SOURCE: Lightscape Technologies

November 14, 2008 08:45 ET

Lightscape Technologies Reports Fiscal 2009 Second Quarter Results; Revenue Increases Sharply Year-over-Year

HONG KONG--(Marketwire - November 14, 2008) - Lightscape Technologies Inc. (OTCBB: LTSC), an operator of outdoor LED billboards and provider of LED solutions, reported financial results for the fiscal 2009 second quarter ending September 30, 2008.

Total net revenue for the three months ended September 30, 2008 increased 137% to $1.08 million, from $0.46 million for the three months ended September 30, 2007. Operating expenses for the three months ended September 30, 2008 were $1.01 million which represents a 2% increase in operating expenses over $0.99 million for the three months ended September 30, 2007.

Net loss for the three months ended September 30, 2008 was $0.74 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 September 30, 2007.

Bondy Tan, President and CEO of Lightscape, said, "We continue to see excellent opportunities for growth in our LED outdoor billboard and LED solutions businesses as evidenced by our solid revenue growth in the first half of fiscal 2009. Our partnerships with Ogilvy & Mather, XinTong Media and major property owners are beginning to yield tangible results and we continue to seek opportunities to expand our LED billboard network. We're pleased with our progress."

Business Highlights:

--  Lightscape has completed and installed three LED outdoor billboards in
    the cities of Beijing, Shenzhen and Jinan in China and three additional
    screens are in progress in Shenyang, Tianjin and Hangzhou in China.
    
--  Pre-selling of advertising space has begun in cooperation with Ogilvy
    and XinTong Media for 11 out-of-home advertising screens in China and Hong
    Kong.
    
--  LED solutions business also continues to improve with 25 LED solutions
    projects in pipeline, of which 15 are on schedule to be completed by March
    2009; we have already completed 18 in Hong Kong, China, Singapore and
    Macau.
    

Results of Operations

Total net revenue for the three months ended September 30, 2008 was $1,084,091 representing a 137% increase from the total net revenue of $457,206 for the three months ended September 30, 2007. The increase in net revenues is primarily attributable to an increase in revenues from LED solutions.

Revenue related to the Company's LED solutions business increased to $749,920 for the three months ended September 30, 2008 from $23,242 during the three months ended September 30, 2007. The increase in revenue resulted directly from the completion of several new LED solutions contracts during the three months ended September 30, 2008. This business is beginning to recognize more significant revenue from the large LED contracts it was awarded in 2007 as it continues to enter into new contracts for significant projects.

The LED outdoor billboard business is expected to contribute more substantial revenue going forward as the Company ramps up the selling of advertising space on the three LED billboard installations completed during the three months ended September 30, 2008.

Revenue from the Company's other business, which includes sales of lighting source products, was $334,171 for the three months ended September 30, 2008 compared to $433,964 for the three months ended September 30, 2007, representing a decrease of 23%. The decrease in sales of lighting source products was due primarily to internal restructuring.

Total cost of revenues for the three months ended September 30, 2008 was $730,940 which represents an increase of 137% as compared with the total cost of revenues of $307,809 for the three months ended September 30, 2007. The increase in the total cost of revenues was a direct correlation to the corresponding 137% increase in total sales revenue.

Operating expenses for the three months ended September 30, 2008 were $1,174,033, which represents an 18% increase in operating expenses over $994,451 for the three months ended September 30, 2007. Selling and marketing expenses, general and administrative expenses, and bad debts expenses constitute the main components of the Company's operating expenses.

Selling and marketing expenses for the three months ended September 30, 2008 decreased approximately 25% to $122,322 from $162,449 for the three months ended September 30, 2007. The decrease was mainly due to decreased advertising expenses and staff costs. 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 outdoor billboard and LED solutions businesses.

General and administrative expenses increased by 7% during the three months ended September 30, 2008 to $890,398 from $832,002 for the three months ended September 30, 2007. The increase was mainly due to increased staff and business development costs for the three months ended September 30, 2008 to provide the foundation to support the Company's anticipated overall business growth, particularly its LED outdoor billboard 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.

Bad debt expenses increased to $161,313 during the three months ended September 30, 2008 from $nil for the three months ended September 30, 2007. The increase in bad debts was due primarily to the increase in allowance for doubtful accounts of the Company's operational subsidiary in the lighting source products business.

As of September 30, 2008, the Company had a net working capital surplus of $10,359,950 compared with a surplus of $11,490,237 as of March 31, 2008, representing a decrease in working capital of $1,130,287. The cash and cash equivalents of the Company decreased to $2,588,041 as at September 30, 2008 as compared to $3,978,500 as of March 31, 2008.

Lightscape incurred capital expenditures of $39,436 during the six months ended September 30, 2008 and $133,155 for the six months ended September 30, 2007. The decrease in capital expenditures for the six months ended September 30, 2008 as compared to September 30, 2007 was mainly attributable to decreased purchases of equipment.

Additional information regarding Lightscape's financial performance for the three and six months ending September 30, 2008 and a comparison to the periods ended September 30, 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.

Lightscape also announces that President and CEO Bondy Tan and Chief Strategist Aaron Ratner will present at the upcoming Roth China Comes to Vegas Conference to be held on November 19 - 21, 2008 at the Wynn Hotel, Las Vegas, NV.

The Roth China Comes to Vegas Conference is a three-day conference in Las Vegas that features presentations of executives from approximately 70 U.S.-listed Chinese companies. During the conference, Lightscape will be available to meet with analysts and portfolio managers. Participation in the Roth China Comes to Vegas Conference is by invitation only. For more information, please visit http://www.roth.com/ or email conference@roth.com.

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 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 overall business growth, particularly within the Company's LED outdoor advertising and LED solutions businesses; Lightscape intends to continue to build and expand the Company's outdoor LED advertising network and LED solutions business through partnerships with Ogilvy & Mather, XinTong Media and major property owners; Lightscape is currently installing and expects to complete the installation of three LED outdoor advertising screens in Shenyang, Tianjin and Hangzhou in China; Lightscape has begun and intends to pre-sell advertising space in cooperation with Ogilvy & Mather and XinTong Media for 11 out-of-home advertising screens in China and Hong Kong; Lightscape has 25 LED solutions projects in the pipeline, of which 15 are expected to be completed by March 2009; Lightscape expects its LED outdoor advertising business to contribute increased revenue in the near future as the Company ramps up the selling of advertising space on the three LED billboard installations which were completed during the three months ended September 30, 2008; Lightscape expects its selling and marketing expenses to remain steady or increase in the future to support the Company's intended expansion in its core LED outdoor 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. 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 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 (UNAUDITED)
          Expressed in US dollars (except for per share amounts)

                           Three Months Ended         Six Months Ended
                              September 30,             September 30,
                            2008         2007         2008         2007
                        -----------  -----------  -----------  -----------
                             $            $            $            $
                        -----------  -----------  -----------  -----------
Revenues:
  Advertising revenue             -            -            -            -
  LED solutions revenue     749,920       23,242    1,402,869       23,242
  Other revenue             334,171      433,964    1,239,929    1,248,860
                        -----------  -----------  -----------  -----------
Total net revenues        1,084,091      457,206    2,642,798    1,272,102
                        -----------  -----------  -----------  -----------

Cost of revenues:
  Cost of sales of
   Advertising revenue            -            -            -            -
  Cost of sales of LED
   solutions revenue       (488,368)     (19,070)    (996,003)     (87,477)
  Contract costs of Other
   revenue                 (242,572)    (288,739)    (861,905)    (848,422)
                        -----------  -----------  -----------  -----------
Total cost of revenues     (730,940)    (307,809)  (1,857,908)    (935,899)
                        -----------  -----------  -----------  -----------

Gross profit                353,151      149,397      784,890      336,203
Bad debts                  (161,313)           -     (246,953)           -
Amortization               (187,701)    (187,400)    (393,354)    (374,626)
Depreciation                (52,124)     (64,456)     (94,619)    (126,302)
Selling and marketing
 expenses                  (122,322)    (162,449)    (286,297)    (357,756)
General and administrative
 expenses                  (890,398)    (832,002)  (1,827,192)  (1,590,802)
                        -----------  -----------  -----------  -----------

Loss from operations     (1,060,707)  (1,096,910)  (2,063,525)  (2,113,283)
Interest expense             (9,954)     (39,592)     (10,254)    (395,645)
Interest income                 283       11,152          609       35,452
Gain on redemption of
 redeemable convertible
 notes and options                -      194,968            -      194,968
Other income                 13,645       (7,294)      15,086        7,624
                        -----------  -----------  -----------  -----------

Loss from continuing
 operations before
 income tax and
 minority interests      (1,056,733)    (937,676)  (2,058,084)  (2,270,884)
Income taxes                206,977            -      206,977            -
                        -----------  -----------  -----------  -----------

Net loss from continuing
 operations before
 minority interests        (849,756)    (937,676)  (1,851,107)  (2,270,884)
Minority interests           76,645       22,727       98,081       57,795
                        -----------  -----------  -----------  -----------

Net loss from continuing
 operations                (773,111)    (914,949)  (1,753,026)  (2,213,089)
                        -----------  -----------  -----------  -----------

Discontinued operations
  Net profit (loss) from
   discontinued
   operations, net of
   income taxes              33,780      (77,713)      19,834      (99,545)
                        -----------  -----------  -----------  -----------

Net loss attributable
 to common shareholders    (739,331)    (992,662)  (1,733,192)  (2,312,634)
                        ===========  ===========  ===========  ===========

Loss per share
- Basic and diluted
  Continuing operations       (0.01)       (0.02)       (0.03)       (0.06)
  Discontinued operations      0.00         0.00         0.00         0.00
                        -----------  -----------  -----------  -----------
  Total                       (0.01)       (0.02)       (0.03)       (0.06)
                        ===========  ===========  ===========  ===========

Weighted average number
 of common shares
 outstanding
- Basic and diluted      55,876,410   40,320,975   55,876,410   38,894,033
                        ===========  ===========  ===========  ===========



              LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                          Expressed in US dollars

                                                  September 30, March 31,
                                                      2008        2008
                                                  (Unaudited)   (Audited)
                                                  -----------  -----------
                                                       $            $
                                                  -----------  -----------
ASSETS
Current assets:
 Cash and cash equivalents                          2,551,832    3,976,565
 Accounts receivable, net of allowance for
  doubtful accounts of $1,013,905 on September
  30, 2008 and $817,790 on March 31, 2008           2,920,145    4,438,207
 Costs and estimated earnings in excess of
  billings on uncompleted Contracts                    62,339      639,035
 Prepaid expenses and other current assets          3,027,950    1,742,031
 Inventories                                        4,196,215    3,903,798
 Current assets of discontinued operations            673,666      699,847
                                                  -----------  -----------

Total current assets                               13,432,147   15,399,483
                                                  -----------  -----------

Intangible assets, net                              1,331,187    1,700,114
Goodwill                                            4,476,574    4,476,574
Plant and equipment, net                            4,537,075    4,650,398
Net investment in sales-type leases of
 discontinued operations                               74,521      126,521
                                                  -----------  -----------

                                                   10,419,357   10,953,607
                                                  -----------  -----------

TOTAL ASSETS                                       23,851,504   26,353,090
                                                  ===========  ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Bank loans - current portion                          49,721            -
 Secured loan                                         400,896            -
 Trade payables                                       682,543    2,413,203
 Amount due to a director                             552,699            -
 Amount due to a director of a subsidiary             150,823            -
 Accrued expenses and other current liabilities       748,491      763,797
 Obligations under capital leases - current
  portion                                              12,046        1,774
 Income tax payable                                   185,659      366,281
 Current liabilities of discontinued operations       289,319      364,191
                                                  -----------  -----------

Total current liabilities                           3,072,197    3,909,246
                                                  -----------  -----------

Non-current liabilities:
 Bank loans - long-term portion                        47,701            -
 Obligations under capital leases - non-current
  portion                                               4,582        5,469
                                                  -----------  -----------

Total non-current liabilities                          52,283        5,469
                                                  -----------  -----------

Total liabilities                                   3,124,480    3,914,715
                                                  -----------  -----------

Minority interest                                   1,323,623    1,421,702
                                                  -----------  -----------

COMMITMENTS

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 September 30, 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              1,202,362    1,082,442
Accumulated deficit                               (16,369,162) (14,635,970)
                                                  -----------  -----------

Total shareholders' equity                         19,403,401   21,016,673
                                                  -----------  -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY         23,851,504   26,353,090
                                                  ===========  ===========

Contact Information

  • Contacts:
    Aaron Ratner
    Lightscape Technologies
    917-519-3852

    Thomas Smith or Robert Cavosi
    Ogilvy Public Relations
    212-880-5200