Lightscape Technologies Inc. (OTCBB: LTSC), an operator of LED
out-of-home billboards and provider of LED solutions, reported
financial results for the fiscal 2009 third quarter ending December
31, 2008.
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. (OTCBB: LTSC) is one of the leading
digital media and LED solutions companies in Asia. Lightscape is
building an LED out-of-home 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 LED out-of-home 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 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
============= =============
Contact: Aaron Ratner Chief Strategist Lightscape Technologies
Inc. aaron@lightscapetech.com.hk
Lightscape Technologies (CE) (USOTC:LTSC)
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