GEOSENTRIC OYJ Q2 2009 INTERIM REPORT 24.08.2009 at 11:45
INTERIM REPORT 1-6/2009
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. Outlook
8. Assessment of significant operational risks
9. Review of R&D activities
10. Investments
11. Personnel and organization
12. Environmental issues
13. Financing and structural arrangements
14. Board authorization
15. Company's shares and shareholders
16. About the Company
17. Financial Statements, Q2 2009 (not audited)
1. Summary of key figures and results
The key figures summarizing the Group's financial position and financial results
were as follows (teuros unless indicated otherwise):
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| In period | 4-6/2009 | 1-6/2009 | 4-6/2008 | 1-6/2008 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 548 | 1487 | 1061 | 2146 | 4374 |
--------------------------------------------------------------------------------
| Operating Result | -3943 | -7770 | -2973 | -5683 | -11919 |
--------------------------------------------------------------------------------
| Basic earnings | -0.00 | -0.01 | -0.00 | -0.01 | -0.01 |
| per share (eur) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| At the end of | | | | | |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 9665 | | 12189 | | 16805 |
--------------------------------------------------------------------------------
| Shareholders' | 2554 | | 8265 | | 10053 |
| equity | | | | | |
--------------------------------------------------------------------------------
| Total | 7111 | | 3924 | | 6752 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
2. Operational overview
GeoSentric 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”)
together with ready-to-use integrated GPS/GSM devices for navigation and object
tracking and customizable software solutions for industry specific uses
(“TWIG”). In addition, GeoSentric offers Internet-based locating services with
which the user may locate other GeoSentric devices. The GyPSii platform and TWIG
product line complement each other and enable GeoSentric to utilize its overall
intellectual property rights to software and services in an efficient manner
with delivery of products and services to two different markets, GyPSii
offerings to the geo social networking/LBS sector and TWIG offerings to the
LBS/B2B sector.
The business model for the GyPSii platform services and applications is via
embedded licensing of IPR in terms of software technology and branded
trademarks, and downstream advertising revenue generation from the platform in
partnerships with mobile operators and carriers. Thus during the reporting
period Q2/2009 the Group continued its focus on securing contracts with the
major distribution partners to integrate product on to their new devices and
services. Major marketing and launch plans for 2009 by all the distribution
partners are expected to drive significant volumes of GyPSii users on a global
basis, which is also expected to have a positive impact on revenues from GyPSii
during the second half of 2009. The global financial crisis has delayed the
launches of certain new products by some of the company's distribution partners.
This has caused some lag to the company's business plans but has not had any
significant effect on the future outlook for GyPSii business.
The total net sales of the Group in 1-6/2009 were 1487 teuros, down by 30.7%
compared to the total net sales in 1-6/2008 of 2146 teuros. Revenue in 1-6/2009,
as last year, was substantially all from the Twig products. The revenue
reduction was caused by a decline in sales of the older Discovery Pro product
which was not offset by the newly launched Protector product. Protector sales
are expected to improve in future quarters. The total cost of sales in 1-6/2009
were substantially reduced from that of the prior period in 1-6/2008, going to
989 teuros from 1600 teuros, a 38.2% reduction. The gross margin for the
reporting period was strong, at 498 teuros (33.5%), compared to a gross margin
of 546 teuros (25.4%) for 1-6/2008. This reduction in cost of sales and
resulting gross margin improvement was caused mainly by the inclusion in Q1 last
year of a strategic sale at a relatively low sales price to a customer, and also
by a reduction from last year to this year in the cost of direct (i.e.
production) employees resulting from efficiency savings.
Total operating expenses were increased in the reporting period compared to the
prior year period, going to 8268 teuros in 1-6/2009, from 6263 teuros in
1-6/2008, a 32.0% increase. This was mainly driven by increases in R & D
personnel related to the development of GyPSii products and services and to
increased sales and marketing expenditure and personnel again in relation to the
GyPSii products and services.
The total earnings before taxes were -8034 teuros in 1-6/2009, versus -5696
teuros in 1-6/2008, a 41.0% decrease. Earnings per share for the reporting
period were -0.00 Euros per share.
3. Material events in the period
During the period 4-6/2009, the Group has continued its efforts to broaden the
range of GyPSii supported devices, which is an essential element in Group's
business plan. As GyPSii's revenue model is based on income from embedded and
upstream licensing of IPR, subscription fees and advertising, broadening the
range of supported devices, entering into agreements with major distribution
partners and introduction of OEx has created a solid basis for achieving a
critical mass of users for GyPSii and at the same for future revenue generation,
even though those events haven't had material effect on company's financial
performance yet during the first half of 2009. The following distribution
milestones were achieved during the period:
In April the company announced that the Group's GyPSii mobile social networking
application was available as a download from the Samsung Mobile Application
Store, which was launched in January
2009(http://applications.samsungmobile.com). This will further extend the
accessibility of the GyPSii application to potentially many millions of users.
In May, the company announced GyPSii native application support for the iPhone,
which can now be downloaded from the Apple iPhone Application Store, extending
penetration into the fastest growing mobile phone sector, smart phones, to over
30M iPhone/iTouch active mobile internet users.
In May, the GyPSii application was made available as a download from GetJar
(http://www.getjar.com/) for the following operating systems: Windows Mobile,
S60 3rd Edition, S60 5th edition, and RIM Blackberry. Getjar.com is available
in over 200 different countries, support over 1600 different devices, has over
300,000 registered users and over 300 million downloads to date.
In May, the company signed an agreement with WeFi,Inc. to make the GyPSii
application available for distribution from WeFiApps <http://www.WeFiApps.com/>.
WeFi is an application portal for rich multimedia and data applications for
mobile phones. WeFi and WeFiApps.com opens up the GyPSii application to a user
base leveraging over 30 million WiFi access points across the globe.
In May, the GyPSii application was made available as download from Uygulama
Pazari, the mobile application portal for Turkcell subscribers. Launched in Q4
of 2008 through a joint partnership between Turkcell and Kokteyl, Uygulama
Pazari, Turkish for “Application Market”, now contains more than 550 unique
mobile applications and exclusively supports Turkcell's 35 million subscribers.
In May, the company signed a marketing partnership agreement with UCweb
(www.ucweb.com). UCWEB is the leading mobile software and integrated service
providers in China. UCweb is sponsoring the GyPSii's wap portal on it's WAP
portal promotion page.
In June, the company announced GyPSii product availability on the mobile Java
platform, which opens access to over 650 million java device users in China
alone. The new java version was built with extensive feedback from partners and
users and has been a positive contributor to the uptake of users, particularly
in the target Chinese market.
In June, the company launched its GyPSii application in Nokia's Ovi store, which
provides access for downloads of the applications in more than 100 countries.
In June the company signed an agreement with Sony Ericsson Mobile Communications
for World-wide distribution of the Group's GyPSii mobile social networking
application. GyPSii is made available to Sony Ericsson phones in 19 different
languages to support its global reach and distribution to over 90 million
consumers.
In June, the company revised its global contract with LG Electronics, for an
expanded commitment to ship GyPSii on all LG platforms of which GyPSii has an
application. In calendar year 2008, LG shipped approximately 110 million
devices, which therefore, illustrates the significance of this revised
contractual commitment for global GyPSii distribution.
In June, the company signed a marketing partnership agreement in China with
weiphone.com (http://weiphone.com>). Weiphone.com is the most popular iPhone
forum in China and the biggest platform for Chinese iPhone users to discuss and
share how to use iPhone and what's new on iPhone. Weiphone has 300,000
registered members and the daily unique visitors are over 100,000, daily PV is
1,500,000. As part of the agreement, weiphone provides an ad banner space on the
main page of weiphone.com, as well as opening a dedicated forum space within
weiphone to promote GyPSii's iPhone client.
In June, the company signed a marketing partnership agreement with 91.com
(http://91.com). 91.com is a new platform for Chinese iPhone users that features
interaction and entertainment. 91.com will put the GyPSii ad banner on the main
page of 91.com.
In June, the company signed a marketing partnership agreement with CHAnet in
China (www.chanet.com.cn). CHANet will issue GyPSii ads to over 32,000 affiliate
sites. This partnership is expected to heavily impact the awareness of GyPSii in
China.
Other material events during the reporting period were:
The Court of First Instance in Rome has given a decision relating to the dispute
between the Company and a UK company Magi.Tel Limited regarding an alleged
patent infringement in Italy. The Company has appealed the judgment on 21 April
2009 and is awaiting the Court's decision relating to its appeal.
The company's Annual General Meeting (AGM) convened in Helsinki on Friday 15 May
2009. The AGM confirmed the financial statements and resolved to discharge from
liability the members of the Board and the Managing Director for the financial
year 2008. In addition, the AGM resolved to adopt the proposal by the Board of
Directors that no dividend shall be paid for 2008. The AGM resolved that the
number of Board members is seven (7) and elected the following persons to the
Board: Mr. Daniel Harple (Chairman), Mr. Michael Vucekovich, Mr. Gary Bellot,
Mr. Andy van Dam, Mr. Winston Guillory, Mr. Hans van der Velde and Mr. Raymond
Kalley. The meeting fee for each Board and committee meeting was decided to be
1,500 euros.
The AGM re-elected Ernst & Young as the auditor of the Company with Erkka
Talvinko (CPA) as the auditor in charge.
The AGM authorized the Board to decide upon increase in share capital and the
issuance of new shares as well as special rights entitling to shares, against or
without payment, such that the maximum amount of increase is 3,000,000 euros and
the maximum number of new shares is 300,000,000. The decisions adopted by the
AGM are described in more detail in the stock exchange release published on 15
May.
The AGM amended the company's Articles of Association according to the Board's
proposal such that the notice to the General Meeting shall be published no later
than twenty-one (21) days before the date of the General Meeting, instead of
earlier seventeen (17) days.
In June the company announced that the European Patent Office had granted it an
EU-wide patent for the transmission of location-based information between
devices and the subsequent publishing of that information for viewing on a map.
This feature represents what the industry has coined “friend finding” and is
felt to be the cornerstone of the combination of mobile social networking and
location based services. The Company is currently exploring the options to
utilize its patent commercially and also reviewing the use of the patented
technology in the solutions already in the markets.
4. Material events after the end of the period
The Company made significant announcements after the end of the period
concerning its GyPSii geo-social networking platform and services.
The company made a settlement in the previously reported dispute with its US
distributor for TWIG products. The company is satisfied with the outcome and
reaching the final settlement in the matter. The settlement shall become final
during the Q3 after all closing conditions have been met.
Despite the global financial crisis the Company has seen steady growth rate in
the number of GyPSii users and managed to close several important distribution
partnership deals with world's leading mobile manufacturers and operators. Major
marketing and launch plans for 2009 by all the distribution partners are
expected to drive significant volumes of GyPSii users on a global basis and
affect positively on revenue from GyPSii. The global financial crisis has
delayed the launches of new products by some of Company's distribution partners
which increases uncertainty towards the rest of the year causing some lag to the
Company's business plans and slightly shifting the revenue expectations of
GyPSii.
To continue to execute the business plan and to secure Company's working capital
the Company has started preparations for new 15M€ financing round to selected
international investors. The Company has entered into an agreement with CRT
Investment Banking LLC (“CRT”) to act as a financial advisor and placement
agent. CRT is a highly reputed international investment bank, with an excellent
track record. There are already a number of investors that have indicated their
interest to participate in the upcoming financing round. Accordingly, the
Company sees it likely that the financing round will be successful and that it's
able to retain sufficient liquidity in all circumstances. The Company targets to
close the new financing during the Q3, or early Q4 at the latest, and will
inform the additional details of the financing as soon as they are available.
The Company's management monitors the progress of the business and financial
performance against the business plan and budget and reports to the Board on a
regular basis. Working capital management is one of management's key focus
areas.
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 Group's financial position and financial results
were as follows (teuros unless indicated otherwise):
--------------------------------------------------------------------------------
| In period | 4-6/2009 | 1-6/2009 | 4-6/2008 | 1-6/2008 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 548 | 1487 | 1061 | 2146 | 4374 |
--------------------------------------------------------------------------------
| Operating Result | -3943 | -7770 | -2973 | -5683 | -11919 |
--------------------------------------------------------------------------------
| Basic earnings | -0.00 | -0.01 | -0.00 | -0.01 | -0.01 |
| per share (eur) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| At the end of | | | | | |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 9665 | | 12189 | | 16805 |
--------------------------------------------------------------------------------
| Shareholders' | 2554 | | 8265 | | 10053 |
| equity | | | | | |
--------------------------------------------------------------------------------
| Total | 7111 | | 3924 | | 6752 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Cash | 4087 | | 3950 | | 9754 |
--------------------------------------------------------------------------------
The Company has agreed with its main investor to delay the payment of accrued
interest on its loans, which had a positive impact of 930k€ in Company's cash
position at the end of the reporting period.
6. Sufficient liquidity
The Company has during the period retained sufficient liquidity. However, the
company's working capital is not sufficient for the next twelve (12) months
without raising additional external financing. To secure sufficient liquidity in
all circumstances the Company has started preparations for a new EUR 15M
financing round as in more detail described under the section “Material events
after the end of the period” above. With the new financing the Company shall
retain sufficient liquidity through the next twelve (12) months period.
Starting from this interim report 1-6/2009 the company does not include future
looking cash flow projection in its reports.
7. Future Outlook
Over the past 18 months the Group has signed agreements with global leaders in
mobile technology and GPS navigation: Samsung as the #2 provider of mobile
handsets, and Garmin as the #1 provider of GPS products. Further, the agreement
with MyNet and China Mobile is indicative of the global market's selection and
adoption of the GyPSii overall platform. The Intel relationship as part of the
reference platform for Atom-based processor MID devices is also a strategic and
significant milestone for the Group. The Group also has deep device support for
Nokia supported platforms built on the Symbian operating systems, like the
recently introduced, 5th Edition Touch based device, Nokia 5800 and future
devices expected in 2009. These material agreements continue to establish GyPSii
as a leading platform, applications and services provider for the geo-social
networking, mobility, and internet advertising markets.
GyPSii is further establishing distribution with major global players in the
phone and MID (mid internet devices) markets. The market is blurring between
smart phones, MID devices and new entrants that are pushing the price down for
entry point for what was seen as mid to high level mobile devices, making them
available to purchase by the mass market in the US, Europe and Asia. This trend
continues with the recent entries by Android and RIM devices. GyPSii will be
supporting Android as it emerges as a serious alternative for device
manufacturers to the development of home grown proprietary platforms, lightly
supported Linux variants and established competitive platforms. GyPSii updated
the iPhone application for full native support in Q2, which will expand reach
into the most advanced mobile web user base.
The GyPSii business is moving from intensive product development phase to market
penetration phase. As the revenues derive from embedded licensing of IPR and
downstream advertising revenue generation, the growth of both the number of
GyPSii users and the devices supported by GyPSii in the markets are crucial for
the commercial success of the business. Despite the global financial crisis the
company has seen steady growth rate in the number of GyPSii users and managed to
close several important distribution partnership deals with world's leading
mobile manufacturers and operators. The company expects to see positive
development in GyPSii generated revenues starting from the second half of 2009.
However, this also requires that the Company is able to continue executing its
current business plan, which further requires the Company to be able to secure
sufficient financing. Possible delays in raising the new external financing,
which is currently being prepared, might have adverse effect on Company's
ability to execute its business plan and accordingly shift the revenue
expectations of GyPSii further to the future.
The TWIG product demand has remained in a steady and stable state focused on the
TWIG Discovery Pro GSM/GPRS/GPS handset which is targeted at the safety and
security market and the TWIG Locator tracking unit for the asset and vehicle
tracking market. Customers continue to place orders for these unique devices and
the Company continues to provide reliable quality product shipments and
delivery. The recently announced new Twig Protector product which is a next
generation, ruggedized, location-centric personal protection device will further
enhance the Group's product range.
8. Assessment of significant operational risks
The global financial crisis and current global recession may have a negative
impact also on the business of the Group. The Group's business model is partner
driven and possible delays in partners' launching their new products to the
market may have an adverse effect on the development of the Group's business by
decelerating the distribution and user-adoption rate of the Group's services.
There is no certainty of the success regarding the implementation and
realisation of the business plan. According to the business strategy, the Group
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 the Group is
able to successfully respond to these development it may significantly impair
the Group´s operating results.
A key driver of the 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 the Group has no certainty. Advertising budgets are
being reduced by all major brands and advertisers and this could have an adverse
affect on the adoption of mobile and location based advertising in 2009 and
beyond.
In addition, the Company carries a limited risk connected with the TWIG product
inventory. Should the Company not be able to sufficiently protect its industrial
rights and other intangible assets, its competitive position may suffer. It is
also possible that other parties may bring action against the Company on grounds
of alleged infringement of industrial or intellectual property rights and,
should they be successful, the Company may be obligated to pay significant
compensation.
Since 1997, the Company has not paid dividends. In the future, the re-payments
of capital loans will restrict the possibility to distribute dividends. The
total amount of loans as at 30 June 2009 was 10113 teuros at nominal value.
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 Group´s business plan has been prepared by assuming that the Group´s result
and cashflow will improve significantly. Should the result and cashflow
essentially fail to meet the planned figures, the Group´s financing plan may
turn out to be insufficient causing a need to secure additional financing. The
Company has already started preparations of a new financing round. Should the
new financing be delayed this might enforce the Company to introduce significant
cost cutting plan, which would also have material effect on execution on
Company's current business plan in the short term.
9. Review of R&D-activities
The volume of the Group´s R&D activities continued to be significant due to the
on-going R&D-programs by means of which the Group intends to significantly
expand its business over the next few years. No capitalisations were made.
The Group has R&D units in Salo (Finland), Amsterdam (the Netherlands), Windsor
(UK), Warwick, RI (USA) and Shanghai (China).
Additionally, GyPSii server facilities are maintained in the US, China and the
Netherlands at present, with continued upgrades and new locations planned in the
future.
10. Investments
Gross investments in period 1-6/2009 were 177 teuros. In the full year 2008
gross investments were 119 teuros. There were no new investments made into the
Company and no new sources of finance established in the period 1-6/2009.
11. Personnel and organization
The number of employed personnel at GeoSentric in period 1-6/2009 averaged 115,
of which 28, at most, were affected by alternate forced leaves. The alternate
forced leave program, agreed in autumn 2007 to apply for the time being,
continues also in 2009.
On 15 May 2009 Mr Raymond Kalley was elected to the Board. Mr Kalley has
extensive management experience and a background in mergers and acquisitions and
general corporate development.
The employment of Thor Johnson, SVP Media Markets, with the Company ended in
June 2009.
12. Environmental issues
The Company pays for its products a statutory recycling fee and has organised
the recycling of disposed materials contractually through Jalopinta Ky.
Altogether, the Group´s operations cause no significant environmental impact.
13. Financing and structural arrangements
As previously disclosed, the Company decided to raise a maximum amount of EUR
16,000,000 (“Issue”) by issuing a loan note which includes a specific option
right. The Company received and accepted in 2008 a commitment for a total amount
of 10,000,000 euros and the subscription period for the Issue has now ended on
May 15, 2009. The maximum amount of new shares to be subscribed by virtue of the
note is 94,339,622.
In addition the issued amount of 2,830,189 shares directed to an advisor of the
Board as part of his advisory fee were registered into the Finnish Trade
Register on February 5, 2009. Thus the registered share amount was increased to
897,926,354.
The Board decided in its meeting on May 14, 2009 to adopt Option Plan 2009-I and
issue a total amount of 3,000,000 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. The options may be subscribed into
corresponding amount of new shares during the share subscription period ending
on December 31, 2012 with a share subscription price of 0.045 euros per share.
Option rights have been subscribed when issued.
The Board decided in its meeting on May 15, 2009 to adopt Option Plan 2009-II
and issue a total amount of 24,500,000 option rights to the members of the Board
of Directors without charge. The options may be subscribed into corresponding
amount of new shares during the share subscription period ending on December 31,
2013 with a share subscription price of 0.045 euros per share. Option rights
have been subscribed when issued.
The Board decided in its meeting on August 13 to adopt Option Plan 2009-III and
issue a total amount of 1,500,000 option rights to the key employees of the
company without charge. The options may be subscribed into corresponding amount
of new shares during the share subscription period ending on December 31, 2013
with a share subscription price of 0.045 euros per share. Option rights have
been subscribed when issued. The Board further decided to allocate additional
195,000 new option rights to the employees under the Option Plan 2008-V.
The company is also preparing a restructuring of its group structure to achieve
a more efficient operation model. In the planned restructuring all GeoSentric's
subsidiaries would be centered under its Dutch subsidiary, Benefon Solutions
B.V., name to be changed to GeoSolutions Holding N.V. The restructuring does not
have any effect on company's assets and liabilities.
14. Board authorization
The Annual General Meeting convened on May 15, 2009 authorized the Board to
increase the share capital by maximum of 3,000,000 euros and share amount by
maximum of 300,000,000 new shares. The authorization is valid for two (2) years
from the date of the Annual General Meeting. At the same all the other
authorizations were terminated.
At the date of this report the remaining authorization is 2,740,000 euros and
274,000,000 shares.
15. 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.
The Company and its subsidiaries do not have any Company´s shares owned by or
administered on behalf of the Company.
At the end of the reporting period company's registered share capital was
8,950,961.65 euros, consisting of 897,926,354 shares.
During the reporting period the company received a flagging notice from
GeoHolding. According to the notice, the threshold of GeoHolding could increase
from 27.97 % to a maximum of 31.90 % by virtue of option rights. In addition the
threshold of GeoHolding could raise up to a maximum of 32.80 % of the registered
share amount and votes, comprising of aggregate amount of 251,171,068 shares and
43,418,055 option rights.
16. About the Company
GeoSentric 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 for consumer and B2B
markets, 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.
© 2009 GeoSentric Oyj. All rights reserved.
Based in Salo, Finland and Amsterdam, The Netherlands, GeoSentric operates
offices in North America, Europe and Asia Pacific.
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 2Q/2009 (Unaudited)
GROUP STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
| 1000 EUR | Note | 2Q/2009 | 1-2Q/200 | 2Q/2008 | 1-2Q/2008 | 2008 |
| | | | 9 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | | 548 | 1487 | 1061 | 2146 | 4374 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost of | 4 | 389 | 989 | 773 | 1600 | 3006 |
| goods sold | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross margin | | 159 | 498 | 288 | 546 | 1368 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other | | 0 | 0 | 30 | 34 | 35 |
| operating | | | | | | |
| income | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| General & | 4 | 724 | 1559 | 929 | 1906 | 3874 |
| Administrati | | | | | | |
| ve expenses | | | | | | |
--------------------------------------------------------------------------------
| Research & | 4 | 2163 | 4283 | 1490 | 2865 | 6088 |
| Development | | | | | | |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Sales & | 4 | 1215 | 2426 | 872 | 1492 | 3360 |
| Marketing | | | | | | |
| expenses | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating | | -3943 | -7770 | -2973 | -5683 | -11919 |
| result | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial | | -5 | 72 | 14 | 54 | 330 |
| income | | | | | | |
--------------------------------------------------------------------------------
| Financial | | -166 | -336 | -20 | -67 | -276 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result | | -4114 | -8034 | -2979 | -5696 | -11865 |
| before taxes | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | | 128 | 254 | 128 | 255 | 492 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result for | | -3986 | -7780 | -2851 | -5441 | -11373 |
| the period | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation | | 14 | 18 | 0 | 0 | 124 |
| difference | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comprehensiv | | -3972 | -7762 | -2851 | -5441 | -11249 |
| e income | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per | | | | | | |
| share, eur | | | | | | |
--------------------------------------------------------------------------------
| Basic | | -0,00 | -0,01 | -0,00 | -0,01 | -0,01 |
| earnings per | | | | | | |
| share, eur | | | | | | |
--------------------------------------------------------------------------------
Diluted earnings per share have not been computed because dilution effect would
improve the key figure.
GROUP STATEMENT OF FINANCIAL POSITION
--------------------------------------------------------------------------------
| 1000 EUR | Note | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
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| ASSETS | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Property, plant and | | 310 | 219 | 194 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Goodwill | | 216 | 216 | 216 |
--------------------------------------------------------------------------------
| Other intangible assets | | 1515 | 3525 | 2520 |
--------------------------------------------------------------------------------
| Other financial assets | | 66 | 64 | 64 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| | | 2107 | 4024 | 2994 |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | | 1692 | 1982 | 1405 |
--------------------------------------------------------------------------------
| Trade receivables and | | 1778 | 1458 | 1816 |
| other receivables | | | | |
--------------------------------------------------------------------------------
| Prepaid expenses | | 1 | 775 | 836 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 4087 | 3950 | 9754 |
--------------------------------------------------------------------------------
| | | 7558 | 8165 | 13811 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | 9665 | 12189 | 16805 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders´equity | | | | |
--------------------------------------------------------------------------------
| Share capital | 5 | 8951 | 8231 | 8951 |
--------------------------------------------------------------------------------
| Share premium account | 5 | 13631 | 13631 | 13631 |
--------------------------------------------------------------------------------
| Translation difference | | 142 | 0 | 124 |
--------------------------------------------------------------------------------
| Invested distributable | 5 | 27972 | 21950 | 28039 |
| equity account | | | | |
--------------------------------------------------------------------------------
| Retained earnings | | -48142 | -35547 | -40692 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ equity | | 2554 | 8265 | 10053 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | 383 | 893 | 638 |
--------------------------------------------------------------------------------
| Interest-bearing debt | 7 | 3013 | 0 | 3394 |
--------------------------------------------------------------------------------
| | | 3396 | 893 | 4032 |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Trade payables and other | | 2591 | 2094 | 1977 |
| payables | | | | |
--------------------------------------------------------------------------------
| Provisions | | 62 | 104 | 62 |
--------------------------------------------------------------------------------
| Interest bearing debt | 7 | 1062 | 833 | 681 |
--------------------------------------------------------------------------------
| | | 3715 | 3031 | 2720 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | | 7111 | 3924 | 6752 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ equity | | 9665 | 12189 | 16805 |
| and liabilities | | | | |
--------------------------------------------------------------------------------
GROUP CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| 1000 EUR | 1-2Q/2009 | 1-2Q/2008 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations | | | |
--------------------------------------------------------------------------------
| Result for the period | -7780 | -5441 | -11373 |
--------------------------------------------------------------------------------
| Adjustments | 1024 | 1660 | 3384 |
--------------------------------------------------------------------------------
| Changes in working capital: | | | |
--------------------------------------------------------------------------------
| Change of trade and other | 873 | 781 | 362 |
| receivables | | | |
--------------------------------------------------------------------------------
| Change of inventories | -287 | 836 | 1416 |
--------------------------------------------------------------------------------
| Change of trade and other | 614 | -337 | -454 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Paid interests | 0 | 0 | -2 |
--------------------------------------------------------------------------------
| Received interest payments | 147 | 45 | 118 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operations, net | -5409 | -2456 | -6549 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investments, net | -191 | -80 | -119 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
--------------------------------------------------------------------------------
| Proceeds from issue of share | 0 | 1 | 1 |
| capital | | | |
--------------------------------------------------------------------------------
| Transaction expenses of share | -67 | -35 | -99 |
| issues | | | |
--------------------------------------------------------------------------------
| Proceeds from long term | 0 | 0 | 6038 |
| borrowings, equity | | | |
--------------------------------------------------------------------------------
| Proceeds from long term | 0 | 0 | 3962 |
| borrowings, liability | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from financing | -67 | -34 | 9902 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash | -5667 | -2570 | 3234 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash in the beginning of the | 9754 | 6520 | 6520 |
| period | | | |
--------------------------------------------------------------------------------
| Cash at the end of the period | 4087 | 3950 | 9754 |
--------------------------------------------------------------------------------
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY
--------------------------------------------------------------------------------
| | Share | Translat | Share | Inv. | Accrued | Total |
| | capital | ion | premium | distrib | result | (1000eur |
| | (1000eur | differen | account | equity | (1000eur | ) |
| | ) | ce | (1000eur | account | ) | |
| | | (1000eur | ) | (1000eur | | |
| | | ) | | ) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholde | 5246 | 0 | 14652 | 23695 | -30856 | 12737 |
| rs´ equity | | | | | | |
| 31.12.2007 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items | 0 | 0 | 0 | 0 | 0 | 0 |
| booked | | | | | | |
| directly | | | | | | |
| into | | | | | | |
| shareholde | | | | | | |
| rs´ equity | | | | | | |
--------------------------------------------------------------------------------
| Result for | 0 | 0 | 0 | 0 | -5441 | -5441 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| Comprehens | 0 | 0 | 0 | 0 | -5441 | -5441 |
| ive income | | | | | | |
--------------------------------------------------------------------------------
| Share | 6 | 0 | 0 | 99 | 0 | 105 |
| issues, | | | | | | |
| cash | | | | | | |
--------------------------------------------------------------------------------
| Share | 1022 | 0 | -1021 | 0 | 0 | 1 |
| issues, | | | | | | |
| special | | | | | | |
| rights | | | | | | |
--------------------------------------------------------------------------------
| Conversion | 1957 | 0 | 0 | -1836 | 0 | 121 |
| of | | | | | | |
| convertibl | | | | | | |
| e bonds | | | | | | |
| into | | | | | | |
| shares | | | | | | |
--------------------------------------------------------------------------------
| Share | 0 | 0 | 0 | -35 | 0 | -35 |
| issue | | | | | | |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked | 0 | 0 | 0 | 0 | 750 | 750 |
| expense of | | | | | | |
| stock | | | | | | |
| options to | | | | | | |
| key | | | | | | |
| personnel | | | | | | |
| and | | | | | | |
| partners | | | | | | |
--------------------------------------------------------------------------------
| Equity | 0 | 0 | 0 | 27 | 0 | 27 |
| portions | | | | | | |
| of | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Shareholde | 8231 | 0 | 13631 | 21950 | -35547 | 8265 |
| rs´ equity | | | | | | |
| 30.06.2008 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholde | 8951 | 124 | 13631 | 28039 | -40692 | 10053 |
| rs´ equity | | | | | | |
| 31.12.2008 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items | 0 | 18 | 0 | 0 | 0 | 18 |
| booked | | | | | | |
| directly | | | | | | |
| into | | | | | | |
| shareholde | | | | | | |
| rs´ equity | | | | | | |
--------------------------------------------------------------------------------
| Result for | 0 | 0 | 0 | 0 | -7780 | -7780 |
| the period | | | | | | |
--------------------------------------------------------------------------------
| Comprehens | 0 | 18 | 0 | 0 | -7780 | -7762 |
| ive income | | | | | | |
--------------------------------------------------------------------------------
| Share | 0 | 0 | 0 | -67 | 0 | -67 |
| issue | | | | | | |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Booked | 0 | 0 | 0 | 0 | 330 | 330 |
| expense of | | | | | | |
| stock | | | | | | |
| options to | | | | | | |
| key | | | | | | |
| personnel | | | | | | |
| and | | | | | | |
| partners | | | | | | |
--------------------------------------------------------------------------------
| Shareholde | 8951 | 142 | 13631 | 27972 | -48142 | 2554 |
| rs´ equity | | | | | | |
| 30.06.2009 | | | | | | |
--------------------------------------------------------------------------------
KEY FIGURES
--------------------------------------------------------------------------------
| | 2Q/2009 | 1-2Q/2009 | 2Q/2008 | 1-2Q/2008 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, 1000 | 548 | 1487 | 1061 | 2146 | 4374 |
| EUR | | | | | |
--------------------------------------------------------------------------------
| Operating result, | -3943 | -7770 | -2973 | -5683 | -11919 |
| 1000 EUR | | | | | |
--------------------------------------------------------------------------------
| Result before | -4114 | -8034 | -2979 | -5696 | -11865 |
| taxes, 1000 EUR | | | | | |
--------------------------------------------------------------------------------
| Gross | 177 | 191 | 33 | 50 | 119 |
| investments, 1000 | | | | | |
| EUR | | | | | |
--------------------------------------------------------------------------------
| Average personnel | 121 | 115 | 92 | 90 | 94 |
--------------------------------------------------------------------------------
| Earnings per | -0,00 | -0,01 | -0,00 | -0,01 | -0,01 |
| share, EUR | | | | | |
--------------------------------------------------------------------------------
| Equity per share, | 0,00 | 0,00 | 0,01 | 0,01 | 0,01 |
| EUR | | | | | |
--------------------------------------------------------------------------------
| Weighted average | 897926 | 897376 | 767777 | 682192 | 779047 |
| number of shares | | | | | |
| in period, 1000 | | | | | |
| pcs | | | | | |
--------------------------------------------------------------------------------
| Number of shares | 897926 | 897926 | 823116 | 823116 | 895096 |
| at the end of the | | | | | |
| period, 1000 pcs | | | | | |
--------------------------------------------------------------------------------
NOTES TO THE GROUP INTERIM REPORT
1. BASE INFORMATION OF THE COMPANY
GeoSentric 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”)
together with ready-to-use integrated GPS/GSM devices for navigation and object
tracking and customisable software solutions for industry specific uses
(“TWIG”).
The company 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.
Based in Salo, Finland, and Amsterdam, The Netherlands, GeoSentric operates
offices in North America, Europe and Asia Pacific. GeoSentric is listed in
NASDAQ OMX Helsinki Ltd (NASDAQ OMX: GEO1V). The parent company of the group is
GeoSentric Oyj (former Benefon 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
Foundation:
The group interim report has been prepared in accordance with the International
Financial Reporting Standards ("IFRS") and has been prepared according to the
accounting standard IAS 34, Interim Reports. An interim report shall be read
together with the financial statements for year 2008.
Accounting principles:
The utilised principles of preparation are identical with those utilised by the
Group in financial statements for year 2008.
IASB has published new standards and interpretations and changes in existing
standards, application of which is mandatory on 1.1.2009 or thereafter, and
which the group has not adopted earlier voluntarily. The group has adopted the
following standards (and their amendments) and interpretations from 1.1.2009
onwards:
IAS 23, cost of liabilities. The renewed standard prescribes that in the
purchase cost of a commodity fulfilling the conditions are included the
immediate cost of related liabilities. No effect on the Group.
IFRIC 13, Customer Loyalty Programmes. Group operations do not include pertinent
transactions.
IAS 1, Presentation of the financial statements. The change affects the
terminology and the presentation format of some accounts.
IFRS 2, Share-based payments. The change affects the definition of the fair
value of equity-based instruments.
IAS 1, Presentation of the financial statements and IAS 32, Financing
instruments: presentation format. The changes may cause the re-classification as
equity of certain equity-based financing instruments.
Changes for "Improvements to IFRS". Small changes relate to 34 different
standards but they have no significant effects on the financial statements.
Changes to standards IFRS 1, First application of the IFRS-standards and IAS 27,
Group financial statements and separate financial statements. They concern only
firms applying the IFRS for the first time.
IFRIC 15, Agreements for the Construction of Real Estate. No effect on the
Group.
IFRIC 16, Hedges of a Net Investment in a Foreign Operation.No effect on the
Group.
IFRS 8, Business segments. No essential effect on the information because there
is only one business segment.
3. SEGMENT INFORMATION
The primary reported segments of the group comprise business segments. At the
moment, there is only one distinct segment, location based services and devices
utilising them. Its share of net sales has been 100% in the period and in the
reference period.
4. COSTS BY CATEGORY
--------------------------------------------------------------------------------
| 1000 EUR | 2Q/2009 | 1-2Q/2009 | 2Q/2008 | 1-2Q/2008 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Increase/decr | 180 | 364 | 364 | 736 | 1290 |
| ease in | | | | | |
| inventories | | | | | |
| of finished | | | | | |
| products | | | | | |
--------------------------------------------------------------------------------
| Use of raw | 75 | 356 | 116 | 401 | 808 |
| materials and | | | | | |
| consumables | | | | | |
--------------------------------------------------------------------------------
| Total expense | 134 | 269 | 293 | 463 | 908 |
| of direct | | | | | |
| employees | | | | | |
--------------------------------------------------------------------------------
| Cost of goods | 389 | 989 | 773 | 1600 | 3006 |
| sold total | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total expense | 2177 | 4372 | 1818 | 3222 | 7263 |
| of indirect | | | | | |
| employees | | | | | |
--------------------------------------------------------------------------------
| Depreciations | 549 | 1078 | 534 | 1064 | 2133 |
--------------------------------------------------------------------------------
| Other | 1376 | 2818 | 939 | 1977 | 3926 |
| operating | | | | | |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Expenses by | 4102 | 8268 | 3291 | 6263 | 13322 |
| cost | | | | | |
| category, | | | | | |
| total | | | | | |
--------------------------------------------------------------------------------
5. SHAREHOLDERS´ EQUITY
--------------------------------------------------------------------------------
| | Number of | Share | Share | Invested | Total |
| | shares | capital | premium | distribut | (1000eur) |
| | (1000) | (1000eur) | account | . equity | |
| | | | (1000eur) | account | |
| | | | | (1000eur) | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31.12.2008 | 895096 | 8951 | 13631 | 28039 | 50621 |
--------------------------------------------------------------------------------
| Share issue free | 2830 | | | | 0 |
| 5.2.2009 | | | | | |
--------------------------------------------------------------------------------
| Costs of share | | | | -67 | -67 |
| issues | | | | | |
--------------------------------------------------------------------------------
| 30.06.2009 | 897926 | 8951 | 13631 | 27972 | 50554 |
--------------------------------------------------------------------------------
According to the Company´s articles of association registered on 10.12.2007,
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.
6. OPTION RIGHTS
Option program 2008-5:
According to the terms and conditions the maximum of 9,505,000 option rights
shall be allotted to the key resourses of the GeoSentric group during the option
subscription period, which ends on December 31, 2009. Of the reserved amount, a
total of 9,277,500 options have been allotted before end of reporting period.
Option program 2009-I:
The Board decided in its meeting on May 14, 2009 to adopt Option Plan 2009-I and
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. The options may be
subscribed into corresponding amount of new shares during the share subscription
period ending on December 31, 2012 with a share subscription price of 0.045
euros per share. Option rights have been subscribed when issued.
Option program 2009-II:
The Board decided in its meeting on May 15, 2009 to adopt Option Plan 2009-II
and issue a total amount of 24,500,000 option rights to the members of the Board
of Directors without charge by virtue of the authorization granted by the AGM on
May 15, 2009. The options may be subscribed into corresponding amount of new
shares during the share subscription period ending on December 31, 2013 with a
share subscription price of 0.045 euros per share. Option rights have been
subscribed when issued.
Special right:
The Board decided to issue 2.830.189 shares without price to Raymond Kalley as
part of the agreed advisor fee. The shares have been registered in trade
register on 5.2.2009.
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 | 1-2Q/2009 | 1-2Q/2008 | 2008 |
--------------------------------------------------------------------------------
| Key persons | 82 | 222 | 385 |
--------------------------------------------------------------------------------
| Board | 221 | 446 | 989 |
--------------------------------------------------------------------------------
| Other interest groups | 27 | 82 | 163 |
--------------------------------------------------------------------------------
| Total | 330 | 750 | 1537 |
--------------------------------------------------------------------------------
7. FINANCIAL LIABILITIES
--------------------------------------------------------------------------------
| 1000 EUR | Nominal loan | 2Q/2009 | 2Q/2008 | 2008 |
| | value 2Q/2009 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current: | | | | |
--------------------------------------------------------------------------------
| Loan 2008 | 10000 | 3013 | 0 | 3394 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current: | | | | |
--------------------------------------------------------------------------------
| Cbl 2004A | 113 | 113 | 833 | 113 |
--------------------------------------------------------------------------------
| Loan 2008 | | 949 | 0 | 568 |
--------------------------------------------------------------------------------
| Current | | 1062 | 833 | 681 |
| total | | | | |
--------------------------------------------------------------------------------
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 interest is 4%. No interest was paid. The loan capital, interest and other
benefit may be paid in case of dismantling or bankruptcy of the 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.
Financing round 2008:
The subscription period of the loan note for raising a maximum amount of 16,000
teuros ended on May 15, 2009 and the total amount of subscription was 10,000
teuros. The maximum amount of new shares to be subscribed by virtue of the
subscribed note is 94,339,622 representing approximately 10.51 % of the
registered share amount and 8.14 % of all outstanding securities. As a result of
the note company's share capital may increase by a maximum of 943 teuros. The
annual interest of the loan is 12.5 %, paid twice a year, however no interest
was paid by the end of the reporting period. The loan will end on August 25,
2013.
8. COLLATERAL COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------
| 1000 EUR 2Q/2009 2Q/2008 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Contingent liability: |
--------------------------------------------------------------------------------
| Debt to banks with interest until 31.12. 0 1756 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Collateral for own liabilities: |
--------------------------------------------------------------------------------
| Chattel mortgage as collateral for own liability 0 12068 0 |
--------------------------------------------------------------------------------
| Pledged non-current financial assets 46 44 44 |
--------------------------------------------------------------------------------
| Pledged current financial assets 57 357 57 |
--------------------------------------------------------------------------------
9. RELATED PARTY TRANSACTIONS
The parent and subsidiary company relations in the group were as follows: Parent
company GeoSentric Oyj. Subsidiaries with parent company ownership and voting
rights of 100 % are GeoSolutions B.V., GeoSentric (UK) Ltd., GyPSii (Shanghai)
Co. Ltd., GyPSii Inc. and Benefon Solutions B.V..
Inner circle transactions have been presented in the financial statements for
year 2008. No essential changes have taken place in the reporting period.
The Annual General Meeting on May 15, 2009 elected the following persons to the
Board: Daniel Harple, Michael Vucekovich, Gary Bellot, Andy van Dam, Hans van
der Velde, Winston Guillory and Raymond Kalley. The Board meeting elected Daniel
Harple as Chairman.
The Board received a directed option program 2009-II with total cost effect of
555 teuros of which a cost of 145 teuros was booked in period 2Q/2009.
10. EVENTS AFTER THE END OF THE PERIOD
1) Structural arrangements
The Board decided in its meeting on August 13, 2009 to adopt Option Plan
2009-III and issue a total amount of 1,500,000 option rights to the secretary of
the Board of Directors without charge under the same terms and conditions as
Option Plan 2009-II directed to the Board members. The options may be subscribed
into corresponding amount of new shares during the share subscription period
ending on December 31, 2013 with a share subscription price of 0.045 euros per
share. Option rights have been subscribed when issued. More about events after
the end of the period in the explanatory section above.
11. DISCLAIMER
Possible forward-looking statements in this Q2/2009 release are based on the
current expectations, known factors, decisions and plans of the management of
GeoSentric. Although the management believes that the disclosed expectations are
reasonable, there is no assurance that these expectations would prove to be
correct. Therefore, the results could differ materially from those implied in
the managements statements, due to for example changes in the economic, market
and competitive environments, delays in partners' launching their new products
and regulatory changes.
