GEOSENTRIC OYJ STOCK EXCHANGE RELEASE April 30, 2013 at 15:40
FINANCIAL STATEMENTS RELEASE FOR FINANCIAL YEAR 2012
The Annual Report 2012 of GeoSentric Oyj has been published on the Company’s web site. The Annual Report is available at www.geosentric.com.
Contents
1. Summary of key figures and results
2. Review of October – December 2012
3. Operational overview
4. Material events in the year 2012
5. Material events after the end of the financial year
6. Review of the financial position and the financial results
7. Sufficient Liquidity
8. Outlook
9. Assessment of significant operational risks
10. Review of R&D activities
11. Investments
12. Personnel and organization
13. Environmental issues
14. Group structure
15. Board of Directors and auditors
16. Board authorization
17. Financing and structural arrangements
18. Company’s shares and shareholders
19. Board proposal regarding the handling of the result
20. Notice
1. SUMMARY OF KEY FIGURES AND RESULTS
The key figures summarizing the Company’s financial position and financial results were as follows (teuros unless indicated otherwise):
| In period | 10-12/2012 | 2012 | 10-12/2011 | 2011 |
| Net sales | 0 | 0 | 0 | 49 |
| Operating Result | -149 | -589 | -248 | 12739 |
| Basic earnings per share (eur) |
-0.00 |
-0.00 |
0.00 | 0.01 |
| At the end of the period | ||||
| Total assets | 947 | 1171 | ||
| Shareholders’ equity |
-606 |
931 | ||
| Total liabilities | 1553 | 240 |
2. REVIEW OCTOBER –DECEMBER 2012
The Company confirmed that it has received the full amount of the €350,000 secured loan confirmed by the Annual General Meeting on June 5, 2012. Secured loan is expected to finance the operations of the Company into Q1/2013. 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.
Therefore the Company opened a new financing round on November 2012 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. The cash from the said loan notes would have been used to repay the current secured loan of €350,000, 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 Company did not receive any subscriptions, however, at the end of December 2012 an independent investment company committed to provide an additional loan of approximately €360,000 on terms and conditions similar to the existing secured loan note of €350,000.
This additional loan enabled the Company to participate in GHNV’s equity funding round to its full prorate share of approximately 24% of approximately € 360,000. The additional loan was secured by the new GHNV shares issued against the Company’s full participation in GHNV’s equity funding round. The additional loan matures at the same time with the original secured loan on April 30, 2013 and is subject to a maximum redemption premium of 38.44%. The Company is entitled, in its sole discretion, to repay the additional loan by transferring the newly issued GHNV shares paid with the funds from the additional loan to the creditor instead of cash payment. In this case, the Company’s holding in GHNV would reduce to approximately 6% level assuming the original secured loan was repaid and the current GHNV shares securing the original secured loan were retained by the Company
As the additional financing was needed to secure the Company’s 24% investment in GHNV, the Company needs to raise other additional funding to secure its short-term working capital needs.
3.OPERATIONAL REVIEW
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 business model is via licensing of intellectual property in terms of software technology and branded trademarks, and revenue generation from services, which generate advertising and subscription revenue.
The Company did not have any net sales in year 2012 compared to 49 teuros in year 2011 from its then-current indirect GHNV´s operations.
The Company’s other operating income was in 2012 4 teuros compared to non-cash gain of 16690 teuros in year 2011 as a result of the de-consolidation of GHNV.
The total operating expenses were significantly lower in 2012 compared to the prior year, decreasing to 593 teuros in 2012, from 4000 teuros in 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 2012 also includes its proportional share of GHNV`s result, which was -526 teuros (-231 teuros in 2011).
As a result of the above factors, the total result before taxes was -1602 teuros in 2012, compared to 14707 teuros in 2011. Earnings per share from continuing operations for the financial year were -0.00 euros per share.
4. MATERIAL EVENTS IN THE YEAR 2012
The main events in the financial year 2012 were as follows:
Business operations
The Company continued to act as a holding company to its approximately 24% shareholding in GHNV.
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.
Decisions by the AGM
The Annual General Meeting held on June 5, 2012 (“AGM”) confirmed the annual accounts 2011 and decided that the loss from the financial period will be booked on the accrued profit/loss account and that no dividend is paid. The meeting further re-elected the auditors, Ernst & Young, approved the remuneration and incentives of the auditor and the Board members, resolved that the number of Board members shall be three and elected Victor Franck, Jeffrey Crevoiserat and Mike Po to continue as the ordinary Board members. The Board further elected Victor Franck to continue as the Chairman of the Board.
Further, the AGM confirmed the Board’s prior approval of the terms of the financing Proposal of €350,000 secured loan as described below “Financing arrangements”.
The AGM further resolved on cancellation of all outstanding option rights and reverse split ratio in of at maximum ten 10:1 to be executed by the end of year, provided that the preconditions for the reverse split can be met. Due to technical obstacles, the Board could not execute the reverse split and therefore any future reverse split requires new decision by the general meeting.
Financing arrangements
During the year 2012 the Company had several negotiations on financing arrangements and the Company explored possible options to ensure that it had sufficient liquidity to secure its operations through 2012 and beyond. As announced on February 20, 2012, the Company tried to raise a convertible loan note of at minimum €350,000 and at maximum €500,000 from its major shareholders. However, the major holders were not interested to subscribe for the secured loan note offered by the Company.
On March 2012 the Company received a non-binding funding offer from an independent advisory business representing a number of individual investors. After a difficult negotiation process, the Company and the independent advisory business finally reached understanding for the €350,000 secured funding. As result of the difficult financing negotiations the trading with Company’s shares was suspended as of April 3, 2012 on the request of the Company due to the Company´s inability to secure additional funding by April 3, 2012. At the same time the Company’s Board planned to invite the shareholders’ meeting to decide on the placing of the company into liquidation. However, as result of successful negotiations with respect to the €350,000 secured loan, the Company did not need proceed with liquidation process, but to invite the AGM to confirm the secure loan.
The AGM confirmed the financing 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 AGM. 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 €0.004 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 AGM, 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.
Accordingly the Board decided by virtue of authorization granted by the Annual General Meeting of June 29, 2011 to issue a total amount of 34,902,464 new shares without charge as the agreed arrangement fee and 76,519,300 new shares without charge as the advance payment of the interest. The issued shares represented 1.88 % of the fully diluted amount. The Board decided also to issue special subscription right according to Chapter 10, Clause 1 of the Finnish Companies Act entitling the investor to subscribe for a total amount of 400,185,346 new shares for the aggregate subscription price of €1.00. If the Company would decide to issue new shares or shares would be subscribed by virtue of option rights or other special rights before the exercise, the amount of shares to be subscribed would be adjusted accordingly to correspond 10 % of the outstanding shares at the time of exercise of the warrants. At the time of the issue, the shares to be subscribed represented 6.75 % of the fully diluted amount.
The Company received the full amount of the €350,000 secured loan during 2012. Secured loan was expected to finance the operations of the Company into Q1/2013. According to the terms, 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, does not yet generate revenues back to the Company, the Company must finance the repayment of the loan by additional external funding.
Therefore the Company opened a new financing round on November 2012 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. The cash from the said loan notes would be used to repay the current secured loan of €350,000, 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 Company did not receive any subscriptions, however, at the end of December 2012 an independent investment company committed to provide an additional loan of approximately €360,000 on terms and conditions similar to the existing secured loan note of €350,000.
This additional loan enabled the Company to participate in GHNV’s equity funding round to its full prorate share of approximately 24% of approximately € 360,000. The additional loan was secured by the new GHNV shares issued against the Company’s full participation in GHNV’s equity funding round. The additional loan matures at the same time with the original secured loan on April 30, 2013 and is subject to a maximum redemption premium of 38.44%. The Company is entitled, in its sole discretion, to repay the additional loan by transferring the newly issued GHNV shares paid with the funds from the additional loan to the creditor instead of cash payment. In this case, the Company’s holding in GHNV would reduce to approximately 6% level assuming the original secured loan was repaid and the current GHNV shares securing the original secured loan were retained by the Company
As the additional financing was needed to secure the Company’s 24% investment in GHNV, the Company needs to raise other additional funding to secure its short-term working capital needs.
Changes in management
On April 2012 the Company informed that CFO Robin Halliday, acting on a contractor basis, was no longer employed in the service of the Company.
Legal Proceedings
Magi.tel has continued its litigation in Italy against the Company despite the fact that, pursuant to the Finnish Corporate Reorganization Act, any Magi.tel liability ceased on 19 March 2004 when Turku Court approved the GeoSentric Oyj / Benefon Oyj reorganization program. In any case, any claims or damages sustained by the Company related to this litigation should be indemnified and/or reimbursed by TWIG Com Oy, which acquired the TWIG business operations from the Company. The court has recently ruled in favor of the Company. However as said, the ruling does not have an affect to Company’s financial position.
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.
The Company does not have any other pending or threatening legal proceedings, which the Company would consider to have material impact on the Company’s financial position or profitability.
5. MATERIAL EVENTS AFTER THE END OF THE FINANCIAL YEAR
During early 2013 the Company negotiated upon acquiring a new business based on signed term sheet regarding the acquisition of Sinophi Healthcare Limited, a company operating in the field of private specialty healthcare, especially in China. The planned transaction involved acquisition of the entire share capital, shares and votes of Sinophi Healthcare Limited in exchange for newly issued shares of the Company representing 90 % of the Company’s shares and votes after the acquisition.
Despite the substantial efforts the negotiations with Sinophi Healthcare Limited terminated on March 2013. As a result of the termination Company commenced negotiations with another acquisition target based on a similar deal structure that was negotiated with Sinophi. The Company also requested additional short term funding from its key investors and received signed confirmation for this short-term funding. This short-term funding enables the Company to complete the acquisition or, in the event of non-completion, orderly wind-down of its business. The Company has received in March 2013 a commitment from an independent advisory group to make a loan and fund the Company with up to €250,000, which arrangement the Board of Directors has accepted. This commitment is from the same independent advisory group that has previously made secured loans to the Company. This investor and the Company are also working with other parties and negotiating a business plan under which the Company would acquire minority holding in another business. If this acquisition would be successful, the investor would defer repayment on the prior secured loans which would keep the Company solvent and operating. The Company has already received the first tranche of financing in the amount of €25,000 for the Company’s imminent working capital needs. The remaining financing will be funded periodically for the Company’s working capital needs through the remainder of 2013. This financing is secured by the shares of GHNV owned by the Company. 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 after Annual General Meeting 2013 approval.
After the financial year 2012, the Managing Director and a Member of the Board of Directors Michael Po has announced that he will resign from Company. Mr. Po has agreed to assist the Company for the transition period until the end of April 2013.
6. REVIEW OF THE FINANCIAL POSITION AND THE FINANCIAL RESULTS
The key figures summarizing the Company’s financial position and financial results were as follows (teuros unless indicated otherwise):
| In period | 10-12/2012 | 2012 | 10-12/2011 | 2011 |
| Net sales | 0 | 0 | 0 | 49 |
| Operating Result | -149 | -589 | -248 | 12739 |
| Basic earnings per share (eur) |
-0.00 |
-0.00 |
0.00 | 0.01 |
| At the end of the period | ||||
| Total assets | 947 | 1171 | ||
| Shareholders’ equity | -606 | 931 | ||
| Total liabilities | 1553 | 240 | ||
| Cash | 96 | 131 |
Sufficient liquidity
The Company has, during the financial year, retained sufficient liquidity.
As announced on April 23, 2012, the Company succeeded to secure an additional €350,000 secured funding from an independent advisory business that secures the Company´s funding through 2012 and into 2013.
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 did not receive any subscriptions, however, at the end of December 2012 an independent investment company committed to provide an additional loan of approximately €360,000 on terms and conditions similar to the existing secured loan note of €350,000. However, this additional loan enabled the Company to participate in GHNV’s equity funding round to its full prorate share.
The Company has received a commitment for additional short-term funding from its key investors enabling the Company to complete the acquisition, or in the event of non-completion, orderly wind-down of its business. Thus the financing provides the funding of the Company through 2013.
The Company is pursuing possible options open to it in order continue the operations. Company is working with other parties and negotiating a possible business plan under which the Company would acquire minority holding in another business. If the financing arrangement and the related business plan are not approved by the annual general meeting on 2013, the Company does not have the ability to repay the prior secured loans, and the Company’s GHNV shares which are pledged against these loans would be put up for auction to satisfy the amounts owed by the Company on these loans. If the GHNV shares were able to be sold for more than the total amount owed on the secured loans, then the Company would be entitled to retain any such excess amount.
The Company does not have sufficient funds to finance its operations beyond 2013 unless it succeeds to raise additional financing.
7. 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 focused 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 recognize 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 past financial arrangements, the Company became a minority shareholder in GHNV with its currently approximately 24% holding. As a minority shareholder of GHNV the Company does not have the 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 to enjoy strong 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 also to new business segments with competitive situations new to it, or which may be only in the early market phase. Unless GHNV is able to successfully respond to these developments it may significantly impair its operating results affecting consequently to operating results of the Company.
A key driver of the GHNV business model is sufficient and sufficiently 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. 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, 2013 it needs to raise additional external financing to repay the loan despite the additional loan of €250,000 described above in “Material events after the period”. 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.
In addition, the Company will need further external funding to secure sufficient liquidity in the long term and also to enable further investments in GHNV. Should the new financing be delayed or prove to be unavailable, this could cause an insolvency risk and/or further dilution of Company’s holding in GHNV. The Company’s go-forward budget and cash sufficiency estimates have been prepared assuming further 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 AND FINANCING
Gross investments in year 2012 were 360 teuros. In the year 2011 gross investments were 1043 teuros.
11. PERSONNEL AND ORGANIZATION
The number of employed personnel in the Company in year 2012 averaged 3, at most in addition to the Managing Director. All personnel has been subject to forced leaves from September 2012.
12. ENVIRONMENTAL ISSUES
The Company’s operations cause no significant environmental impact.
13. BOARD OF DIRECTORS AND AUDITORS
According to the Company’s articles of association the Board of Directors consists of not less than three (3) but no more than nine (9) ordinary members. The term of the members of the Board of Directors begins at the end of the Annual General Meeting of shareholders and expires at the end of the next Annual General Meeting of the shareholders following the election.
The AGM 2012 resolved that the number of Board members is three. The Board consists of Victor Franck (Chairman), Michael A. Po and Jeffrey Crevoiserat. After the financial year the Company’s Managing Director and a Member of the Board of Directors Michael Po has announced that he will resign from the Company. Mr. Po has agreed to assist the Company for the transition period until the end of April 2013.
The Company has no longer Board committees.
In financial year 2012, the audit firm Ernst & Young Oy continued to serve as the ordinary auditor of the Company, with Mr. Erkka Talvinko, CPA, as the responsible auditor.
14. GROUP STRUCTURE
As a result of de-consolidation of GHNV sub-group on August 4, 2011 the Company ceased to be a part of the Group. The Company’s only external holding is its approximately 24% holding in GHNV, an associated company.
15. 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 1,922,802,890 shares corresponding to 53.39 % of the issued share amount and 47.24 % shares after all shares and instruments entitled to shares, effecting a corresponding immediate dilution to existing shareholdings (including current authorization).
16. STRUCTURAL ARRANGEMENTS AND CHANGES IN AMOUNTS OF SHARES
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”.
By virtue of the first secured loan of €350k confirmed by the AGM held on June 5, 2012, the Board decided by virtue of authorization granted by the Annual General Meeting of June 29, 2011 to issue a total amount of 34,902,464 new shares without charge as the agreed arrangement fee and 76,519,300 new shares without charge as the advance payment of the interest. The issue is directed to the investor of the secured loan. The issued shares represented 1.88 % of the fully diluted amount. The share registration is pending.
Further, according to the terms and conditions of the said financing the Company was required to place in a warranty structure that entitles the investor or its assignee to receive 10% of Company’s outstanding shares at the time of exercise of the warrants for one (1) euro. Accordingly the Board has decided by virtue of authorization granted by the Annual General Meeting of June 29, 2011 to issue special subscription right according to Chapter 10, Clause 1 of the Finnish Companies Act entitling to subscribe for a total amount of 400,185,346 new shares for the aggregate subscription price of €1.00. If the company would decide to issue new shares or shares would be subscribed by virtue of option rights or other special rights before the exercise, the amount of shares to be subscribed would be adjusted accordingly to correspond 10 % of the outstanding shares at the time of exercise of the warrants. At the time of the issue, the shares to be subscribed represent 6.75 % of the fully diluted amount. The warranty structure has not yet been registered.
As a conclusion the amount of registered shares of the Company changed over the reporting year as follows:
| Number of registered shares on 1.1.2012 | 3,490,246,354 |
| New shares issued in directed share issue (registration pending) | 111,421,764 |
| Number of issued shares on 31.12.2012 | 3,601,668,118 |
| Number of registered shares on 31.12.2012 | 3,490,246,354 |
17. CAPITAL LOANS
The Company did not raise any new capital loans in 2012.
The loan decided on February 26, 2004 and remaining 112,762.57 euros has been matured and entitles no longer new shares of the Company. Until now, no payments have been made of the Loan. The loan will accrue a fixed annual interest of 4 % also paid on mentioned date of June 30 of each year providing that the requirements set in the Companies´ Act regarding interest payments on equity loans are met. Until now, no interest has been paid on the loan.
18. 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. As of April 3, 2012 the trading with Company’s shares has been suspended on the request of the Company. Of the total share amount 924,656,354 have are subject to public trading. Remaining share amount shall be applied for public trading.
The Company does not have any Company´s shares owned by or administered on behalf of the Company.
At the end of the financial year the Company’s registered share capital was 8,955,761.65 Euros and share amount 3,601,668,118, consisting of 3,490,246,354 registered shares and 111,421,764 un-registered shares (registration pending).
The number of outstanding shares in the beginning of the financial year 2011 was 3,490,246,354.
As of 31.12.2012 according to share register of the Euroclear Finland shareholders who hold their shares under a name of a nominee own a total amount of 716,515,781 shares corresponding 20.52 % of the Company’s registered shares and votes. It should be noted that the above nominee registered holdings do not include the new 2,677,011,764 new shares consisting of 2,565,590,000 issued in the Company’s directed share issue in November 2011 and 111,421,764 issued by virtue of the secure loan in year 2012 as those shares have not yet been publicly listed and therefore form a separate species of shares with equal rights to the old shares (GEO1VN0111).
| Shareholder | Shares | % of votes and shares |
| Nordea Pankki Suomi Oyj (custodian shares) | 399,244,760 | 11.44 % |
| Skandinaviska Enskilda Banken (custodian shares) | 211,754,956 | 6.07 % |
| Svenska Handelsbanken AB (custodian shares) | 54,026,573 | 1.55 % |
| Danske Bank, Nordic Custody, Copenhagen (custodian shares) | 45,611,759 | 1.31 % |
| TOTAL | 710,638,048 | 20.36 % |
According to information received by the Company during the reporting year, the holdings of the following shareholders are (including the the 2,565,590,000 issued in the Company’s directed share issue in November 2011):
| Shareholder | Shares | % of votes and shares |
| Ansa Group | 468,377,779 | 13.42 % |
| Nobolles Investments Limited | 616,107,806 | 17.65 % |
The number of fully diluted shares as of 31.12.2012 was as follows:
| Registered listed shares | 924,656,354 |
| Registered un-listed shares | 2,565,590,000 |
| Un-registered shares (registration pending) | 111,421,764 |
| Registered rights entitling to shares | 68,329,805 |
| Un-registered rights entitling to shares | 400,185,346 |
|
Board authorization |
1,922,802,890 |
| TOTAL | 5,992,986,159 |
The Company’s all issued instruments including authorization entitled to shares together correspond to approximately 166,39 % of the share amount after all instruments entitled to shares issued by the Company and board authorization, effecting a corresponding direct dilution to existing holdings.
19. SHAREHOLDING OF BOARD MEMBERS AND MANAGING DIRECTOR
The share holdings and potential holdings by virtue of instruments entitling to share subscriptions of the Board members and managing director on 31.12.2012, including the holdings by controlled corporations, are as follows:
| Person | Direct shares/holdings of interest parties | Stock options |
Total securities |
% shares and votes |
| Franck, Victor | 78,500,000 | - | 78,500,000 | 2.18 |
| Po, Mike | - | 3,000,000 | 3,000,000 | 0.00 |
| Crevoiserat, Jeffrey | 616,107,806 | - | 616,107,806 | 17.11 |
The AGM decided on certain incentives for the Board members. Based on such decision the Board is authorized to adopt new option plan and to issue option rights according to Chapter 10, Clause 1 of the Finnish Companies Act entitling to subscribe for a total amount of 209,414,781 new shares corresponding 6% of the outstanding share amount on June 5, 2012. The share subscription price is €0.0004 for each share.
20. RELATED PARTY TRANSACTIONS
There were no related party transactions made during the financial year 2012.
As a part of the terms relating to the investors investment in the Company in previous financing round arranged in August-September 2007 and simultaneously agreed restructuring of Company’s ownership, the Board approved an incentive carve-out agreement entered into with key senior managers who are holders in GeoHolding B.V. for a successfully completed exit transaction. The incentive carve-out is based on the valuation of the Company in pre-defined exit events, requiring shareholders’ approval to take place, and may not exceed 10 percent of the valuation. The agreement shall be valid until July 31, 2017.
21. BOARD PROPOSAL REGARGING THE HANDLING OF THE RESULT
The Board proposes to the Annual General Meeting that no dividend is distributed and that the profit for the period is booked to the prior years´ result account.
GeoSentric Oyj
For more information, please contact: investors@gypsii.com
Distribution:
NASDAQ OMX Helsinki
Principal news media
GROUP STATEMENT OF COMPREHENSIVE INCOME
| 1000 EUR | Note | 4Q/2012 | 2012 | 4Q/2011 | 2011 |
| Net sales | 0 | 0 | 0 | 49 | |
| Cost of goods sold | 0 | 0 | 0 | 0 | |
| Gross margin | 0 | 0 | 0 | 49 | |
| Other operating income | 4 | 4 | 4 | 0 | 16690 |
| General & Administrative expenses | 5 | 153 | 593 | 240 | 1969 |
| Research & Development expenses | 5 | 0 | 0 | 8 | 1224 |
| Sales & Marketing expenses | 5 | 0 | 0 | 0 | 807 |
| Operating result | -149 | -589 | -248 | 12739 | |
| Financial income | 6 | 0 | 0 | 4264 | 4265 |
| Financial expenses | 7 | -208 | -487 | -37 | -2066 |
| Share of Associate Company result | 8 | -133 | -526 | -265 | -231 |
| Result before taxes | -490 | -1602 | 3714 | 14707 | |
| Income taxes | 0 | 0 | 0 | 129 | |
| Result for the period | -490 | -1602 | 3714 | 14836 | |
| Translation difference | 0 | 0 | 2 | -34 | |
| Comprehensive income | -490 | -1602 | 3716 | 14802 | |
| Earnings per share, eur: | |||||
| Basic earnings per share | -0,00 | -0,00 | 0,00 | 0,01 | |
| Diluted earnings per share | -0,00 | -0,00 | 0,00 | 0,01 |
GROUP STATEMENT OF FINANCIAL POSITION
| 1000 EUR | Note | 31.12.2012 | 31.12.2011 |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 3 | 2 | |
| Investment in Associate Company | 8 | 820 | 988 |
| Deferred tax assets | 0 | 0 | |
| 823 | 990 | ||
| Current assets | |||
| Trade receivables and other receivables | 28 | 50 | |
| Cash and cash equivalents | 96 | 131 | |
| 124 | 181 | ||
| Total assets | 947 | 1171 | |
| EQUITY AND LIABILITIES | |||
| Shareholders´equity | |||
| Share capital | 9 | 8956 | 8956 |
| Share premium account | 9 | 13631 | 13631 |
| Invested distributable equity account | 9 | 29056 | 29056 |
| Retained earnings | -52249 | -50712 | |
| Total shareholders´ equity | -606 | 931 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 0 | 0 | |
| Current liabilities | |||
| Trade payables and other payables | 436 | 127 | |
| Interest bearing debt | 11 | 1117 | 113 |
| 1553 | 240 | ||
| Total liabilities | 1553 | 240 | |
| Total shareholders´ equity and liabilities | 947 | 1171 |
GROUP CASH FLOW STATEMENT
| 1000 EUR | 2012 | 2011 |
| Cash flow from operations | ||
| Result for the period | -1602 | 14836 |
| Adjustments | 888 | -16282 |
| Changes in working capital: | ||
| Change of trade and other receivables | 22 | 174 |
| Change of trade and other liabilities | 309 | -3092 |
| Paid interests | 0 | 0 |
| Received interest payments | 0 | 501 |
| Cash flow from operations, net | -383 | -3863 |
| Cash flow from investments, net | -360 | -1043 |
| Cash flow from financing | ||
| Proceeds from issue of share capital | 0 | 1026 |
| Transaction expenses of loans | 0 | -31 |
| Proceeds from long term borrowings, liability | 708 | 3150 |
| Net cash flow from financing | 708 | 4145 |
| Change in cash | -35 | -761 |
| Cash on January 1 | 131 | 892 |
| Cash on December 31 | 96 | 131 |
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY
| Share capital (1000 eur) | Translation difference (1000 eur) | Share premium account (1000 eur) | Invested distrib. 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 | 88 | -34 |
| Result for the period | 0 | 0 | 0 | 0 | 14836 | 14836 |
| Comprehensive income | 0 | -122 | 0 | 0 | 14924 | 14802 |
| Share issue, cash | 0 | 0 | 0 | 1026 | 0 | 1026 |
| Booked expense of stock options | 0 | 0 | 0 | 0 | 127 | 127 |
| Equity portions of liabilities | 0 | 0 | 0 | -2882 | 2882 | 0 |
| Shareholders´ equity 31.12.2011 | 8956 | 0 | 13631 | 29056 | -50712 | 931 |
| Result for the period | 0 | 0 | 0 | 0 | -1602 | -1602 |
| Comprehensive income | 0 | 0 | 0 | 0 | -1602 | -1602 |
| Booked expense of stock options | 0 | 0 | 0 | 0 | 65 | 65 |
| Shareholders´ equity 31.12.2012 | 8956 | 0 | 13631 | 29056 | -52249 | -606 |
KEY FIGURES
| 4Q/2012 | 2012 | 4Q/2011 | 2011 | |
| Net sales, 1000 EUR | 0 | 0 | 0 | 49 |
| Operating result, 1000 EUR | -149 | -589 | -248 | 12739 |
| Result before taxes, 1000 EUR | -490 | -1602 | 3714 | 14707 |
| Gross investments, 1000 EUR | 2 | 360 | 1000 | 1043 |
| Average personnel | 3 | 3 | 3 | 44 |
| Earnings per share, EUR | -0,00 | -0,01 | 0,00 | 0,01 |
| Equity per share, EUR | -0,00 | -0,01 | 0,00 | 0,00 |
| Weighted average number of shares in period, 1000 pcs | 3490246 | 3490246 | 1352255 | 1031507 |
| Number of shares at the end of the period, 1000 pcs | 3490246 | 3490246 | 3490246 | 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.
According Finnish Companies Act, the shareholders has possibility to accept or reject the financial statements, even the General Meeting is after financial statements is released. General Meeting has also possibility to make desicion about changing financial statements.
2. ACCOUNTING PRINCIPLES FOR THE FINANCIAL STATEMENTS
Accounting principles:
The group financial statement bulletin has been prepared in accordance with International Financial Reporting Standards ("IFRS") and has been prepared to the accounting standard IAS 34, Interim Reports. Information is based to audited financial statement for year 2012.
Accounting principles:
The used preparation principles have been presented in the Financial Statements from year 2012.
Since 1.1.2012 the group has applied the following new standards and interpretations:
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. No effect on the group financial statements.
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. No effect on the group financial statements.
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 | 4Q/2012 | 2012 | 4Q/2011 | 2011 |
| Total expense of indirect employees | 92 | 329 | 66 | 2370 |
| Depreciations | 1 | 1 | 0 | 66 |
| Other operating expenses | 60 | 263 | 182 | 1564 |
| Expenses by cost category, total | 153 | 593 | 248 | 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. FINANCIAL EXPENSES
| 1000 EUR | 2012 | 2011 |
| Interest expense from liabilities valued at amortized cost | 17 | 2066 |
| Other financing expenses | 470 | 0 |
| Total | 487 | 2066 |
8. INVESTMENT IN ASSOCIATE COMPANY
| 1000 EUR | 2012 | 2011 |
| Value of investment at a beginning of period | 988 | 463 |
| Additions | 358 | 1000 |
| Subtractions | 0 | -244 |
| Share of result in period | -526 | -231 |
| Value of investment at end of period | 820 | 988 |
| Domicile of GeoSolutions Holdings N.V. is Holland. | ||
| GeoSentric´s interest at the end of period | 24 % | 24 % |
| Assets at end of period | 2717 | 4947 |
| Liabilities at end of period | 127 | 163 |
| Net sales | 21 | 17 |
| Result | -2186 | -868 |
9. SHAREHOLDERS´ EQUITY
| Number of shares (1000) | Share capital (1000 eur) | Share premium account (1000 eur) | Invested distributed equity account (1000 eur) | Total (1000 eur) | |
| 31.12.2010 | 922156 | 8956 | 13631 | 30912 | 53499 |
| Share issue free 7.1.2011 | 2500 | 0 | |||
| Share issue, cash 16.12.2011 | 2565590 | 1026 | 1026 | ||
| Equity components separated from liabilities | -2882 | -2882 | |||
| 31.12.2011 | 3490246 | 8956 | 13631 | 29056 | 51643 |
| 31.12.2012 | 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.
10. OPTION RIGHTS
The Company carries eight on-going stock option programs. In all of these, one option right entitles to subscribe for one new share of the Company.
Option program 2005A:
The EGM decided on 5.9.2005 to issue a maximum of 1.500.000 option rights to the Managing Director of the Company Mr. Tomi Raita. The share subscription price is 0.10 euros. Share subscription period have ended on 31.12.2012, shares have not paid.
Option programs 2006A and 2006B:
The Board based on authorisation by the annual general meeting of 24.5.2006 decided to issue a total of 4,425,000 option rights to Luben Limited as a compensation for the no-interest loans of a total of 2,950 teuros to the Company. The share subscription price is 0.10 euros.Share subscription period have ended on 31.12.2012, shares have not paid.
Option program 2007-1:
The Board decided on 27.4.2007 by virtue of authorisation by annual general meeting on 16.4.2007 to issue a maximum of 9,778,500 option rights to key persons of GeoSolutions. Option rights are divided into nine categories. The share subscription period have begun and will end depending on the option category between 27.4.2012 and 7.4.2014. EGM on 10.9.2007 decided to amend share subscription price to 0.045 euros. Of the option rights 4,961,000 pcs have become null and void. Share subscription period have ended with 6,663,750 pcs in year 2012, shares have not paid.
Option program 2008-1:
The Board decided on 15.2.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 4,451,632 option rights to certain key persons of the Company. Of the subscribed option rights 2,651,632 pcs have returned and nullified. Share subscription price is 0.06 euros. Share subscription period have ended on 19.02.2012, shares have not paid.
Option program 2008-3:
The Board decided on 16.5.2008 by virtue of authorisation by extraordinary general meeting on 10.9.2007 to issue a maximum of 24,500,000 option rights to the members of the Board of the Company. Of the subscribed option rights 17,500,000 pcs have returned and nullified. Share subscription price is 0.045 euros. Share subscription period have ended on 31.12.2012, shares have not paid.
Option program 2009-1:
The Board decided in its meeting on May 14, 2009 to issue a total amount of 3,000,000 option rights by virtue of the authorization granted by the EGM on September 10, 2007. The options are directed to the Board´s advisors without charge as decided by the Board. Share subscription price is 0.045 euros. Share subscription period have ended on 31.12.2012, shares have not paid.
Accordingly the Board has decided by virtue of authorization granted by the General Meeting of June 29, 2011 to issue special subscription rights entitling the creditor of the secured loan to subscribe for a total amount of 400,185,346 new shares for the aggregate subscription price of €1.00.
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 | 2012 | 2011 |
| Key persons | 66 | 127 |
11. FINANCIAL LIABILITIES
| 1000 EUR | Nominal loan value 2012 | 2012 | 2011 |
| Current: | |||
| Cbl 2004A | 113 | 113 | 113 |
| Loan 2012 | 708 | 1004 | 0 |
| Current total | 1117 | 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 loan for the amount of 350 teuros from an independent advisory business.The shares of GeoSolutions Holdings N.V. owned by the Company secure the financing. The loan matures on April 30, 2013 and accrues interest 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 75% now and will rise to 100%. 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 174 teuros, which have been booked as cost.
Additional Secured Loan 2012
The Company has received in December loan of the amount of 358 teuros from independent investment company, which participated in GeoSolutions Holdings N.V.:s equity fundind ground to its full prorata share of approximately 24%. Received shares of GeoSolutions Holdings N.V. owned by the Company secure the financing. The loan matures on April 30, 2013 and accrues interest 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 9.61% now and will raise to 38.44% step by step.
12. COLLATERAL COMMITMENTS AND CONTINGENCIES
| 1000 EUR | 2012 | 2011 |
| Contingent liability | 0 | 0 |
| Collateral for own liabilities: | ||
| Pledged non-current financial assets | 820 | 0 |
Quarrels and trials:
Magi.tel has continued its ligitation in Italy against the Company despite the fact that, pursuant to the Finnish Corporate Reorganization Act, any Magi.tel liability ceased on 19 March 2004 when Turku Court approved the GeoSentric Oyj / Benefon Oyj reorganization program. In any case, any claims or damages sustained by the Company releated to this litigation should be indemnified and/or reimbursed by TWIG Com Oy, which acquired the TWIG business operations from the company. On 2013 the court in Italy has given its ruling upon which GeoSentric was released from any obligations toward Magitel. The Company does not have any other pending quarrels or trials which the Company would consider to materially impact on the Company´s financial position or profitability.
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. 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 December 2012.
| 1000 EUR | 2012 | 2011 |
| Employee benefits of the management: | ||
| Salaries and bonuses | 114 | 685 |
| Pension payments | 0 | 47 |
| Other costs | 46 | 484 |
| Cost of granted option rights to management and other key persons | 66 | 127 |
| Total | 226 | 1343 |
The Annual General Meeting on June 5, 2012 elected 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. Michael Po have been the Managing Director. Related party transactions have been presented in the Financial Statements from year 2012.
27. GOING CONCERN
As noted below (see note 31), the Company has received a funding commitment from an independent advisory group which provides for the funding of the Company through 2013. This financing arrangement has been approved by the Company’s Board of Directors and will be referred to an AGM to be held by the end of June 2013 for shareholder approval. As also noted below (see note 31), the investor and the Company are also working with other parties and negotiating a possible business plan under which the Company would acquire minority holding in another business. If the shareholders do not approve the financing arrangement and the related business plan, and no alternative and acceptable funding proposal is forthcoming, it is likely that the Company would be declared insolvent and would be forced to liquidate. If the financing arrangement and the related business plan are approved by the AGM it will, according to management’s forecast secure Company’s working capital needs through 2013 and the operations of the Company would be expected to be cash flow positive thereafter.
The management forecast used is based on the current 2013 business plan, budget and availability of external funding. The management has also assested the valuation of GeoSolutions Holdings N.V.’s shares in the Company’s balance sheet and concluded that based on the valuation applied in the most recent financing round of GeoSolutions Holdings N.V. closed in Q3 2011, its business plan and the recent development of GyPSii business in China, as further explained in the Operating Report, the shares of GeoSolutions Holdings N.V. carry at least the book value they have in the Balance Sheet of the Company. If the financing arrangement and the related business plan are not approved by the AGM, the Company does not have the ability to repay the prior secured loans, and the Company’s GeoSolutions Holdings N.V. shares which are pledged against these loans would be put up for auction to satisfy the amounts owed by the Company on these loans. If the GeoSolutions Holdings N.V. shares were able to be sold for more than the total amount owed on the secured loans, then the Company would be entitled to retain any such excess amount.
28. EVENTS AFTER THE END OF THE PERIOD
The Company has received in March 2013 a commitment from an independent advisory group to make a loan and fund the Company with up to 250,000 Euros, which arrangement the Board of Directors has accepted. This commitment is from the same independent advisory group that has previously made secured loans to the Company. This investor and the Company are also working with other parties and negotiating a business plan under which the Company would acquire minority holding in another business. If this acquisition is successful, the investor would defer repayment on the prior secured loans which would keep the Company solvent and operating. The Company has already received the first tranche of financing in the amount of 25,000 Euros for the Company’s imminent working capital needs. The remaining financing will be funded periodically for the Company’s working capital needs through the remainder of 2013. This financing is secured by the shares of GeoSolutions Holdings N.V. owned by the Company. 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 after Annual General Meeting approval.
BOARD PROPOSAL TO THE GENERAL MEETING FOR MEASURES REGARDING THE LOSS OF THE PERIOD
The Company has no distributable assets. The result of the period of the parent company is -1,362,004.64 euros (FAS). The Board proposes to the General Meeting that no dividend is distributed and that profit for the period is booked on the account of Retained earnings.
