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Lightscape Technologies Reports Fiscal 2008 Year-End Results Jul 15, 2008 7:00:00 AM
HONG KONG -- (MARKET WIRE) -- 07/15/08 -- Total net revenue for the year ended March 31, 2008 was $6.0 million, a 56% decrease from total net revenue of $13.6 million a year earlier. Operating expenses, consisting of selling and marketing expenses and general and administrative expenses, were $5.7 million, compared with $4.5 million in the 2007 period. Net loss for the year ended March 31, 2008 was $9.4 million, or $0.22 per diluted share, compared to a net profit of $1.1 million, or $0.02 per diluted share, a year ago.
Of the net loss for the year ended March 31, 2008, $6.8 million was from continuing operations and $2.6 million arose from Lightscape's discontinued operations in the energy-savings solutions business. Expenses from continuing operations, which are not expected to be recurring, also contributed to the net loss. During the year ended March 31, 2008, impairment losses on intangible assets were $689,204 and impairment losses on goodwill were $526,863, compared to $nil for each during the year ended March 31, 2007. These losses are related to write-downs of intangible assets and goodwill associated with Lightscape's acquisition of 76.8% of its subsidiary engaged in the lighting source products business. Bondy Tan, President and CEO of Lightscape Technologies, said: "During the fiscal year and the fourth quarter, we made several decisions to focus on opportunities in our core business, streamline our operations and position the company for future growth. Specifically, we sharpened our strategy to focus on the LED outdoor advertising and LED solutions businesses, where we see excellent opportunities for growth, and we moved resources to address the needs of these businesses. As a result of this strategic shift, our lighting source products and energy-savings solutions units had lower revenue compared with a year ago, and we expect these businesses to have a lesser role in our strategy going forward. The immediate result of these actions was a net loss for the year, but we believe that over the long term these steps will strengthen the company's business and its financial performance. Our balance sheet and cash flow remain solid, and we believe Lightscape now has a clear strategy and strong potential for growth." Continued Mr. Tan, "Lightscape's current business strategy is focused on building and expanding its LED outdoor advertising network through partnerships with major property owners and developers in Asia. The Company is also establishing advertising sales channels for its planned LED outdoor advertising network by forming strategic partnerships with advertising agencies. Lightscape intends to grow its LED solutions business through contracts with high-end real estate developments in China, Hong Kong, Singapore and other areas of Asia to design and supply LED systems." Business Highlights Developments during and subsequent to the fourth quarter included:
-- The continued implementation of the Company's joint venture with an
affiliate of the
"Through our Company's efforts over the past year, we are positioned to be a world-class digital media and LED solutions company in Asia. We are excited about the foundation we have established and look forward to executing in fiscal 2009," Bondy Tan said. Results of Operations Total net revenue for the year ended March 31, 2008 was $6,032,423 which represents a 56% decrease from the total net revenue of $13,629,406 for the year ended March 31, 2007. The decrease in net revenues is primarily attributable to the decrease in sales of LED solutions and the decrease in sales of lighting source products. Specifically, sales and contract revenue related to our LED solutions business decreased by 55% to $3,564,537 for the year ended March 31, 2008 from $7,881,399 during the year ended March 31, 2007. The decrease in revenues was due primarily to the longer than expected lead times to secure and complete new LED solutions contracts during the year ended March 31, 2008. Sales of lighting source products were $2,346,981 for the year ended March 31, 2008 compared to $5,210,646 for the year ended March 31, 2007, representing a decrease of 55%. The decrease in revenues was due primarily to the effect of the Company's change of local senior executives at an operating subsidiary and internal restructuring during the year ended March 31, 2008. The purpose of the changes and restructuring was to reduce manufacturing costs and foster the Company's sales and marketing network in China. Lightscape discontinued operations in the energy-savings business during the year ended March 31, 2008. The decision to discontinue these operations was intended to more effectively utilize the Company's financial and human resources by focusing on its LED outdoor advertising and LED systems businesses which management considers to have more promising potential for revenue and margin growth. Operating expenses for the year ended March 31, 2008 were $5,734,128, which represents a 27% increase from operating expenses of $4,510,897 for the year ended March 31, 2007. Selling and marketing expenses as well as general and administrative expenses constitute the components of the Company's operating expenses. Selling and marketing expenses for the year ended March 31, 2008 decreased approximately 2% to $666,426 from $678,762 for the year ended March 31, 2007. General and administrative expenses increased by 32% during the year ended March 31, 2008 to $5,067,702 from $3,832,135 for the year ended March 31, 2007. The increase was mainly due to increased staff and business development costs for the year ended March 31, 2008 to provide the foundation to support the Company's anticipated overall business growth, particularly its LED outdoor advertising and LED solutions business units. As of March 31, 2008, the Company had a net working capital surplus of $11,490,237 compared with a surplus of $5,837,302 as of March 31, 2007, representing an increase in working capital of $5,652,935. The cash and cash equivalents of the Company decreased to $3,978,500 as at March 31, 2008 as compared to $4,117,107 as of March 31, 2007. As of March 31, 2008, the Company had not obtained any credit facilities. Lightscape incurred capital expenditures of $268,424 during the year ended March 31, 2008 and $1,354,500 for the year ended March 31, 2007. The decrease in capital expenditures for the year ended March 31, 2008 as compared to March 31, 2007 was mainly attributable to decreased purchases of equipment. As of March 31, 2008, the Company did not have any material commitments for capital expenditures and management does not anticipate that the Company will spend additional material amounts on capital expenditures in the near future. Additional information regarding Lightscape Technologies' financial performance as of and for the fiscal year ended March 31, 2008 and a comparison to the fiscal year ended March 31, 2007 can be found in the financial tables below and in the Company's Annual Report on Form 10-KSB which has been filed with the Securities and Exchange Commission. The Company's Annual Report can also be accessed through the Company's website at www.lightscapetech.com.hk. Shareholders may receive a hard copy of the Company's Annual Report free of charge upon request. About Lightscape Technologies Lightscape Technologies Inc. (OTCBB: LTSC) is one of the leading digital media and LED solutions companies in Asia. Through a joint venture agreement, Lightscape is building an outdoor LED media network in China focused on LED billboards in prime locations. The Company also designs, markets, sells and installs large-scale LED video screens and LED systems, operates outdoor LED advertising billboards, and provides LED screen rentals. Lightscape is headquartered in Hong Kong, and the Company has offices in Singapore, China and Macau. For additional information, please visit www.lightscapetech.com.hk. Cautionary Disclaimer - Forward-Looking Statements This news release contains "forward-looking statements," as that term is defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Such forward-looking statements include, among others, the estimation, expectation and/or claim, as applicable, that: Lightscape anticipates that its strategic shift and movement of resources to focus on the LED outdoor advertising and LED solutions businesses will strengthen the company's business and its financial performance; Lightscape intends to build and expand its LED outdoor advertising network through partnerships with major property owners and developers in Asia; Lightscape intends to establish advertising sales channels for its planned LED outdoor advertising network by forming strategic partnerships with advertising agencies; Lightscape expects to formally close its joint venture agreement with Beijing Xintong Media & Cultural Development Co. Ltd.; Lightscape expects a minimum of twenty-five LED outdoor advertising billboards to be installed in the largest cities in China by the joint venture by the end of calendar year 2009; Lightscape intends for the joint venture to expand its network coverage of LED outdoor advertising billboards to include other cities in China in 2010 and beyond; Lightscape intends to grow its LED solutions business through contracts with high-end real estate developments in China, Hong Kong, Singapore and other areas of Asia to design and supply LED systems; Lightscape will design, supply and install a large-scale curved LED video wall for the indoor area of the K-11 Hanoi Road development; and Lightscape anticipates that it will not spend additional material amounts on capital expenditures in the near future.Actual results could differ from those projected in any forward-looking statements due to a variety of risks, uncertainties and other factors, including, but not limited to, delays in the supply of LED modules, LED video screens and other hardware; risks of downturns in economic conditions generally and in Hong Kong and China specifically; competition with larger companies with greater resources and more experience in providing LED outdoor advertising services and LED solutions; the availability of timely financing; and the company's ability to manage growth. These forward-looking statements are made as of the date of this news release and the company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although the company believes that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance those beliefs, plans, expectations, or intentions will prove to be accurate. Investors should consider all of the information set forth herein and should also refer to the risk factors disclosed in the company's periodic reports filed from time-to-time with the Securities and Exchange Commission and available at www.sec.gov. [financial tables to follow]
LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (OPERATIONS) INCOME
Expressed in US dollars
Year Ended March 31,
2008 2007
---------- ----------
$ $
---------- ----------
Revenues:
Sale of lighting source products 2,346,981 5,210,646
Sale of lighting design solutions 1,039,548 2,410,025
Contract revenue from lighting design solutions
contracts 2,524,989 5,471,374
Rental income 5,141 1,285
Commission and service income 45,752 28,278
---------- ----------
Total net revenues 5,962,411 13,121,608
---------- ----------
Cost of revenues:
Cost of sale of lighting source products (1,715,679) (3,177,833)
Cost of sale of lighting design solutions (970,169) (858,806)
Contract costs of lighting design solutions
contracts (2,008,918) (3,547,669)
Costs of rental - (632)
Costs of commission and service - (13,871)
---------- ----------
Total cost of revenues (4,694,766) (7,598,811)
---------- ----------
Gross profit 1,267,645 5,522,797
Selling and marketing expenses (662,628) (548,428)
General and administrative expenses (4,952,165) (3,376,119)
---------- ----------
(Loss) income from operations (4,347,148) 1,598,250
Interest expense (382,022) (469,028)
Interest income 39,424 11,186
Other income 888,412 1,334,656
Loss on disposal of plant and equipment (3,728) (445)
Impairment loss on intangible assets (689,204) -
Impairment on goodwill (526,863) -
Gain on disposal of investments - 720
Loss on redemption of redeemable convertible notes
and options (2,253,359) -
Equity share of the result of joint venture - 64,710
---------- ----------
(Loss) income from continuing operations before
income tax and minority interests (7,274,488) 2,540,049
Income taxes - (271,751)
---------- ----------
Net (loss) income from continuing operations before
minority interests (7,274,488) 2,268,298
Minority interests 444,215 (530,547)
---------- ----------
Net (loss) income from continuing operations (6,830,273) 1,737,751
---------- ----------
Discontinued operations
Net loss from discontinued operations, net of
income taxes (244,131) (657,860)
Loss on disposal of discontinued component (2,341,671) -
---------- ----------
(Loss) on discontinued operations (2,585,802) (657,860)
---------- ----------
Net (loss) income attributable to shareholders of
the Company (9,416,075) 1,079,891
========== ==========
(Loss) Earnings per share
- Basic
Continuing operations (0.16) 0.05
Discontinued operations (0.06) (0.02)
---------- ----------
Total (0.22) 0.03
========== ==========
- Diluted
Continuing operations (0.16) 0.03
Discontinued operations (0.06) (0.01)
---------- ----------
Total (0.22) 0.02
========== ==========
Weighted average number of common shares
outstanding
- Basic 42,574,361 33,440,587
========== ==========
- Diluted 42,574,361 44,349,677
========== ==========
LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Expressed in US dollars
March 31, March 31,
2008 2007
----------- -----------
$ $
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents 3,976,565 4,108,180
Accounts receivable, net of allowance for
doubtful accounts of $817,790 on March 31,
2008 and $413,082 on March 31, 2007 4,438,207 4,785,841
Costs and estimated earnings in excess of
billings on uncompleted contracts 639,035 -
Prepaid expenses and other current assets 1,742,031 2,034,460
Inventories 3,903,798 1,569,203
Current assets of discontinued operations 699,847 593,381
----------- -----------
Total current assets 15,399,483 13,091,065
----------- -----------
Other investments, net of write-off amount
of $31,516 on March 31, 2008 and 2007 - -
Intangible assets, net 1,700,114 3,138,568
Goodwill 4,476,574 5,003,437
Plant and equipment, net 4,650,398 3,923,120
Construction in progress - 1,715,141
Net investment in sales-type leases of
discontinued operation 126,521 329,238
Intangible assets, plant and equipment, net
investment in sales-type leases of discontinued
operations - 1,381,478
----------- -----------
10,953,607 15,490,982
----------- -----------
TOTAL ASSETS 26,353,090 28,582,047
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Options to subscribe for additional convertible
notes - 2,619,000
Trade payables 2,413,203 2,966,420
Amount due to a director - 39,846
Accrued expenses and other current liabilities 763,797 978,744
Obligations under capital leases - current
portion 1,774 1,774
Income tax payable 366,281 251,018
Liabilities of discontinued operations 364,191 396,961
----------- -----------
Total current liabilities 3,909,246 7,253,763
----------- -----------
Non-current liabilities:
Obligations under capital leases - non-current
portion 5,469 6,947
Redeemable convertible notes - 147,047
----------- -----------
Total non-current liabilities 5,469 153,994
----------- -----------
Total liabilities 3,914,715 7,407,757
----------- -----------
Minority interest 1,421,702 1,865,916
----------- -----------
COMMITMENTS AND CONTINGENCIES (see Notes 18 and
19)
Shareholders' equity:
Common stock
Authorized:
800,000,000 common shares, par value $0.001
per share
100,000,000 preferred shares, par value
$0.001 per share
Issued and outstanding:
55,876,410 common shares at March 31, 2008
and 37,451,410 at March 31, 2007 55,876 37,451
Additional paid-in capital 34,140,708 24,139,333
Common stock warrants 344,673 -
Other reserves 28,944 28,944
Accumulated other comprehensive income 1,082,442 322,541
Accumulated deficit (14,635,970) (5,219,895)
----------- -----------
Total shareholders' equity 21,016,673 19,308,374
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 26,353,090 28,582,047
=========== ===========
Contacts: Gavin Anderson & Company Rebecca Kogan +212 515 1968 rkogan@gavinanderson.com Joshua Goldman-Brown +852 2218 9952 jgoldman-brown@gavinanderson.com.hk |
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