and vandal resistant.

"With no digging, wiring or electrical connections required, the i-Stop installs on most conventional stop sign posts in minutes," Aylesworth says. "It is maintenance-free for up to five years with zero operating costs, and it has a battery that will charge even on overcast days."

If the trials go well, Aylesworth expects the stops to be installed in hundreds of communities in North America within three years. Indeed, this state-of-the-art signage is expected to be the industry standard across North America and Europe within a few years.

"If we are successful in the city of London, that could lead to $18 million worth of sales over three years. That's 12,000 stops. And then there's North America, which has over a million stops. Europe has over a million stops and the rest of the world has collectively probably a million stops," he says.

But perhaps the ultimate marketing opportunity for Carmanah is the residential market. Recently, the company was awarded a federal government grant of Can. $500,000 to investigate the use of LEDs in residential homes and offices. Notably, LEDs use less than one-tenth of the power of a normal light bulb and the rechargeable batteries last almost a decade. If they become widely used in homes, LEDs could cut hydro bills by 90 per cent. With benefits like that, LEDs could soon edge out incandescent light bulbs as the most popular way to illuminate homes.

However, Carmanah's hopes of eventually becoming a household name will rely upon the vision and aptitude of a strong management team. And that has been the key to the company's success thus far. For instance, Dr. David Green, the founder and CTO, has an enviable track record. He was also the founder of two other very successful companies - NxtPhase Corp. and Axys Group.

Meanwhile, CEO Art Aylesworth helped his last company grow from $4 million to $20 million a year in revenues. And he has even greater aspirations for Carmanah Technologies.

"Recently hitting the 50,000 unit sales mark in just under four years is a significant achievement for the company," he says.

This milestone speaks to the aggressive, competitive corporate culture of our company and our very realistic goal of being the definitive world leader in solar-powered LED lighting products."

Indeed, Carmanah represents a shining beacon to investors who value a company that has ground breaking proprietary technology, dramatic sales growth and a dynamic management. In 2003, SmallCapMedia expects that Carmanah's share price will begin to reflect the company's rising star.