Aerocast Inc.: Report for the Six Month Period ended September 30, 2009

(firmenpresse) - Aerocast Inc.: Report for the Six Month Period ended September 30, 2009

Dear Aerocast Shareholder,

OVERALL PERFORMANCE

Highlights

Since the beginning of the current fiscal year, which commenced on April 1, 2009, we have continued to build on our successes in growing our business. Some of the highlights include:

•Revenues for the six months ended September 30, 2009 totalled $860,592, of which $686,362 was generated during the three months ended September 30, 2009; and

•Gross profits before foundry and G&A expenses totalled $189,519 compared to a loss of $24,473 for the year before.

Overview

Our company consists of Aerocast Inc., a Canada Business Corporations Act corporation, and its 100% owned US subsidiary Aerocast International Inc. Our subsidiary is responsible for the operations of a Nogales, Mexico based foundry. This foundry manufactures complex aluminium and magnesium alloy castings for the aerospace industry. Our objective is to acquire additional equipment and materials and engage additional workers for the foundry which, once fully operational, is expected to have much lower labour rates than those of competing aerospace foundries. The common shares of Aerocast Inc. trade on the Canadian National Stock Exchange under the symbol ‘A’ and on the Open Market of the Frankfurt Stock Exchange under the symbol ØAE.

We invite you to read the following discussion in conjunction with our company’s unaudited consolidated financial statements for the three month period ended September 30, 2009 and the notes to the financials. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles and have not been audited. All amounts are in Canadian dollars unless otherwise stated.

Business Activities

In April 2009 we entered into a financial advisory agreement with Fitzhenry and Green Capital Funding dated April 18, 2009 whereby Fitzhenry and Green agreed to provide financial advisory services to Aerocast for a monthly fee. In addition, we granted Fitzhenry and Green an option to acquire up to 800,000 shares at $0.10 per share whereby one-half of the option vests immediately and one-half of the option will vest upon Fitzhenry and Green LLC having facilitated a minimum $US 500,000 financing into Aerocast.

In April 2009 our wholly owned subsidiary Aerocast International Inc. entered into a long-term agreement with Hamilton Sundstrand Corporation to supply certain parts to Hamilton Sundstrand for a five year period.

In May 2009 we entered into financial advisory agreements with Carrie Howes and Marlies Studer who each agreed to provide financial advisory services to our company.

In June 2009 we entered into a consulting agreement with VS Venture Services GmbH of Wiesbaden, Germany, which has agreed to assist our company in liaising with representatives of ProMexico with a view to promoting Aerocast as a potential recipient of a loan, guarantee, subvention or other benefit from ProMexico. We also entered into consulting agreements with Global Communication Services GmbH of Cologne, Germany and with Investor Magazine Ltd. of Frankfurt, Germany.

In July 2009 we entered into a consulting agreement with a German contractor that has agreed to write and distribute four research reports on Aerocast and assist in institutional financings based on performance fee. We also entered into a consulting agreement with a German consultant that has agreed to write and distribute three research reports on Aerocast, provide a periodic text link on www.ad-hoc-news.de, develop and periodically update a fact sheet on Aerocast and post such fact sheet on www.ad-hoc-news.de, and assist in institutional financings based on performance fee.

In July 2009 our subsidiary Aerocast International Inc. entered into a multi-million dollar long-term agreement with Sikorsky Aircraft Corporation whereby Aerocast International agreed to furnish certain parts to Sikorsky for a ten year period.

In August 2009, we announced that our subsidiary, Aerocast International Inc., has received Nadcap certification for welding. Along with other customer approvals, Nadcap approval will allow us to fulfill welding requirements on aluminum and magnesium castings.

We currently have over 25 different casting part numbers in production and the quantity we produce of each part number ranges from about 10 to 165 per month, depending on customer requirements and our available production capacity. In a number of cases we have been currently producing less, sometimes significantly less, than the ideal quantities that our customers would like to order. This shortfall has cost us a lot in missed revenues.

One of the factors holding us back from higher production levels has been a shortage of raw materials on hand, such as the aluminum and magnesium alloys and sand for sand moulds that we need to make castings. The shortage was due to us having insufficient working capital to purchase and maintain adequate quantities of raw materials.

To address these issues, in October 2009 we closed an offering of units of our company’s securities where each unit consists of one common share and one share purchase warrant exercisable for two years at $0.20 per share. A total of 4,505,453 units were issued at $0.20 per unit for gross proceeds totaling $901,090. In connection with this financing, we paid finder’s fees totaling $66,454 cash and 50,750 finder’s units, where each finder’s unit consists of one common share and one common share purchase warrant exercisable at $0.20 per share for a two year period. At the same time we also settled debts totaling $301,036 via the issuance of 1,505,180 shares at a deemed price of $0.20 per share.

Using the additional working capital we purchased additional supplies of metal and sand and are now in the process of acquiring and installing equipment which will enable us to increase production capacity and reduce expenses.

In November 2009, we entered into a consulting agreement with QIS Capital, which has agreed to do the following: send an original overview and corporate summary of Aerocast to the QIS Capital investor/broker contacts and update this report at least each quarter after financial results have been issued or after any significant developments; send the corporate summary to QIS Capital’s complete client base of investors, brokers, and analysts; distribute original and updated corporate profiles of Aerocast; feature Aerocast on a rotating basis within the “QIS Capital Feature Company Spotlight”; and complete a brief research report for Aerocast.

In November 2009 we announced that our wholly owned subsidiary, Aerocast International Inc., has received Nadcap certification for optical emission spectroscopy. Optical emission spectroscopy (OES) is a reference technique for direct analysis of solid metallic samples. We use OES to test metal samples prior to pouring castings. An unmatched combination of accuracy, high speed, precision, stability and reliability have made OES an indispensable tool for production of high quality metallurgical products. Nadcap (the National Aerospace and Defense Contractors Accreditation Program) is a global cooperative standards-setting program for aerospace engineering, defense and related industries.

Investment Conferences

In April 2009 we exhibited at the Invest conference in Stuttgart, Germany and our CEO gave a presentation at the SCF Small Cap Forum in Frankfurt, Germany. In September 2009 our CEO gave a presentation at the Vancouver Small Cap Conference. In October 2009 we exhibited at the Calgary Small Cap Conference at the Coast Plaza Hotel & Conference Centre Calgary.

Annual General Meeting

Our 2009 annual general meeting was held on September 30, 2009 at the Vancouver office of our transfer agent Computershare. At the AGM, shareholders approved the re-appointment of our auditors BDO Dunwoody LLP, elected a three member board of directors consisting of Robert Jamieson Sr., Robert Jamieson Jr. and Raynard von Hahn, and approved our 2009 stock option plan. Subsequent to the AGM, the directors re-appointed Robert Jamieson Sr. as President, Raynard von Hahn as CEO, Robert Jamieson Jr. as CFO, Secretary and Treasurer, and Kenneth Hromada as Executive Vice President, Sales & Engineering.

Trends

A report issued by the Aerospace Industries Association entitled 2008 Year End Review and 2009 Forecast projects aerospace industry growth to be pushed up 4.8 percent from 2008. The forecast states that U.S. aerospace industry sales are estimated to reach US$204.4 billion in 2008, while the industry order backlog in 2008 is expected to be higher than ever at US$404.5 billion. The full report is available on the AIA website at www.aia-aerospace.org.

From our point of view, we see a continued high demand for the types of castings that we produce. It is our goal to be the industry’s lowest cost-producer of high-end aluminium and magnesium castings and if we can reach this goal we believe that we’ll be in a position to make profitable sales even if the general economy is weak.

The recent economic downturn is, however, making it more difficult for our company to obtain financing.

RESULTS OF OPERATIONS

Revenues for the three months ended September 30, 2009 totalled $686,362 compared to $15,079 for the same period the year before, while gross margins before expenses totalled $149,116 compared to a gross margin loss of $24,475 for prior year’s quarter.

The net loss for the three months ended September 30, 2009 was $492,529 ($0.03 per share), compared to a net loss of $409,684 ($0.03 per share) for the three months ended September 30, 2008. The increased loss of $82,845 is mainly attributable to the following:

a)Foundry expenses increased by $77,380 from $231,867 to $309,247 as our production of castings increased compared to the prior year’s quarter. The most significant component of the increase is for supplies and materials (from $16,659 to $148,572), which was offset by decreases in salaries and benefits (from $65,697 to $26,588).
b)General and administrative expenses increased by $177,118 from $153,342 to $330,460. Consulting fees recorded the biggest increase (from $224 to $102,037) followed by increased salaries and benefits (from $93,249 to $190,049). These amounts were offset by the decrease in travel costs (from $30,871 to $9,845) and an increase in foreign exchange gain (from $47,615 to $105,785).

Our sales revenues increased from $19,400 for the six months ended September 30, 2008, to $860,592 for the six months ended September 30, 2009 as a result of significant increases in the production and sales of castings as well as revenue recognition for the sales of tooling equipment. Gross margins before expenses increased from a loss of $24,473 to a gain of $189,519.

The net loss for the six months ended September 30, 2009 was $1,121,176 ($0.07 per share), compared to a net loss of $941,359 ($0.06 per share) for the six months ended September 30, 2008. The increased loss of $179,817 is mainly attributable to the following:
a)Foundry expenses increased by $251,458 from $382,738 to $634,196 due to increased production of castings. The most significant components in the increase were for supplies and materials, which increased from $35,990 to $250,962, and for office and miscellaneous expenses, which increased from $24,138 to $73,350. These were offset somewhat by a decrease in salaries and benefits from $129,451 to $99,573.
b)General and administrative expenses increased by $140,413 from $534,148 to $674,561. The most significant components of the increase were salaries and benefits (from $148,159 to $420,966) and consulting fees (from $9,269 to $180,520). These were offset by a decrease in stock-based compensation (from $251,948 to $33,154) and an increase in the foreign exchange gain (from $42,427 to $202,367).

Our accounts payable and accrued liabilities increased from $987,816 as at March 31, 2009 to $1,253,379 as at September 30, 2009. Customer deposits decreased from $865,766 to $483,661 as tooling equipment was completed and invoiced.

SUMMARY OF QUARTERLY RESULTS

There is no material seasonality to our company’s business. The loss for the quarter ended September 30, 2009 includes increased expenses for supplies and materials ($148,572 compared to $16,659 for the prior year’s quarter), consulting fees ($102,037 compared to $224 for the prior year’s quarter) and salaries and benefits ($190,049 compared to $93,249 for the prior year’s quarter).

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2009, our company had cash of $294,244 compared to $112,158 as at June 30, 2009. As at September 30, 2009, our company had a working capital deficiency of $1,326,888 compared to working capital deficiency of $1,422,361 as at June 30, 2009. While we are receiving funds from sales contracts, we will also require additional equity or debt financing in the next twelve months to ensure ongoing operations.


To view the entire news release, please follow the link:
http://www.irw-press.com/dokumente/Aerocast_01122009_English.pdf


ADDITIONAL INFORMATION

Additional information relating to our company is on SEDAR at www.sedar.com. In addition, we invite you to visit our company’s website at www.aerocastinc.com.

Sincerely,
Aerocast Inc.


“Robert L. Jamieson” “Raynard von Hahn”

Bob Jamieson, President Raynard von Hahn, CEO

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Datum: 01.12.2009 - 17:14 Uhr
Sprache: Deutsch
News-ID 8874
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