Carmanah Announces Record Financial Results for Q1 2004.

Vancouver, BC, Canada - (October 21, 2004) - Carmanah Technologies Corporation (TSX VE: CMH; Berlin and Frankfurt Stock Exchanges: QCX), is pleased to announce its first quarter results for the three months ended March 31, 2004 and 2003.

Highlights for the quarter:

  • Record revenues of $4,113,701, representing a 115% increase over Q1 2003 and a 24% increase over the prior Company record achieved in Q4 2003;
  • Earnings before income tax, depreciation and amortization (EBITDA) was $458,156;
  • Net earnings of $369,492 for the quarter, as compared to $12,915 for Q1 2003;
  • Gross profit margin increasing to 52% from an average of 51% for fiscal 2003.

"This has been a very strong quarter for Carmanah, consistent with our financial objectives for 2004." stated Art Aylesworth, Carmanah's CEO. "Building on the significant momentum of Q4 2003, we are now making excellent headway in all strategic areas of our business. Although we achieved record revenues and profitability for Q1 2004, it is important to note that the first half of our fiscal year is historically slower than the last half, and Q1 2004 provides an excellent foundation for the remainder of the year."

SUMMARY OF RESULTS

Carmanah's total revenues for the three months ended March 31, 2004 increased 115% to $4,113,701 compared with $1,906,478 for the same period in 2003. Revenues were derived from the sale of its existing product line of solar powered light-emitting diode hazard and safety lights to marine, roadway and aviation markets, from the sale of new products primarily consisting of the illuminated bus shelters and bus stops to transit markets, and from the sale of edge-lit signs through its newly acquired subsidiary AVVA Light Corporation. Sales were sourced through a worldwide distribution network and direct sales efforts in these key market segments and territories.

Carmanah's gross profit margin achieved in Q1 was 52% of sales, slightly higher than the annual profit margin achieved in fiscal 2003 of 51%.

Wages and benefits expense for the three months ended March 31, 2004, increased 82% to $804,941, compared with $443,346 in 2003. This increase was the result of an increase in sales and administrative staff in support of planned sales growth, as well as the increase in staffing levels resulting from the acquisition of AVVA in October 2003. As a percentage of sales, wages and benefits expense represents 20% of sales in Q1 2004, compared with 23% of sales in Q1 2003.

Office and administration expenses in first quarter 2004 were $246,802, representing a 56% increase over same period in 2003 at $158,613. Most of the increase in office and administration expense is the result of the acquisition of AVVA, which comprises $77,598 (88%) of the total increase for the period. The total office and administration expenses in Q1 2004 decreased as a percentage of sales to 6% of total sales in, as compared to 8% of total sales in Q1 2003.

During first quarter 2004, research and development expenses of $337,903 represented a 72% increase over $196,664 in the comparative quarter. The continued investment in (1) research for existing product enhancements and (2) new product development has enabled Carmanah to turn out prototypes and products at a faster rate. This ability to keep up with market demands for technology enhancements and new product offerings has rewarded the Company with its current sales momentum. Carmanah will continue to be aggressive with its investment in research and development as the Company works with key market segments on new opportunities. As a percentage of sales, research and development expenses decreased in Q1 2004 to 8% of sales, compared with Q1 2003 at 10% of total sales.

Sales and marketing expenses in first quarter 2004 were $293,773, representing a 106% increase over same period in 2003 at $142,569. The Company continued to increase sales and marketing activities for new and existing product lines throughout its worldwide marketplace. In addition, a significant portion of the overall sales and marketing investment was allocated to markets and products where the Company has identified significant future revenue opportunity. Sales and marketing expense continued to grow as a percentage of sales at a consistent level, with sales and marketing expense representing 7% of total sales for both 2004 and 2003 quarters.

The Company utilized a portion of its carry forward investment tax credits, tax losses and SRED pools in order to minimize any current tax expense. The future income tax effect arising from the use of these items has been offset against available tax losses not previously recognized.

Net earnings for Q1 2004 were $369,492 compared with $12,915 in Q1 2003, and net earnings before income tax, depreciation and amortization (EBITDA) was $458,156, compared with $49,705 for Q1 2003. The net earnings for this quarter at 9% of total sales represent a significant milestone for Carmanah, compared with previous net earnings which been closer to a breakeven point.

Carmanah's cash and cash equivalents at March 31, 2004 was $6,257,627, compared to $1,693,069 at December 31, 2003. Net cash usage from operations and investing activities was $720,774. During the quarter, the Company closed a private placement financing for gross proceeds of $5,750,000. Net working capital at the end Q1 2004 was $9,772,493, with a current ratio of 5:1 and $55,917 of non-current debt obligations.

About Carmanah

Carmanah is an award winning alternative energy manufacturer specializing in patented solar-powered LED lighting solutions for the marine, aviation, transit, roadway, railway and mining markets. The Company currently has more than 90,000 units installed in 110 countries. The shares of Carmanah Technologies Corporation (parent company) are publicly traded on the TSX Venture Exchange under the symbol "CMH" and on the Berlin and Frankfurt Stock Exchanges under the symbol "QCX". For more information, please visit www.carmanah.com.

On Behalf of the Board of Directors

Carmanah Technologies Corporation

Praveen Varshney, Director

CARMANAH TECHNOLOGIES CORPORATION

Consolidated Interim Balance Sheets

March 31, 2004 and December 31, 2003

(Unaudited - Prepared by Management)

    March 31, December 31,
2004 2003
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 6,257,627 $ 1,693,069
Accounts receivable, net 3,948,453 2,698,061
Inventories 1,865,842 1,904,872
Prepaid expenses and deposits 119,481 53,376
12,191,403 6,349,378
Equipment and leasehold improvements, net 1,026,242 871,683
Intangible assets, net 184,493 190,320
Goodwill 3,072,173 3,072,173
Future Income taxes 190,114 190,114
$16,664,425 $10,673,668
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
  accrued liabilities
1,984,012 1,648,841
Bank loan 310,000 383,332
Deferred Revenue 71,988 71,228
Current portion of
  long-term debt
21,848 21,848
Current portion of obligations
  under capital lease
31,062 55,435
2,418,910 2,180,650
Long-term debt 27,850 33,325
Obligations under capital lease 28,067 71,656
2,474,827 2,285,631
Shareholders' equity:
Share capital 14,258,323 8,831,345
Contributed surplus 476,990 471,899
Deficit (545,715) (915,207)
14,189,598 8,388,037
$16,664,425 $10,673,668

CARMANAH TECHNOLOGIES CORPORATION

Consolidated Interim Statements of Operations and Deficit

For the three months ended March 31, 2004 and 2003

(Unaudited - Prepared by Management)

    2004 2003
Sales $ 4,113,701 $ 1,906,478
Cost of Sales 1,947,147 904,182
2,166,554 1,002,296
Operating Expenses:
Wages and benefits 804,941 443,346
Office and administration 246,802 158,613
Research and development 337,903 196,664
Sales and marketing 293,773 142,569
Bank charges and interest 29,527 14,178
Amoritization of:
   Capital Assests 79,039 34,562
   Patents and other intangible assets 9,625 2,228
$ 1,801,610 $ 992,160
Operating income for the period 364,944 10,136
Interest and other income 4,548 2,779
Earnings before income taxes 369,492 12,915
Income tax expense (recovery):
  Current income taxes 206, 000 -
Future (206,000) -
Net earnings (loss) 369,492 12,915
Retained earnings (deficit),
beginning of year,
as previously reported
(741,505) (764,348)
Adjustment to reflect change
in accounting for
employee stock options
(173,702) (24,465)
Deficit, beginning of period (915,207) (788,813)
Deficit, end of period (545,715) (775,898)
Earnings per share
   Basic $ 0.013 $ 0.001
   Fully diluted $ 0.012 $ 0.001
Weighted average number
   of shares outstanding
   Basic 27,307,882 20,808,266
   Diluted 29,459,672 21,247,693

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are described under the caption "Note Regarding Forward-looking Statements" and "Key Information - Risk Factors" and elsewhere in Carmanah's Annual Report for the fiscal year ended December 31, 2003, as filed with the U.S. Securities and Exchange Commission and which are incorporated herein by reference. These risks and uncertainties are also described under the caption "Risk Factors" in Carmanah's Annual Information Form dated December 31, 2003, as filed with the British Columbia Securities Commission and which are incorporated herein by reference. Carmanah does not assume any obligation to update the forward-looking information contained in this press release.