Science & Technology
Science and Technology
Science and Technology
Wed, February 18, 2009
Tue, February 17, 2009
Lightscape Technologies Inc.: Lightscape Technologies Reports Fiscal 2009 Third Quarter Results
HONG KONG--(Marketwire - February 17, 2009) - Lightscape Technologies Inc. (
Total net revenue for the three months ended December 31, 2008 was $1.70 million, a 53% decrease from $3.62 million for the three months ended December 31, 2007. Gross profit margin was 34% for the three months ended December 31, 2008 as compared to 19% for the three months ended December 31, 2007. 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 LED consultancy contracts, which are generally of a higher profit margin as compared to LED supply and build contracts.
The Company's LED solutions segment had a strong quarter, with revenue accounting for $1,406,668, up 115% and 88% compared to the first and second quarters of this fiscal year, respectively.
Net loss for the three months ended December 31, 2008 was $0.79 million, or $0.01 per fully diluted share, compared to a net loss of $0.55 million, or $0.01 per fully diluted share, for the three months ended December 31, 2007.
Total net revenue for the nine months ended December 31, 2008 was $4,344,097, an 11% decrease from the total net revenue of $4,889,296 for the nine months ended December 31, 2007. Net loss for the nine months ended December 31, 2008 was $2,521,221 compared to a net loss of $2,864,561 for the nine months ended December 31, 2007.
Bondy Tan, President and CEO of Lightscape, said, "It's been a challenging year for Lightscape considering the volatile market and advertising environments, but we've still been able to achieve some substantive corporate milestones. With our innovative LED solutions and support from strategic partners, we secured several new contracts from high-profile clients in the past quarters, and we expect that trend to continue into the future. We also significantly improved our gross margin by securing more favorable contracts with our OEM suppliers of LED hardware. As we move into 2009, we will take every measure to manage risks and operational expenditure."
"In addition to our partnership with Ogilvy & Mather Group to sell advertising space on our LED out-of-home media network, we continue to step up our sales efforts. We have appointed LIME, a diversified media conglomerate, as a sales representative for our expanding and cost-effective LED billboard network. With LED out-of-home advertising billboards being installed at premium spots in Beijing, Hong Kong and other major Chinese cities, Lightscape's network is an attractive choice for advertisers to bring their sales messages to the widest possible number of potential customers."
Business Highlights
-- Lightscape was commissioned to design, supply and build three outdoor LED billboards for Le Royal Arc, a leading 6-star hotel complex in Macau. -- Lightscape was appointed as the technical consultant to Prudential, one of the world's largest financial services institutions, for the company's existing LED rooftop signage as well as the development of innovative 3D and 2D animations. -- Lightscape was contracted to undertake several LED lighting projects for the retail stores of Chow Tai Fook Jewellery Co. Ltd. in China and Hong Kong. -- Lightscape has begun selling advertising on its network of LED out-of- home media properties. Six LED out-of-home advertising billboards are set to go live in five separate locations in China and Hong Kong. -- Lightscape has engaged LIME, a diversified media conglomerate, as a sales representative for its LED out-of-home media network.
Results of Operations
Total net revenue for the three months ended December 31, 2008 was $1,701,299, representing a 53% decrease from the total net revenue of $3,617,194 for the three months ended December 31, 2007.
Revenue related to the Company's LED solutions business decreased by 53% to $1,406,668 for the three months ended December 31, 2008 from $2,975,913 during the three months ended December 31, 2007. The decrease in revenues was due primarily to the completion of fewer LED solutions contracts during the three months ended December 31, 2008. The LED solutions business is expected to contribute increased revenues in the foreseeable future as several key projects are expected to be initiated and/or completed in the near future.
Revenue from the Company's other business, which includes sales of lighting source products, was $294,631 for the three months ended December 31, 2008, compared to $641,281 for the three months ended December 31, 2007, representing a decrease of 54%. The decrease in sales of lighting source products was due primarily to the effect of a change of local senior executives and internal restructuring in the Company's Beijing subsidiary during the three months ended December 31, 2008 and in prior periods.
Total cost of revenues for the three months ended December 31, 2008 was $1,114,434, which represents a decrease of 62% as compared to total cost of revenues of $2,927,284 for the three months ended December 31, 2007. The decrease in the total cost of revenues during the three months ended December 31, 2008 corresponds to the 53% decrease in total sales revenues.
Operating expenses for the three months ended December 31, 2008 were $1,378,714, which represents a 14% increase in operating expenses over $1,205,072 for the three months ended December 31, 2007. Selling and marketing expenses, general and administrative expenses, and amortization of intangible assets constitute the main components of the Company's 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 December 31, 2008 increased approximately 85% to $276,204 from $149,356 for the three months ended December 31, 2007. The increase was mainly due to higher marketing expenses associated with the Company's attendance and booths at the Hong Kong International Lighting Fair 2008 held in October 2008 as compared to expenditure at the 2007 fair, and increased staff costs incurred in order to build up the Company's project pipeline of LED solutions contracts and establish the sales network for the LED out-of-home 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 LED out-of-home 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 increased by 16% during the three months ended December 31, 2008 to $976,071 from $844,309 for the three months ended December 31, 2007. The increase was mainly due to increased staff, accounting, investor relations, public relations and business development costs for the three months ended December 31, 2008 to provide the foundation to support the Company's anticipated overall business growth, particularly its LED out-of-home advertising and LED solutions businesses. The Company anticipates that general and administrative costs will continue to 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 a company-wide cost-cutting initiative implemented in January 2009.
There was a decrease in provision for doubtful debts amounting to $174,709 during the three months ended December 31, 2008 as compared to $nil for the three months ended December 31, 2007. This was due primarily to the completion of a review of the Company's doubtful debts provision plan performed by management.
As of December 31, 2008, the Company had a net working capital surplus of $9,346,579 compared with a surplus of $11,490,237 as of March 31, 2008, representing a decrease in working capital of $2,143,658. The cash and cash equivalents of the Company decreased to $1,557,685 as at December 31, 2008 as compared to $3,978,500 as of March 31, 2008.
Lightscape incurred capital expenditures of $549,361 during the nine months ended December 31, 2008 and $243,256 for the nine months ended December 31, 2007. The increase in capital expenditures for the nine months ended December 31, 2008 as compared to December 31, 2007 was mainly attributable to increased purchases of plant and equipment.
During the nine months ended December 31, 2008, the Company obtained short-term borrowings through an account receivable factoring loan. This loan commenced on September 29, 2008 with a non-bank financial institution at a principal amount of $400,896 with a maturity date of 60 days, which was subsequently extended to 90 days, at an annual interest rate of 10%. This loan was repaid in full on the maturity date of December 29, 2008.
Additional information regarding Lightscape's financial performance for the three and nine months ending December 31, 2008 and a comparison to the periods ended December 31, 2007 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 to secure LED solutions contracts from high-profile clients; Lightscape intends to expand its installations of LED out-of-home advertising billboards at premium spots in Beijing, Hong Kong and other major Chinese cities; the first six LED out-of-home advertising billboards in Lightscape's network are set to go live in five separate locations in China and Hong Kong; Lightscape expects its LED solutions business to contribute increased revenues in the foreseeable future as several key projects are expected to be initiated and/or completed in the near future; Lightscape anticipates that selling and marketing expenses will remain steady or increase in the future but that any such increases are expected to be limited as a result of a company-wide cost-cutting initiative implemented in January 2009; Lightscape anticipates overall business growth, particularly within the Company's LED out-of-home advertising and LED solutions businesses; and Lightscape anticipates that its general and administrative costs will continue to increase in the foreseeable future alongside the anticipated expansion of the Company's operations but that 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 LED out-of-home 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 (UNAUDITED) Expressed in US dollars (except for number of common shares) Three Months Ended Nine Months Ended December 31, December 31, 2008 2007 2008 2007 ----------- ----------- ----------- ----------- $ $ $ $ ----------- ----------- ----------- ----------- Revenues: Advertising revenue - - - - LED solutions revenue 1,406,668 2,975,913 2,809,537 2,999,155 Other revenue 294,631 641,281 1,534,560 1,890,141 ----------- ----------- ----------- ----------- Total net revenues 1,701,299 3,617,194 4,344,097 4,889,296 ----------- ----------- ----------- ----------- Cost of revenues: Cost of sales of Advertising revenue - - - - Cost of sales of LED solutions revenue (870,190) (2,482,775) (1,866,193) (2,570,252) Contract costs of Other revenue (244,244) (444,509) (1,106,149) (1,292,931) ----------- ----------- ----------- ----------- Total cost of revenues (1,114,434) (2,927,284) (2,972,342) (3,863,183) ----------- ----------- ----------- ----------- Gross profit 586,865 689,910 1,371,755 1,026,113 Allowance for doubtful debts 174,709 - (72,244) - Amortization (184,928) (133,846) (578,282) (401,537) Depreciation (50,606) (77,561) (145,225) (229,603) Loss on disposal of property, plant and equipment (65,614) - (65,614) - Selling and marketing expenses (276,204) (149,356) (562,501) (507,112) General and administrative expenses (976,071) (844,309) (2,803,263) (2,516,306) ----------- ----------- ----------- ----------- Loss from operations (791,849) (515,162) (2,885,374) (2,628,445) Interest expense (12,726) (1,903) (22,980) (397,548) Interest income 183 3,619 792 39,071 Gain on redemption of redeemable convertible notes and options - - - 194,968 Other income 9,944 5,446 25,030 13,170 ----------- ----------- ----------- ----------- Loss from continuing operations before income tax and minority interests (794,448) (507,900) (2,852,532) (2,778,784) Income tax benefit 5,084 - 212,061 - ----------- ----------- ----------- ----------- Net loss from continuing operations before minority interests (789,364) (507,900) (2,640,471) (2,778,784) Minority interests 10,083 19,988 108,164 77,783 ----------- ----------- ----------- ----------- Net loss from continuing operations (779,281) (487,912) (2,532,307) (2,701,001) ----------- ----------- ----------- ----------- Discontinued operations Net profit (loss) from discontinued operations, net of income taxes (8,748) (64,015) 11,086 (163,560) ----------- ----------- ----------- ----------- Net loss attributable to common shareholders (788,029) (551,927) (2,521,221) (2,864,561) =========== =========== =========== =========== Loss per share - Basic and diluted Continuing operations (0.01) (0.01) (0.05) (0.07) Discontinued operations - - - - ----------- ----------- ----------- ----------- Total (0.01) (0.01) (0.05) (0.07) =========== =========== =========== =========== Weighted average number of common shares outstanding - Basic and diluted 55,876,410 44,584,019 55,876,410 40,797,592 =========== =========== =========== =========== LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Expressed in US dollars December 31, March 31, 2008 2008 (Unaudited) (Audited) ------------- ------------- $ $ ------------- ------------- ASSETS Current assets: Cash and cash equivalents 1,545,038 3,976,565 Accounts receivable, net of allowance for doubtful accounts of $839,180 on December 31, 2008 and $817,790 on March 31, 2008 3,289,828 4,438,207 Costs and estimated earnings in excess of billings on uncompleted Contracts 137,617 639,035 Prepaid expenses and other current assets 4,086,633 1,742,031 Inventories 3,713,141 3,903,798 Current assets of discontinued operations 725,001 699,847 ------------- ------------- Total current assets 13,497,258 15,399,483 ------------- ------------- Intangible assets, net 1,149,987 1,700,114 Goodwill 4,476,574 4,476,574 Plant and equipment, net 4,805,043 4,650,398 Net investment in sales-type leases of discontinued operations 58,484 126,521 ------------- ------------- 10,490,088 10,953,607 ------------- ------------- TOTAL ASSETS 23,987,346 26,353,090 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank loans - current portion 49,311 - Trade payables 1,461,240 2,413,203 Amount due to a director 771,208 - Amount due to a director of a subsidiary 150,965 - Accrued expenses and other current liabilities 1,419,698 763,797 Obligations under capital leases - current portion 11,196 1,774 Income tax payable 10,606 366,281 Current liabilities of discontinued operations 276,455 364,191 ------------- ------------- Total current liabilities 4,150,679 3,909,246 ------------- ------------- Non-current liabilities: Bank loans - long-term portion 35,806 - Obligations under capital leases - non-current portion 4,434 5,469 ------------- ------------- Total non-current liabilities 40,240 5,469 ------------- ------------- Total liabilities 4,190,919 3,914,715 ------------- ------------- Minority interest 1,313,539 1,421,702 ------------- ------------- Shareholders' equity: Preferred stock, par value of $0.001 each; 100,000,000 shares authorized, none issued or outstanding Common stock Authorized: 800,000,000 common shares, par value $0.001 per share Issued and outstanding: 55,876,410 common shares at December 31, 2008 and at March 31, 2008 55,876 55,876 Additional paid-in capital 34,140,708 34,140,708 Common stock warrants 344,673 344,673 Statutory surplus reserves 28,944 28,944 Accumulated other comprehensive income 1,069,878 1,082,442 Accumulated deficit (17,157,191) (14,635,970) ------------- ------------- Total shareholders' equity 18,482,888 21,016,673 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 23,987,346 26,353,090 ============= =============
