Science & Technology 
Science and Technology
Science and Technology 
Thu, July 16, 2009
Wed, July 15, 2009
Lightscape Technologies Inc.: Lightscape Technologies Reports Fiscal Year 2009 Results
HONG KONG--(Marketwire - July 15, 2009) - Lightscape Technologies Inc. (
Total net revenue for the twelve months ended March 31, 2009 was $5.62 million, a 6% decrease from $5.96 million for the twelve months ended March 31, 2008. Gross profit margin improved to 34% for the twelve months ended March 31, 2009 as compared to 21% for the twelve months ended March 31, 2008.
Net loss for the twelve months ended March 31, 2009 narrowed to $4.58 million, or $0.08 per fully diluted share, compared to a net loss of $9.42 million, or $0.22 per fully diluted share, for the twelve months ended March 31, 2008.
Bondy Tan, President and CEO of Lightscape, said, "Our business was severely impacted by the downturn in advertising spending that began last year. Fortunately, Lightscape's ability to secure top-quality locations for our LED OOH billboards, and our relationships with leading advertising agencies, has allowed us to sign top-tier international and Mainland Chinese clients and content providers. Additionally, revenue from our LED Solutions business supported the operations of the Company while the OOH network is built out."
Continued Mr. Tan, "Of additional importance, Lightscape was able to focus its exclusive OOH relationship with New World Group to sign a MOU with New World Department Stores China. This agreement will allow Lightscape to focus on a list of high-quality LED billboard and LCD screen properties throughout China."
Business Highlights
-- Lightscape expanded its exclusive OOH advertising network relationship with New World Group to focus on the New World Department Stores China properties throughout Mainland China
-- The digital OOH network signed agreements with the following international brands: Nokia, Philips, Warner Brothers, Panasonic, Martell, Chivas, Linguaphone
-- Current Chinese content providers include: TVB, Universal Music China, East Asia, Emperor Entertainment, Universe International, Media Asia, CEInet
-- In April 2009, Lightscape secured $771,208 in bank financing to support its operations
Results of Operations
Total net revenue for the year ended March 31, 2009 was $5,620,360, representing a 6% decrease from the total net revenue of $5,962,411 for the year ended March 31, 2008. The decrease in net revenues is primarily attributable to the decrease in revenue from non-core businesses, primarily the Company's HID lighting products business segment.
Specifically, revenue related to the LED out-of-home advertising business remained at $nil for the year ended March 31, 2009 as compared to from $nil during the year ended March 31, 2008. The LED out-of-home advertising business is expected to contribute increased revenues in the foreseeable future as the Company ramps up several key LED billboard installations which were completed during the year ended March 31, 2009 and are expected to begin generating advertising revenue in the near 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 the LED billboards. The Company is also in the process of negotiating strategic partnership agreements and contracts with other advertising agencies and advertisers for the sales of advertising space on the LED billboard network.
Revenue related to the LED solutions business increased to $4,046,490 for the year ended March 31, 2009 from $3,564,537 during the year ended March 31, 2008, or an increase of 14%. The increase in revenues was due primarily to the completion of more LED solutions contracts during the year ended March 31, 2009 as compared to a smaller number of contracts completed during the year ended March 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 in the near future.
Sales from other business, which includes the HID lighting products business, were $1,573,870 for the year ended March 31, 2009 compared to $2,397,874 for the year ended March 31, 2008, representing a decrease of 34%. 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 LED out-of-home advertising and LED solutions businesses. Sales and revenue were also lower due to transport restrictions in Beijing for approximately one month surrounding the Beijing Olympics, which reduced flows of raw materials transported to and finished goods shipped from the Company's Beijing factory. The Company is currently reviewing its plans and strategic options related to its HID lighting products business.
Total cost of revenues for the year ended March 31, 2009 was $3,702,332, which represents a decrease of 21% as compared to total cost of revenues of $4,694,766 for the year ended March 31, 2008. The decrease in the total cost of revenues during the year ended March 31, 2009 was due in part to the 6% 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 portion of LED consultancy income which is of a higher profit margin. The lower costs of supplies are a result of general technological improvements and economies of scale in the manufacture of LED hardware by the Company's OEM suppliers, and the Company's ability to secure supply contracts on more favorable terms. As a result, gross profit margin improved to 34% for the year ended March 31, 2009 as compared to 21% for the year ended March 31, 2008.
Operating expenses for the year ended March 31, 2009 were $7,203,033, which represents a 5% increase in operating expenses over $6,834,588 for the year ended March 31, 2008. Selling and marketing expenses, general and administrative expenses, amortization of intangible assets and bad debts constitute the main components of operating expenses.
Selling and marketing expenses for the year ended March 31, 2009 increased approximately 5% to $698,116 from $662,628 for the year ended March 31, 2008. 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 attendance in October 2007, increased staff costs incurred in order to build up the project pipeline of LED solutions contracts, and to establish the sales network for the Company's 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, 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 15% during the year ended March 31, 2009 to $4,070,944 from $3,526,970 for the year ended March 31, 2008. The increase was mainly due to increased staff, accounting, investor relations, public relations and business development costs for the year ended March 31, 2009 to provide the foundation to support anticipated overall business growth, particularly the 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.
Bad debt expenses increased to $1,019,285 during the year ended March 31, 2009 from $414,897 for the year ended March 31, 2008. The increase in bad debts was due primarily to the increase in allowance for doubtful accounts of subsidiary Beijing Illumination. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in its existing accounts receivable.
As of March 31, 2009, the Company had a net working capital surplus of $6,287,977 compared to a surplus of $11,490,237 as of March 31, 2008, representing a decrease in working capital of $5,202,260. The cash and cash equivalents of the Company attributable to continuing operations decreased to $381,643 as at March 31, 2009 as compared to $3,976,565 as of March 31, 2008. Cash attributable to discontinued operations totaled $8,555 and $1,935 for the years ended March 31, 2009 and 2008, respectively.
Additional information regarding Lightscape Technologies' financial performance as of and for the fiscal year ended March 31, 2009 and a comparison to the fiscal year ended March 31, 2008 can be found in the financial tables below and in the Company's Annual Report on Form 10-K 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. (
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 OOH advertising network at properties throughout China; Lightscape expects its LED OOH advertising business to contribute increased revenues in the foreseeable future as the Company ramps up several key LED billboard installations which were completed during the year ended March 31, 2009 and are expected to begin generating advertising revenue in the near future; Lightscape expects Ogilvy & Mather and LIME to sell advertising space on its OOH LED advertising network; Lightscape expects its LED solutions business to contribute increased revenues in the foreseeable future as several key projects are expected to be initiated 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 LED out-of-home 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 and China specifically; competition with larger companies with greater resources and more experience in providing OOH advertising and LED solutions products and services; and the availability of timely financing. 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 Expressed in US dollars (except for number of common shares) Year Ended March 31, 2009 2008 ---------- ---------- $ $ ---------- ---------- Revenues: Advertising revenue - - LED solutions revenue 4,046,490 3,564,537 Other revenue 1,573,870 2,397,874 ---------- ---------- Total net revenues 5,620,360 5,962,411 ---------- ---------- Cost of revenues: Cost of sales of Advertising revenue (13,577) - Cost of sales of LED solutions revenue (2,479,354) (2,979,087) Costs of Other revenue (i) (1,209,401) (1,715,679) ---------- ---------- Total cost of revenues (3,702,332) (4,694,766) ---------- ---------- Gross profit 1,918,028 1,267,645 Bad debts (1,019,285) (414,897) Amortization (758,871) (749,251) Depreciation (223,297) (261,047) Selling and marketing expenses (698,116) (662,628) General and administrative expenses (4,070,944) (3,526,970) Interest expense (27,554) (382,022) Interest income 867 39,424 Other income 453,129 888,412 Other expenses (171,102) - Impairment loss on intangible assets, net - (689,204) Impairment on goodwill - (526,863) Loss on disposal of plant and equipment (432,520) (3,728) Loss on redemption of redeemable convertible notes and options - (2,253,359) ---------- ---------- Loss from continuing operations before income tax and minority interests (5,029,665) (7,274,488) Income tax refund 239,912 - ---------- ---------- Net loss from continuing operations before minority interests (4,789,753) (7,274,488) Minority interests 314,817 444,215 ---------- ---------- Net loss from continuing operations (4,474,936) (6,830,273) ---------- ---------- Discontinued operations Net (loss) from discontinued operations, net of income taxes (108,314) (244,131) Loss on disposal of discontinued component - (2,341,671) ---------- ---------- (Loss) on discontinued operations (108,314) (2,585,802) ---------- ---------- Net loss attributable to common shareholders (4,583,250) (9,416,075) Other comprehensive income (loss) Foreign currency translation adjustment arising during the period (5,088) 759,901 ---------- ---------- Comprehensive loss (4,588,338) (8,656,174) ========== ========== Loss per share - Basic Continuing operations (0.08) (0.16) Discontinued operations 0.00 (0.06) ---------- ---------- Total (0.08) (0.22) ========== ========== - Diluted Continuing operations (0.08) (0.16) Discontinued operations 0.00 (0.06) ---------- ---------- Total (0.08) (0.22) ========== ========== Weighted average number of common shares outstanding - Basic 55,876,410 42,574,361 ========== ========== - Diluted 55,876,410 42,574,361 ========== ========== (i) Includes depreciation of plant and equipment of $288,916 and $243,197 for the year ended March 31, 2009 and 2008 respectively. LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Expressed in US dollars March 31, March 31, 2009 2008 ----------- ----------- $ $ ----------- ----------- ASSETS Current assets: Cash and cash equivalents 381,643 3,976,565 Accounts receivable, net of allowance for doubtful accounts of $1,287,843 on March 31, 2009 and $817,790 on March 31, 2008 2,239,228 4,438,207 Costs and estimated earnings in excess of billings on uncompleted contracts 673,313 639,035 Prepaid expenses and other current assets 1,817,215 1,742,031 Inventories - LED, including valuation allowance of $162,782 on March 31, 2009 and $158,987 on March 31, 2008 1,264,975 2,024,422 Inventories - others 2,274,552 1,879,376 Current assets of discontinued operations 591,921 699,847 ----------- ----------- Total current assets 9,242,847 15,399,483 ----------- ----------- Other investments, net of write-off amount of $31,516 on March 31, 2009 and 2008 - - Intangible assets, net 969,282 1,700,114 Goodwill 4,476,574 4,476,574 Plant and equipment, net 2,529,141 4,650,398 Out-of-home advertising equipment, net 2,213,808 - Construction in progress - Out-of-home advertising equipment 266,250 - Deferred cost 111,132 - Accounts receivable, due after one year and net of allowance for doubtful accounts of $145,871 on March 31, 2009 and $Nil on March 31, 2008 200,890 - Prepaid expenses and other current assets - due after one year 511,277 - Net investment in sales-type leases of discontinued operations 36,359 126,521 ----------- ----------- 11,314,713 10,953,607 ----------- ----------- TOTAL ASSETS 20,557,560 26,353,090 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term bank borrowings 55,266 - Trade payables 689,945 2,413,203 Amount due to a director 745,501 - Accrued expenses and other current liabilities 1,284,239 763,797 Obligations under capital leases - current portion 2,904 1,774 Income tax payable 10,062 366,281 Current liabilities of discontinued operations 166,953 364,191 ----------- ----------- Total current liabilities 2,954,870 3,909,246 ----------- ----------- Non-current liabilities: Obligations under capital leases - non-current portion 5,313 5,469 Long-term bank borrowings 62,158 - ----------- ----------- Total non-current liabilities 67,471 5,469 ----------- ----------- Total liabilities 3,022,341 3,914,715 ----------- ----------- Minority interest 1,106,884 1,421,702 ----------- ----------- 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, 2009 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 Other reserves 28,944 28,944 Accumulated other comprehensive income 1,077,354 1,082,442 Accumulated deficit (19,219,220) (14,635,970) ----------- ----------- Total shareholders' equity 16,428,335 21,016,673 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 20,557,560 26,353,090 =========== ===========