GEOSENTRIC OYJ Q3 2012 INTERIM REPORT 30.11.2012 at 11:20
INTERIM REPORT 1-9/2012
Contents
1. Summary of key figures and results
2. Operational overview
3. Material events in the period
4. Material events after the end of the period
5. Review of the financial position and the financial results
6. Sufficient liquidity
7. Future outlook
8. Assessment of significant operational risks
9. Review of R&D activities
10. Investments
11. Personnel and organization
12. Financing and structural arrangements
13. Board authorization
14. Company’s shares and shareholders
15. About the Company
16. Financial Statements, Q3 2012 (not audited)
1. Summary of key figures and results
The key figures summarizing the Company’s financial position and financial results from continuing operations were as follows (teuros unless indicated otherwise):
| In period | 7-9/2012 | 1-9/2012 | 7-9/2011 | 1-9/2011 | 2011 |
| Net sales | 0 | 0 | 4 | 49 | 49 |
| Operating Result | -113 | -440 | 16076 | 12987 | 12739 |
| Basic earnings per share (eur) | -0.00 | -0.00 | 0.02 | 0.01 | 0.01 |
| At the end of the period | |||||
| Total assets | 716 | 656 | 1171 | ||
| Shareholders’ equity | -128 | -3803 | 931 | ||
| Total liabilities | 844 | 4459 | 240 |
2. Operational overview
The Company has continued to act as a holding company and has not had direct operational activities of its own since disposing of the TWIG business at the end of 2010. In addition, all of its indirect operational activities, under its former Dutch subsidiary, GeoSolutions Holdings N.V. (“GHNV”) and its respective subsidiaries, were also disposed of in August 2011. As a result of this transaction, the Company became a minority shareholder in its former subsidiary GHNV with a current holding of approximately 24%.
GHNV carries on its indirect business as a developer and provider of solutions, products and technologies for location based services and LBS-enabled social networks through its 40% holding in the Joint Venture (“JV”) with a major Chinese public media company, Sina Corp (“Sina”) focusing on the Chinese market.
The Company did not have any net sales in the reporting period compared to 49 teuros in period 1-9/2011 from its then-current indirect GHNV´s operations.
The Company did not have any other operating income and in prior period 1-9/2011 booked as a result of the de-consolidation of GHNV, non-cash gain of 16690 teuros.
The total operating expenses from continuing operations were significantly lower in the reporting period compared to the prior period, decreasing to 440 teuros in 1-9/2012, from 3752 teuros in 1-9/2011. This was mainly driven by the de-consolidation of the GHNV sub-group, as mentioned above, on August 4, 2011.
The Company´s result from the reporting period 1-9/2012 also includes its proportional share of GHNV`s result, which was -393 teuros (34 teuros in 1-9/2011).
As a result of the above factors, the total result before taxes from continuing operations was -1112 teuros in 1-9/2012, compared to 10993 teuros in 1-9/2011. Earnings per share from continuing operations in the reporting period were -0.00 euros per share.
3. Material events in the period
The main events in the period 7-9/2012 were as follows:
The Company continued to act as a holding company to its approximately 24% shareholding in GHNV.
The Annual General Meeting held on June 5, 2012 confirmed the Proposal providing the Company with a secured loan of €350,000. The loan is secured by a pledge on the GHNV shares held by the Company. Additionally, the independent advisory business granting the loan is entitled to receive an arrangement fee of 1% of Company’s shares and warrants that entitle it to receive 10% of Company’s outstanding shares at the time of exercise of the warrants for one euro at any time during twenty-four months period from the Annual General Meeting. The loan matures on April 30, 2013 and accrues interest at the rate of 12% per annum, which is payable in the Company shares at the valuation of the preceding financing round of €0.0004 per share. The Company has also the right to repay the loan at any time subject to redemption premium that is 25% if the loan is repaid within first three months from the Annual General Meeting, 50% if the repayment takes place later than three months but earlier than six months from the meeting, 75% of the repayment takes place later than six months but earlier than nine months from the meeting and 100% if the repayment takes place later than nine months from the meeting.
As the Company has also reported, the execution of the Financing was delayed from the original schedule and the second tranche of €116,670 was received on August 17, 2012. The Company received the remaining part of the third tranche after the end of the period.
The Company reported also on August 15, 2012 that its ex-CFO Mr. Robin Halliday has through his fully owned consulting company filed a claim against the Company, amounting to approximately €40,000. The Company has rejected the claim and started all necessary actions to respond.
To bring its operating cost level down even more and extend its current cash runway, the Company decided on part-time forced leaves for the time being to reduce the working hours of its entire remaining personnel by 50% starting from September.
4. Material events after the end of the period
After the reporting period, the Company confirmed the receipt of the full amount of the third tranche of the €350,000 secured loan (“Loan”) confirmed by the Annual general Meeting on June 5, 2012. The received funding will finance the operations of the Company into Q1/2013 as originally expected. The Loan falls due on the maturity date of 30 April 2013 and requires a maximum repayment in the amount of €700,000 on that date. As the Company’s investment in GHNV, has not yet started to generate revenues back to the Company, the Company must finance the repayment of the Loan by additional external funding.
As announced on November 6 and November 14, 2012, the Company opened a new financing round in order to raise a minimum of €1,000,000 and up to €1,550,000, by issuing a new secured interest-bearing loan notes (“Loan Notes”). The proposed Loan Notes would use the current approximately 24% equity investment that the Company holds in GHNV as a security. The cash from the proposed Loan Notes would be used to repay the current secured loan, to fund the operations of the Company through 2013, and to potentially participate in the recent GHNV cash call for additional funding needed to finance GHNV’s operations for 2013. The proposed schedule for this offer requires the subscribed Loan Notes be paid to the bank account of the Company on or before 21 December 2012.
The payment of the cash call by GHNV is due no later than January 1, 2013. The Company’s prorata share of the GHNV cash call is €540,348, which is needed to protect the Company’s holding in GHNV from further dilution. If the Company does not succeed in raising the required additional funding, it may lose all or part of its holding in GHNV either as a result of realization of the pledge on the Loan or further dilution from the other shareholders’ investment in GHNV based on the cash call.
5. Review of the financial position and the financial results
The Company has during the period retained solidity and liquidity.
The key figures summarizing the Company’s financial position and financial results from continuing operations were as follows (teuros unless indicated otherwise):
| In period | 7-9/2012 | 1-9/2012 | 7-9/2011 | 1-9/2011 | 2011 |
| Net sales | 0 | 0 | 4 | 49 | 49 |
| Operating Result | -113 | -440 | 16076 | 12987 | 12739 |
| Basic earnings per share (eur) | -0.00 | -0.00 | 0.02 | 0.01 | 0.01 |
| At the end of the period | |||||
| Total assets | 716 | 656 | 1171 | ||
| Shareholders’ equity | -128 | -3803 | 931 | ||
| Total liabilities | 844 | 4459 | 240 | ||
| Cash | 69 | 70 | 131 |
6. Sufficient liquidity
The Company has, during the reporting period, retained sufficient liquidity.
As announced on April 23, 2012, the Company succeeded to secure a commitment for an additional €350,000 secured funding from an independent advisory business that secures the Company´s funding through 2012 and into 2013. The Annual General Meeting on June 5, 2012 confirmed the terms of the funding as explained in Section “Material events in the period” above. Subsequently the Company has received the first tranche of the funding in June, second tranche in August and third tranche in November. As a result, the Company has received the full amount of the secured loan.
As announced on November 14, 2012, the Company has resolved to issue a new secured interest-bearing loan note seeking to raise, through this instrument, a minimum of €1,000,000, and potentially up to €1,550,000 to finance operations through 2013, repayment of secured loan and additional investment in GHNV. The Company does not have sufficient funds to finance its operations through 2013 unless it succeeds to raise at least the minimum amount in the offering.
7. Future Outlook
Market Outlook
Due to forming the Joint Venture (“JV”) with a major Chinese media company, Sina Corp (“Sina”) and refocus of the GHNV development, sales and marketing activities into China, the future business outlook of the Company’s associate company, GHNV, is currently almost completely focused on the China market. In partnership with Sina, China’s third largest internet company, the immediate focus is to leverage the now very large +300M Sina user base to spread the use of the GyPSii platform and applications to as many mobile phone users as possible over the next few years. The JV will combine the IP of GeoSolutions B.V., a 100% owned subsidiary of GHNV, with Sina’s large user base, marketing and sales activities to develop the China market for the Tuding and Weilingdi products and the GyPSii Location Based Services Platform. Seeding this market should give rise to opportunities in 2013 and beyond for income to the JV based on advertising, IP licensing and small to medium business subscriptions. The China market for mobile technology is experiencing extremely rapid growth compared to the rest of the world. This is expected to continue alongside China’s economic expansion well into the decade. This strong growth of mobile technology is a natural pull for the Sina and GyPSii products.
Outside of China, GHNV is exploring opportunities to leverage its IP and products in other developing countries with similar user demographics and similarly strong smart phone growth as China. This involves creating other potential partnerships with a business model similar to the JV with Sina.
Financial and Business Development Outlook
The Company’s currently remaining business comprises solely its 24% minority holding in GHNV. This in turn currently is focussed mainly on its 40% holding in the JV. The current projections indicate that the JV will become profitable over the next few years, however, it may be several years before dividends may flow from the JV to the Company via GHNV. Unless the Company decides to start some new operational activities of its own, it is likely that the Company will not generate any income of its own and will not recognise dividend income from the JV until the JV turns profitable or becomes liquid through merger or acquisition and starts to distribute profits. Therefore, despite minimized operational costs, the Company is likely to make losses through this period. The Company may also sell part or all of its holding in GHNV in the future, which may generate an accounting and distributable profit.
8. Assessment of significant operational risks
As a result of the financial arrangements, the Company became a minority shareholder in GHNV with its current approximate 24% holding on August 2011. As a minority shareholder of GHNV, the Company does not have control over the activities of GHNV and is dependent on the actions of the other shareholders of GHNV. The Company’s future value and cash flow is highly dependent on the success of the JV with Sina in China. There is no certainty that these efforts will succeed. As agreed in the Subscription and Shareholders’ Agreement between GHNV and its shareholders, GHNV has decided to issue an option pool to its Board and management of up to 15% of its issued share capital. This may decrease the Company´s current ownership of GHNV down to approximately 21%.
The global financial crisis and current global recession have had and may continue to have a negative impact also on the GyPSii business although the business is now almost exclusively focussed on China, which continues with strong reported economic growth.
There is no certainty of the success regarding the implementation and realisation of the GHNV business plan. According to the business strategy, GHNV is pursuing entrance to new business segments with competitive situations new to it, or which may be in the early market phase. Unless GHNV is able to successfully respond to these developments it may significantly impair its operating results.
A key driver of the GHNV business model is sufficient and rapid growth of users of the services, and the speed of adoption of mobile, UGC and location based advertising of which there is no certainty.
Since 1997, the Company has not paid dividends and, in the future, there may be restrictions on the ability to distribute dividends. Regarding future dividend payments, there is also uncertainty about the ability of the Company to accrue distributable capital. According to the financial statements of the Company, there was no distributable capital in the latest balance sheet of the Company.
The Company´s business plan has been prepared by assuming that the Company can derive long term value from its holding in GHNV but this potential value creation is uncertain. The Company’s financing plan assumes that the additional €350,000 external financing confirmed by the Annual General Meeting on June 5, 2012 is sufficient to fund the Company through 2012 and into early Q1 2013. As the financing is secured by a pledge on the shares of GHNV held by the Company and the Company does not expect to have any net income from its business before the maturity of the loan on April 30, 2012 it needs to raise additional external financing to repay the loan. If the Company does not success to raise such external funding, there is a risk that the creditor could by virtue of the pledge demand realization of all or part of the GHNV shares owned by the Company to received funds for repayment of the loan.
As explained above in section “Material events after the end of the period” the Company has opened a new secured loan note to raise at minimum 1M€ and maximum 1.55M€ to satisfy its funding needs for the year 2013. If the Company does not succeed to raise at least the minimum amount in the offering, it will run out of cash in Q1 2013, which may lead into bankruptcy.
In addition, the Company will need further external funding in the long term and to enable possible further investments in GHNV. Should the new funding be delayed or prove to be unavailable, this could cause an insolvency risk and/or further dilution of the Company’s holding in GHNV. GHNV has recently made a cash call of €540,348 and the Company needs to raise additional external financing in order to participate in the GHNV upcoming financing round. If the Company does not succeed in raising the required additional financing prior to January 1, 2013 its shareholding in GHNV may be subject to substantial dilution.
The Company’s going forward budget and cash sufficiency estimates have been prepared assuming decreased cost levels. Should the actual cost levels be higher, the Company would need to raise additional external capital and the availability of this additional capital is uncertain.
Trading with the Company’s shares on NASDAQ OMX Helsinki stock exchanges has been suspended since April 3, 2012 on Company’s request. Also a substantial portion of the Company’s shares have not been applied for public trading due to the lack of financial resources to complete the process before sufficient long-term funding has been secured. The Company may not guarantee that the trading with its shares will continue and that the currently unlisted but issued shares will be listed before the long-term funding has been secured. If the unclear situation continues, there is also the risk that the Company’s shares will get de-listed.
As reported to the market on 15 August 2012, SoftTech Support Services Ltd, a company domiciled in the United Kingdom and owned by the Company’s ex-CFO Robin Halliday, has filed a claim against GeoSentric Oyj. The amount of the claim is approximately EUR 40,000. The Company has rejected the claim and will take all necessary actions to respond. Should the Company have to pay the full or a substantial amount of the claim, the Company would need to raise additional external capital and the availability of this capital is uncertain.
There are significant financial risks related to the Company’s business, competition and industry and it is possible that investors may lose all or a part of their invested capital.
Schroders & Co Limited and investor groups led by Horizon Group, have influence on GeoSentric. As a result of the directed share offering closed in November 2011, Jeffrey Crevoiserat, a Board member of the Company, has a substantial holding in the Company. The Company trusts that the regulation and information obligation binding public companies, supported by the compliance with the corporate governance recommendations, together with the continuous external auditing activity maintained by a skilled and reputable auditing firm suffice to pre-empt a misuse of control power.
9. Review of R&D-activities
The Company did not have any R&D-activities in the reporting period.
10. Investments
Gross investments in period 1-9/2012 were 2 teuros (43 teuros in period 1-9/2011).
11. Personnel and organization
The number of employed personnel in the Company in period 1-9/2012 averaged 3 in addition to the managing director (58 in period 1-9/2011). All personnel has been subject to forced leaves from September 2012.
12. Financing and structural arrangements
The financing arrangements and latest developments have been described above in sections “Material events in the period” and ”Material events after the end of the period”.
13. Board authorization
The Annual General Meeting convened on June 29, 2011 as extended to July 1, 2011 authorized the Board to increase the share capital by maximum of 5,000,000 euros and share amount by maximum of 5,000,000,000 new shares, option rights or special rights. The authorization is valid for two (2) years from the date of the Annual General Meeting. At the same time all the other authorizations were terminated.
At the end of the reporting period the remaining amount of Board’s authorization, as granted by the extended meeting on July 1, 2011, was 5,000,000 euros and 2,434,410,000 shares corresponding to 69.75 % of the currently registered share amount and 68.0 % shares after all shares and instruments entitled to shares, effecting a corresponding immediate dilution to existing shareholdings (including current authorization).
14. Company’s shares and shareholders
The shares of GeoSentric Oyj are listed on the NASDAQ OMX Helsinki (NASDAQ OMX: GEO1V) and issued in the book entry system held by Euroclear Finland, address PL 1110, FIN-00101 Helsinki, Finland. The ISIN-code of the share is FI 0009004204. The Company’s shares have been on the surveillance list since February 11, 2003. Since April 3, 2012 the trading with Company´s shares has been suspended on the request of the Company.
The Company does not have any Company´s shares owned by or administered on behalf of the Company.
At the end of the reporting period the Company’s registered share capital was 8,955,761.65 Euros, consisting of 3,490,246,354 shares of which 924,656,354 are currently listed on NASDAQ OMX Helsinki stock exchange.
15. About the Company
GeoSentric is an investor in a business GeoSolutions Holdings N.V., a former subsidiary of GeoSentric, and a Dutch company which together with its subsidiaries and affiliates is a developer of location-based technologies, delivering products and services with a market-leading mobile digital lifestyle application and geo-mobility social networking platform: connecting people, places and communities across networks and devices. GyPSii provides a geo-location social networking platform and services for mobile and web Internet-connected devices, and provides applications and bundled ODM/OEM solutions, built on the convergence of location based services, social networking, search, mobile & Web 2.0 technologies. For more information, visit www.geosentric.com or www.gypsii.com or www.gypsii.com.cn.
© 2011 GeoSentric Oyj. All rights reserved.
The Company is based in Salo, Finland.
GeoSentric (NASDAQ OMX Helsinki-GEO1V) is listed on the NASDAQ OMX Exchange in Helsinki. The Company has been on the surveillance list since February 2003.
GEOSENTRIC OYJ
For more information, please contact: investors@gypsii.com
Distribution:
NASDAQ OMX Helsinki
Principal news media
GEOSENTRIC OYJ INTERIM REPORT 3Q/2012 (Unaudited)
GROUP STATEMENT OF COMPREHENSIVE INCOME
| 1000 EUR | Note | 3Q/2012 | 1-3Q/2012 | 3Q/2011 | 1-3Q/2011 | 2011 |
| Continuing operations | ||||||
| Net sales | 0 | 0 | 4 | 49 | 49 | |
| Cost of goods sold | 0 | 0 | 0 | 0 | 0 | |
| Gross margin | 0 | 0 | 4 | 49 | 49 | |
| Other operating income | 4 | 0 | 0 | 16690 | 16690 | 16690 |
| General & Administrative expenses | 5 | 113 | 440 | 416 | 1729 | 1969 |
| Research & Development expenses | 5 | 0 | 0 | 137 | 1216 | 1224 |
| Sales & Marketing expenses | 5 | 0 | 0 | 65 | 807 | 807 |
| Operating result | -113 | -440 | 16076 | 12987 | 12739 | |
| Financial income | 6 | 0 | 0 | 0 | 1 | 4265 |
| Financial expenses | -278 | -279 | -373 | -2029 | -2066 | |
| Share of Associate Company result | 7 | -127 | -393 | 34 | 34 | -231 |
| Result before taxes | -518 | -1112 | 15737 | 10993 | 14707 | |
| Income taxes | 0 | 0 | 0 | 129 | 129 | |
| Result for the period | -518 | -1112 | 15737 | 11122 | 14836 | |
| Translation difference | 0 | 0 | -39 | -36 | -34 | |
| Comprehensive income | -518 | -1112 | 15698 | 11086 | 14802 | |
| Earnings per share, eur: | ||||||
| Basic earnings per share, | -0,00 | -0,00 | 0,02 | 0,01 | 0,01 | |
| Diluted earnings per share, | -0,00 | -0,00 | 0,02 | 0,01 | 0,01 |
GROUP STATEMENT OF FINANCIAL POSITION
| 1000 EUR | Note | 30.9.2012 | 30.9.2011 | 31.12.2011 |
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 3 | 2 | 2 | |
| Goodwill | 0 | 0 | 0 | |
| Other intangible assets | 0 | 0 | 0 | |
| Investment in Associate Company | 7 | 595 | 497 | 988 |
| Other financial assets | 0 | 0 | 0 | |
| Deferred tax assets | 0 | 0 | 0 | |
| 598 | 499 | 990 | ||
| Current assets | ||||
| Inventories | 0 | 0 | 0 | |
| Trade receivables and other receivables | 49 | 87 | 50 | |
| Prepaid expenses | 0 | 0 | 0 | |
| Cash and cash equivalents | 69 | 70 | 131 | |
| 118 | 157 | 181 | ||
| Total assets | 716 | 656 | 1171 | |
| EQUITY AND LIABILITIES | ||||
| Shareholders´equity | ||||
| Share capital | 8 | 8956 | 8956 | 8956 |
| Share premium account | 8 | 13631 | 13631 | 13631 |
| Translation difference | 0 | 0 | 0 | |
| Invested distributable equity account | 8 | 29056 | 28030 | 29056 |
| Retained earnings | -51771 | -54420 | -50712 | |
| Total shareholders´ equity | -128 | -3803 | 931 | |
| Non-current liabilities | ||||
| Deferred tax liabilities | 0 | 0 | 0 | |
| Interest-bearing debt | 10 | 0 | 1783 | 0 |
| 0 | 1783 | 0 | ||
| Current liabilities | ||||
| Trade payables and other payables | 376 | 2563 | 127 | |
| Provisions | 0 | 0 | 0 | |
| Interest bearing debt | 10 | 468 | 113 | 113 |
| 844 | 2676 | 240 | ||
| Total liabilities | 844 | 4459 | 240 | |
| Total shareholders´ equity and liabilities | 716 | 656 | 1171 |
GROUP CASH FLOW STATEMENT
| 1000 EUR | 1-3Q/2012 | 1-3Q/2011 | 2011 |
| Cash flow from operations | |||
| Result for the period | -1112 | 11122 | 14836 |
| Adjustments | 566 | -14502 | -16282 |
| Changes in working capital: | |||
| Change of trade and other receivables | 1 | 137 | 174 |
| Change of inventories | 0 | 0 | 0 |
| Change of trade and other liabilities | 249 | -656 | -3092 |
| Paid interests | 0 | 0 | 0 |
| Received interest payments | 0 | 1 | 501 |
| Cash flow from operations, net | -296 | -3898 | -3863 |
| Cash flow from investments, net | -2 | -43 | -1043 |
| Cash flow from financing | |||
| Proceeds from issue of share capital | 0 | 0 | 1026 |
| Transaction expenses of share issues | 0 | 0 | 0 |
| Transaction expenses of loans | 0 | -31 | -31 |
| Proceeds from long term borrowings, equity | 0 | 0 | 0 |
| Proceeds from long term borrowings, liability | 236 | 3150 | 3150 |
| Net cash flow from financing | 236 | 3119 | 4145 |
| Change in cash | -62 | -822 | -761 |
| Cash at beginning of period | 131 | 892 | 892 |
| Cash at end of period | 69 | 70 | 131 |
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY
| Share capital (1000 eur) | Translation difference (1000 eur) | Share premium account (1000 eur) | Inv. Distributed equity account (1000 eur) | Accrued result (1000 eur) | Total (1000 eur) | |
| Shareholders´ equity 31.12.2010 | 8956 | 122 | 13631 | 30912 | -68645 | -15024 |
| Items booked directly into shareholders´ equity | 0 | -122 | 0 | 0 | 86 | -36 |
| Result for the period | 0 | 0 | 0 | 0 | 11122 | 11122 |
| Comprehensive income | 0 | -122 | 0 | 0 | 11208 | 11086 |
| Booked expense of stock options to key personnel and partners | 0 | 0 | 0 | 0 | 135 | 135 |
| Equity portions of liabilities | 0 | 0 | 0 | -2882 | 2882 | 0 |
| Shareholders´ equity 30.9.2011 | 8956 | 0 | 13631 | 28030 | -54420 | -3803 |
| Shareholders´ equity 31.12.2011 | 8956 | 0 | 13631 | 29056 | -50712 | 931 |
| Items booked directly into shareholders´ equity | 0 | 0 | 0 | 0 | 0 | 0 |
| Result for the period | 0 | 0 | 0 | 0 | -1112 | -1112 |
| Comprehensive income | 0 | 0 | 0 | 0 | -1112 | -1112 |
|
Booked expense of stock options to key personnel and partners |
0 | 0 | 0 | 0 | 53 | 53 |
| Equity portions of liabilities | 0 | 0 | 0 | 0 | 0 | 0 |
| Shareholders´ equity 30.9.2012 | 8956 | 0 | 13631 | 29056 | -51771 | -128 |
| KEY FIGURES | |||||
| 3Q/2012 | 1-3Q/2012 | 3Q/2011 | 1-3Q/2011 | 2011 | |
| Net sales, 1000 EUR | 0 | 0 | 4 | 49 | 49 |
| Operating result, 1000 EUR | -113 | -440 | 16076 | 12987 | 12739 |
| Result before taxes, 1000 EUR | -518 | -1112 | 15737 | 10993 | 14707 |
| Gross investments, 1000 EUR | 2 | 2 | 0 | 43 | 1043 |
| Average personnel | 3 | 3 | 29 | 58 | 44 |
| Earnings per share, EUR | -0,00 | -0,00 | 0,02 | 0,01 | 0,01 |
| Equity per share, EUR | -0,00 | -0,00 | -0,00 | -0,00 | 0,00 |
| Weighted average number of shares in period, 1000 pcs | 3490246 | 3490246 | 924656 | 924592 | 1031507 |
| Number of shares at the end of the period, 1000 pcs | 3490246 | 3490246 | 924656 | 924656 | 3490246 |
1. BASE INFORMATION OF THE COMPANY
Prior to August 4, 2011, GeoSentric wholly owned its subsidiary, GeoSolutions Holdings NV ("GHNV"). On August 4, 2011, its holding in GHNV became a minority holding and GeoSentric´s sole business then became holding its minority investment in GHNV. GHNV is a developer and provider of solutions, products and technologies for location based services and LBS-enabled social networks. It develops a leading geo-integration platform for mobile devices, personal navigation devices, web browsers, and other internet-connected devices, which provides applications and bundled ODM/OEM solutions for consumer and B2B markets, built on the convergence of location based services, social networking, search, mobile & Web 2.0 technologies. Its intellectual property is delivered as software and services in products which include the GyPSii product platform ("GyPSii"). It has deep expertise and technology IP in User Generated Content Management, Location Based Services, Open Social Networking, Ad-Targeting and Integration, for Social Media markets and users on mobile phones, the web, personal navigation and internet connected devices. GeoSentric is based in Salo, Finland. GeoSentric is listed in NASDAQ OMX Helsinki Ltd (NASDAQ OMX: GEO1V). Trading has been suspended as of April 3, 2012. The parent company of the group is GeoSentric Oyj. The registered domicile is Salo, Finland, with street address Meriniitynkatu 11, 24100 Salo, Finland, and mail address PL 84, FIN-24101 Salo, Finland. A copy of the group financial statements is available at the internet address www.geosentric.com or at the company head office at address Meriniitynkatu 11, FIN-24100 Salo, Finland.
2. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS
Accounting principles:
The group interim report has been prepared in accordance with International Financial Reporting Standards ("IFRS") and has been prepared to the accounting standard IAS 34, Interim Reports. An interim report shall be read together with the financial statements for year 2011.
Accounting principles:
The utilised principles of preparation are identical with those utilised by the Group in financial statements for year 2011. IASB has published new standards and interpretations and changes in existing standards, application of which is mandatory on 1.1.2012 or thereafter, and which the group has not adopted earlier voluntarily. The group will adopt the following standards (and their amendments) and interpretations from 1.1.2012 onwards:
Change to IFRS 7, Financial instruments: Disclosures (in force 1.7.2011 or in beginning account period after it). Change bring more transparence regarding transaction presentation of disposal of financial instruments. Change is not yet accepted to apply in EU.
Change to IAS 12, Income taxes (in force 1.1.2012 or in beginning account period after it). Change concern valuation method effects of selected assets to deferred taxes. Change is not yet accepted to apply in EU. No effect on the group.
Change to IAS 1, Presentation of financial statements (in force 1.7.2012 or in beginning account period after it). Central change is demand for grouping of other comprehensive income items according if they will possible carry later to earnings acting with filling certain condition. Change is not yet accepted to apply in EU.
3. SEGMENT INFORMATION
The group has only one distinct segment, location based services. Its share of net sales has been 100% in the period and in the reference period.
4. OTHER OPERATING INCOME
As a result of the de-consolidation of GHNV, the Company realized in year 2011 a one time, non cash gain of 16690 teuros.
5. COSTS BY CATEGORY
| 1000 EUR | 3Q/2012 | 1-3Q/2012 | 3Q/2011 | 1-3Q/2011 | 2011 |
| Total expense of indirect employees | 65 | 237 | 320 | 2304 | 2370 |
| Depreciations | 0 | 0 | 8 | 66 | 66 |
| Other operating expenses | 48 | 203 | 290 | 1382 | 1564 |
| Expenses by cost category, total | 113 | 440 | 618 | 3752 | 4000 |
6. FINANCIAL INCOME
As a result of the repayment of CBL2008B, the Company realized in year 2011 a one time, non cash gain of 4264 teuros.
7. INVESTMENT IN ASSOCIATE COMPANY
| 1000 EUR | 1-3Q/2012 | 1-3Q/2011 | 2011 |
| Value of investment at beginning of period | 988 | 463 | 463 |
| Additions | 0 | 0 | 1000 |
| Subtractions | 0 | 0 | -244 |
| Share of result in period | -393 | 34 | -231 |
| Value of investment at end of period | 595 | 497 | 988 |
| Domicile of GeoSolutions Holdings N.V. is Holland. | |||
| GeoSentric´s interest was 24,34% at the end of June 2012. | |||
| Assets at end of period | 3268 | 4199 | 4947 |
| Liabilities at end of period | 125 | 321 | 163 |
| Net sales | 18 | 8 | 17 |
| Result | -1634 | 225 | -868 |
8. SHAREHOLDERS´ EQUITY
| Number of shares (1000) | Share capital (1000 eur) | Share premium account (1000 eur) | Invested distributed equity account (1000 eur) | Total (1000 eur) | |
| 31.12.2011 | 3490246 | 8956 | 13631 | 29056 | 51643 |
| 30.9.2012 | 3490246 | 8956 | 13631 | 29056 | 51643 |
According to the Company´s articles of association registered there is no maximum for the shares and there is only one category of shares at the Company. Also the clause about maximum amount of share capital has been removed. The shares carry no nominal value. All outstanding shares are fully paid.
9. OPTION RIGHTS
Option program 2008-1: Share subscription period has expired, shares has not subscribed. Cost of options booked in the period according to IFRS 2. Consideration is given as options. The counter-item of costs bookings is income statement is shareholders´ equity.
| 1000 EUR | 1-3Q/2012 | 1-3Q/2011 | 2011 |
| Key persons | 54 | 135 | 127 |
10. FINANCIAL LIABILITIES
| 1000 EUR | Nominal loan value 3Q/2012 | 3Q/2012 | 3Q/2011 | 2011 |
| Non-current: | ||||
| Loan 2008 | 0 | 0 | 1783 | 0 |
| Current: | ||||
| Cbl 2004A | 113 | 113 | 113 | 113 |
| Loan 2012 | 236 | 355 | 0 | 0 |
| Current total | 468 | 113 | 113 |
Convertible bond loan 2004A:
This loan with a nominal principal of 1130 teuros was raised on year 2004 and was converted during the conversion period before 31.12.2008 in all 1017 teuros. The remaining amount of loan is 113 teuros. The interest is 4%. No interest was paid. The loan capital, interest and other benefit may be paid in case of dismantling or bankruptcy of company only with priority after the other creditors. The principal may be returned otherwise only providing that a full coverage for the bound equity and other non-distributable items in the confirmed financial statements for the latest expired financial year is retained. Interest or other benefits may be paid only in case the paid amount may be used for profit distribution in the confirmed balance sheet for latest expired financial period.
Secured Loan 2012
The Company has received a financing offer for the amount of 350 teuros from an independent advisory business, which proposal the Board of Directors and Annual General Meeting have accepted and the final documents have been executed. The Company has already received current financing 236 teuros satisfying its imminent working capital needs. The Company will receive the remaining third tranche of approximately €114k during 2012, which will secure Company´s working capital needs through 2012 and into early Q1 2013. The shares of GeoSolutions Holdings N.V. Owned by the Company secure the financing. The loan matures on April 30, 2013 and accrues interest at the rate of 12% per annum, which is payable in the Company shares. The Company has also the right to repay the loan at any time subject to redemption premium that is 50% now and will rice to 100% step by step. The investor is in addition entitled to receive special subscription rights entitling to Company´s shares to the amount agreed in the financing terms and a one-off investment fee payable in Company´s shares to be issued to the investor without charge. Value of special subscription rights and one-off investment fee is about 154 teuros, which have been booked as cost to this period.
11. COLLATERAL COMMITMENTS AND CONTINGENCIES
| 1000 EUR | 3Q/2012 | 3Q/2011 | 2011 |
| Contingent liability | 0 | 0 | 0 |
| Collateral for own liabilities: | |||
| Pledged GHNV shares | 595 | 0 | 0 |
12. RELATED PARTY TRANSACTIONS
The parent and subsidiary company relations in the group were to beginning of August 2011 as follows: Parent company GeoSentric Oyj. Subsidiaries with parent company ownership and voting rights of 100 % were GeoSolutions Holdings N.V., and its through (100%) subsidiaries GeoSolutions B.V., GyPSii (Shanghai) Co Ltd. and GyPSii Inc.. GeoSentric (UK) Ltd was sold in June 2011. On August 4, 2011 the GeoSentric Oyj´s interest in GHNV was reduced to a minority holding of approximately 15%, and it was 24,34% at the end of June 2012.
Related party transactions have been presented in the Financial Statements 2011.
The Annual General Meeting the following persons to continue on the Board: Victor Franck, Jeffrey Crevoiserat and Michael Po. The Board elected Victor Franck to continue as the Chairman of the Board.
Company´s ex-CFO has filed a claim against the Company through his fully owned company SoftTech Support Services Ltd. Amounting to €40k. The Company has rejected the claim.
13. EVENTS AFTER THE END OF THE PERIOD
Company has received the remaining third tranche of the €350k secured loan in November, which secures Company’s operations into Q1 2013. The loan is secured by Company’s approximately 24% holding in GeoSolutions Holding N.V. (“GHNV”). Company has further in November opened a new secured loan note to raise a minimum of €1,000,000 and maximum of €1,550,000 to finance its operations through 2013, repayment of the existing secured note to the repayment amount of €700,000 and participation in GHNV’s coming funding round up to its pro-rata amount of €540,348. The new secured note would be secured by Company’s holding in GHNV after the repayment of the current secured note. The subscriptions of the new loan note are to be paid to the Company on or before December 21, 2012. The new loan note is required to maintain sufficient liquidity through 2013 and to repay the existing secured loan note that matures on April 30, 2013.
