SOURCE: Lightscape Technologies Inc.
Lightscape Technologies Reports Fiscal 2010 First Quarter Results
HONG KONG--(eMediaWorld - August 20, 2009) - Lightscape Technologies Inc. (
Total net revenue for the three months ended June 30, 2009 was $1.49 million, a 4% decrease from $1.56 million for the three months ended June 30, 2008. Gross profit margin was 29.3% for the three months ended June 30, 2009 as compared to 27.7% for the three months ended June 30, 2008. The improvement in gross margin is primarily attributable to improved cost control related to the Company's LED solutions business, namely supplies of LED modules and video screens, and a higher proportion of revenue from the digital OOH advertising business, which generally provides for a higher profit margin compared to the LED solutions business. During the three months ended June 30, 2009, the gross profit margin achieved on the digital OOH advertising business was 79.2%.
Net loss for the three months ended June 30, 2009 was $0.75 million, or $0.01 per fully diluted share, compared to a net loss of $0.99 million, or $0.02 per fully diluted share, for the three months ended June 30, 2008.
Bondy Tan, President and CEO of Lightscape, said, "During the first quarter, we continued to focus on opportunities in our core digital OOH advertising business. After the work we completed during calendar year 2008 and into 2009 to build up our digital OOH advertising network, we booked our first revenue from this segment during the first quarter. We see excellent opportunities for growth in this business and we will continue to build and expand the company's OOH advertising network through partnerships with major property owners and developers and by forming strategic relationships with advertising agencies."
Continued Mr. Tan, "With our innovative LED solutions and support from strategic partners, we also secured several new contracts from high-profile clients in the past quarters, and we expect that trend to continue into the future. We also improved our gross margin by securing more favorable contracts with our OEM suppliers of LED hardware. As we progress through calendar year 2009, we will take every measure to manage risks and operational expenditures."
Business Highlights
-- Lightscape continues to focus on its exclusive OOH advertising relationship with New World Group to ramp-up the network of locations at New World Department Stores China properties throughout Mainland China
-- booked first $188,625 of advertising revenue generated by digital OOH advertising network, achieving a gross profit margin of 79.2%
Results of Operations
Total net revenue for the three months ended June 30, 2009 was $1,490,652, representing a 4% decrease from the total net revenue of $1,558,707 for the three months ended June 30, 2008. The decrease in net revenues is primarily attributable to the decrease in revenue from non-core businesses, primarily the Company's lighting products business.
Specifically, revenue related to the digital OOH advertising business was $188,625 for the three months ended June 30, 2009 as compared to from $nil during the three months ended June 30, 2008 and $nil for the Company's last quarter ending March 31, 2009. The gross profit margin on the digital OOH advertising business was 79.2% for the three months ended June 30, 2009. The digital OOH advertising business is expected to contribute increased revenues in the foreseeable future as the Company ramps up several key network installations which were completed during past quarters and are expected to generate increased advertising revenue in the future. The Company has formed strategic partnerships with Ogilvy & Mather Group, a major advertising agency in Hong Kong, and LIME, a diversified media conglomerate, to sell advertising space on its digital OOH network. The Company is also in the process of negotiating strategic partnership agreements and contracts with other advertising agencies and additional advertisers for the sales of advertising space on the network.
Revenue related to the Company's LED solutions business increased by 31% to $855,433 for the three months ended June 30, 2009 from $652,949 during the three months ended June 30, 2008. The increase in revenues was due primarily to the completion of more LED solutions contracts during the three months ended June 30, 2009 as compared to a smaller number of contracts completed during the three months ended June 30, 2008. The gross profit margin on the LED solutions business was 25.1% for the three months ended June 30, 2009. The LED solutions business is expected to contribute increased revenues in the foreseeable future as several key projects are expected to be completed in the near future.
Sales from other business, which includes the HID lighting products business, were $446,594 for the three months ended June 30, 2009, compared to $905,758 for the three months ended June 30, 2008, representing a decrease of 51%. The decrease in revenues from other businesses was due primarily to a decrease in revenue from sales of HID lighting products by subsidiary Beijing Illumination. The decrease in sales by Beijing Illumination was due primarily to the scaling back of overall operations, including reducing production lines, production shifts and personnel, in order to focus on the Company's core digital OOH advertising and LED solutions businesses. The gross profit margin from the Company's other business was 16.3% for the three months ended June 30, 2009. The Company is currently reviewing its plans and strategic options related to its HID lighting products business.
Total cost of revenues for the three months ended June 30, 2009 was $1,053,790, which represents a decrease of 6% as compared to total cost of revenues of $1,126,968 for the three months ended June 30, 2008. The decrease in the total cost of revenues during the three months ended June 30, 2009 was due in part to the 4% decrease in sales revenues, but also decreased due to improved cost control related to the LED solutions business, namely supplies of LED modules and video screens, and a higher proportion of revenue from the digital OOH advertising business, which generally provides for a higher profit margin compared to the LED solutions and HID lighting products businesses. As a result, overall gross profit margin improved to 29.3% for the three months ended June 30, 2009 as compared to 27.7% for the three months ended June 30, 2008.
Operating expenses for the three months ended June 30, 2009 were $1,271,751, which represents an 11% decrease in operating expenses from $1,434,557 for the three months ended June 30, 2008. Selling and marketing expenses, general and administrative expenses and amortization of intangible assets constitute the main components of operating expenses. The Company has recently introduced internal measures to control costs including salary reduction for management.
Selling and marketing expenses for the three months ended June 30, 2009 increased approximately 45% to $238,393 from $163,975 for the three months ended June 30, 2008. The increase was mainly due to increased costs incurred in order to build up the Company's project pipeline of LED solutions contracts and establish the sales network for the digital OOH advertising business. The Company anticipates that selling and marketing expenses will remain steady or increase in the future to support the Company's further expansion in its core digital OOH advertising and LED solutions businesses, however, any such increases are expected to be limited as a result of a company-wide cost-cutting initiative implemented in January 2009.
General and administrative expenses decreased by 11% during the three months ended June 30, 2009 to $835,427 from $936,794 for the three months ended June 30, 2008. The decrease was mainly due to the cost savings achieved as a result of the company-wide cost-cutting initiative implemented in January 2009. The Company anticipates that general and administrative costs will steady or increase in the foreseeable future as the Company's operations continue to expand, however, such increases are expected to be limited as a result of the cost-cutting initiative.
As of June 30, 2009, the Company had a net working capital surplus of $5,996,489 compared to a surplus of $6,287,977 as of March 31, 2009, representing a decrease in working capital of $291,488. The cash and cash equivalents of the Company attributable to continuing operations decreased to $149,549 as at June 30, 2009 as compared to $381,643 as of March 31, 2009. Cash attributable to discontinued operations totaled $nil and $8,555 for the three months ended June 30, 2009 and the year ended March 31, 2009, respectively.
Lightscape incurred capital expenditures of $148,814 during the three months ended June 30, 2009 and $2,814 for the three months ended June 30, 2008. The increase in capital expenditures for the three months ended June 30, 2009 as compared to June 30, 2008 was mainly attributable to increased purchases of digital OOH advertising equipment.
Financing activities generated cash of $811,133 for the three months ended June 30, 2009 as compared to financing activities generating cash of $487,978 for the three months ended June 30, 2008. The increase in net cash flow generated by financing activities was mainly due to the Company obtaining bank loans to fund operations.
Additional information regarding Lightscape's financial performance for the three months ending June 30, 2009 and a comparison to the period ended June 30, 2008 can be found in the financial tables below and in the Company's Quarterly Report on Form 10-Q, which has been filed with the Securities and Exchange Commission.
About Lightscape Technologies
Lightscape Technologies Inc. (
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 expects an MOU agreement signed with New World Department Stores China to enable the Company to expand its digital OOH advertising network at properties throughout China; Lightscape expects its digital OOH advertising business to contribute increased revenues in the foreseeable future as the Company ramps up several key network installations which were completed during past quarters and are expected to generate increased advertising revenue in the future; Lightscape expects Ogilvy & Mather and LIME to sell advertising space on its digital OOH advertising network; Lightscape expects its LED solutions business to contribute increased revenues in the foreseeable future as several key projects are expected to be completed in the near future; and Lightscape anticipates that selling, marketing, general and administrative expenses will remain steady or increase in the future to support the Company's further expansion in its core digital OOH advertising and LED solutions businesses, but such increases are expected to be limited as a result of a company-wide cost-cutting initiative implemented in January 2009. 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, China and Singapore specifically; competition with larger companies with greater resources and more experience in providing digital OOH 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.
LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (UNAUDITED)
Expressed in US dollars (except for number of common shares)
Three Months Ended
June 30,
2009 2008
---------- ----------
$ $
---------- ----------
Revenues:
Advertising revenue 188,625 -
LED solutions revenue 855,433 652,949
Other revenue 446,594 905,758
---------- ----------
Total net revenues 1,490,652 1,558,707
---------- ----------
Cost of revenues:
Cost of sales of Advertising revenue (39,272) -
Cost of sales of LED solutions revenue (640,648) (507,635)
Costs of Other revenue (i) (373,870) (619,333)
---------- ----------
Total cost of revenues (1,053,790) (1,126,968)
---------- ----------
Gross profit 436,862 431,739
Bad debts - (85,640)
Amortization (120,844) (205,653)
Depreciation (77,087) (42,495)
Selling and marketing expenses (238,393) (163,975)
General and administrative expenses (835,427) (936,794)
---------- ----------
Loss from operations (834,889) (1,002,818)
Interest expense (1,951) (300)
Interest income 159 326
Other income 62,829 1,441
Other expenses (15,055) -
---------- ----------
Loss from continuing operations before income tax
and noncontrolling interests (788,907) (1,001,351)
Income tax provision (3) -
---------- ----------
Net loss from continuing operations before
noncontrolling interests (788,910) (1,001,351)
Less: net income attributable to the noncontrolling
interests 34,625 21,436
---------- ----------
Net loss from continuing operations attributable to
Lightscape Technologies Inc. (754,285) (979,915)
---------- ----------
Discontinued operations
Net (loss) from discontinued operations, net of
income taxes (150) (13,946)
---------- ----------
(Loss) on discontinued operations (150) (13,946)
---------- ----------
Net loss attributable to Lightscape Technologies
Inc. (754,435) (993,861)
Other comprehensive income
Foreign currency translation adjustment arising
during the period 38,046 153,294
---------- ----------
Comprehensive loss (716,389) (840,567)
========== ==========
Loss per share
- Basic and diluted
Continuing operations (0.01) (0.02)
Discontinued operations (0.00) (0.00)
---------- ----------
Total (0.01) (0.02)
========== ==========
Weighted average number of common shares
outstanding
- Basic and diluted 55,876,410 55,876,410
========== ==========
(i) Includes depreciation of plant and equipment of $84,899 for the three
months ended June 30, 2009 and $65,591 for the three months ended June
30, 2008.
LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Expressed in US dollars
June 30, March 31,
2009 2009
(Unaudited)
----------- -----------
$ $
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents 149,549 381,643
Accounts receivable, net of allowance for
doubtful accounts of $1,322,616 on June 30,
2009 and $1,287,843 on March 31, 2009 2,880,353 2,239,228
Costs and estimated earnings in excess of
billings on uncompleted contracts 821,349 673,313
Prepaid expenses and other current assets 2,202,946 1,817,215
Inventories - LED 1,264,975 1,264,975
Inventories - others, including valuation
allowance of $162,782 on June 30, 2009 and
$162,782 on March 31, 2009 2,251,938 2,274,552
Current assets of discontinued operations 516,034 591,921
----------- -----------
Total current assets 10,087,144 9,242,847
----------- -----------
Intangible assets, net 849,059 969,282
Goodwill 4,476,574 4,476,574
Plant and equipment, net 2,459,567 2,529,141
Out-of-home advertising equipment, net 2,209,077 2,213,808
Construction in progress - Out-of-home
advertising equipment 266,250 266,250
Deferred cost 115,518 111,132
Accounts receivable, due after one year and net
of allowance for doubtful accounts of $Nil on
June 30, 2009 and $145,871 on March 31, 2009 72,956 200,890
Prepaid expenses and other current assets - due
after one year 511,337 511,277
Net investment in sales-type leases of
discontinued operations 20,439 36,359
----------- -----------
10,980,777 11,314,713
----------- -----------
TOTAL ASSETS 21,067,921 20,557,560
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings 699,369 55,266
Secured loan 137,524 -
Trade payables 821,787 689,945
Amount due to a director 658,496 745,501
Accrued expenses and other current liabilities 1,543,779 1,284,239
Obligations under capital leases - current
portion 3,037 2,904
Income tax payable 10,521 10,062
Current liabilities of discontinued operations 216,142 166,953
----------- -----------
Total current liabilities 4,090,655 2,954,870
----------- -----------
Non-current liabilities:
Obligations under capital leases - non-current
portion 5,050 5,313
Secured loan - non-current portion 137,523 -
Long-term bank borrowings 50,488 62,158
----------- -----------
Total non-current liabilities 193,061 67,471
----------- -----------
Total liabilities 4,283,716 3,022,341
----------- -----------
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 June 30,
2009 and at March 31, 2009 55,876 55,876
Additional paid-in capital 34,140,708 34,140,708
Common stock warrants 344,673 344,673
Other reserves 28,944 28,944
Accumulated other comprehensive income 1,115,400 1,077,354
Accumulated deficit (19,973,655) (19,219,220)
----------- -----------
Total shareholders' equity 15,686,130 16,428,335
----------- -----------
Noncontrolling interest 1,072,259 1,106,884
----------- -----------
Total Equity 16,784,205 17,535,219
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 21,067,921 20,557,560
=========== ===========
