SOURCE: Lightscape Technologies

July 15, 2008 07:00 ET

Lightscape Technologies Reports Fiscal 2008 Year-End Results

HONG KONG--(Marketwire - July 15, 2008) - Lightscape Technologies Inc. (OTCBB: LTSC), an operator of outdoor LED billboards and provider of LED solutions, yesterday reported operating results for the fiscal year ending March 31, 2008.

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 New World Group to develop an outdoor LED billboard
    network in China. As of June 30, 2008, Lightscape has completed the
    installation of one LED billboard on the outside overpass wall of a
    shopping mall in the Chongwen District of Beijing. The LED screen measures
    264 square meters in area (approximately 2,842 square feet). A minimum of
    twenty-five LED outdoor advertising billboards are targeted to be installed
    in the largest cities in China by the joint venture by the end of calendar
    year 2009. In 2010 and beyond, the joint venture intends to expand its
    network coverage to include other cities in China.
--  The formation of a strategic partnership with Ogilvy & Mather Group, a
    major advertising agency in Hong Kong, to support the development of the
    Company's LED outdoor advertising billboard network in China. Lightscape is
    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.
--  Completion of a $7.5 million private placement of common stock which
    provided additional capital to support the Company's strategies.
--  Commencement of additional work at K-11 Hanoi Road, a high-end
    redevelopment project located on Hong Kong's Victoria Harbour owned by New
    World Development Company Limited. The K-11 Hanoi Road Project is one of
    the largest real estate development projects in Hong Kong, and the scope of
    new work awarded to Lightscape includes providing lighting design and
    consultancy services for the project and designing and installing an LED
    lighting and control system for the entire façade of the tower, which will
    be of one of Kowloon's tallest buildings. Lightscape will also design,
    supply and install a large-scale curved LED video wall for the indoor area
    of the facility which has a pixel pitch of 31.25mm and which measures 118
    feet x 18 feet (or 36 meters x 5.5 meters).
    

"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
                                                  ===========  ===========



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