GUANGZHOU, China, Aug. 17 /PRNewswire-Asia/ -- Guangzhou Global Telecom Inc. (OTC Bulletin Board: GZGT), a mobile phone handset, pre-paid calling card distributor and provider of value-added mobile services in China, reported its fiscal 2009 second quarter results for the period ended 30 June, 2009.
"Our operations were negatively impacted by the global economic downturn during the second quarter. However, we are currently exploring expanding into several growing markets such as distributing subway tickets and 3G phones and accessories," commented Ms. Yankuan Li, Chief Executive Officer of Guangzhou Global Telecom.
Revenue in the second quarter of 2009 was $3.8 million, down 57% from $8.7 million in the second quarter of 2008. The decline in revenue is primarily the result the decline in demand due to the global economic downturn and of the closure of the Beijing Lihe subsidiary and our Beijing, Wuhan, and Zhengzhou branches.
Gross profit for the quarter declined 70% to $251,644 from $848,458 in the same period of 2008. Gross margin for the second quarter was 6.6% compared to 9.7% in the second quarter of 2008. The decline in gross margin is the result of the decline in demand due to the global economic crisis.
Selling, general and administrative expenses were $130,717 or 3.4% of sales compared to $254,091 or 2.9% of sales in the second quarter of 2008.
Net loss was $88,042 for fully diluted loss per share of $0.001 in the quarter compared to $502,355 in net income and fully diluted earnings per share of $0.0085 in the second quarter of 2008.
Six Month Financial Results
For the first six months of 2009 total revenue was $14.8 million, down 10% from $16.4 million in the first six months of 2008. Gross profit for the first six months of 2009 was $427,140, down 72% from gross profit of $1.5 million in the comparable period a year ago. Gross margin was 2.9% compared to 9.3% for the first six month of 2008. Loss from operations for the period was $620,843, compared to operating income of $406,821 in the first six months of 2008. Net loss for the first six months of 2009 was $844,488 for fully diluted loss per share of $0.0105 compared to net income of $85,598 and fully diluted loss per share of $0.0015 in the first six months of 2008.
Financial Condition
As of June 30, 2009, Guangzhou Global Telecom had $1.4 million in cash and equivalents, $1.7 million in working capital and $5.5 million in total liabilities. Shareholders' equity stood at $1.3 million, up from $1.8 million at year end 2008.
About Guangzhou Global Telecom
Guangzhou Global Telecom, Inc. is a national mobile phone handset and
pre-paid calling card distributor and provider of mobile handset value-added services. Maintaining cooperative relationships with China Telecom, China Mobile and China Unicom, the Company seeks to become the largest sales and distribution center of mobile phones, mobile phone parts and prepaid mobile phone cards in China. GTL plans to introduce new software and services through an expanded network of regional and neighborhood service centers, shops and virtual stores. For details, please visit our website at http://www.guangzhouglobaltelecom.com .
Safe Harbor Statement
This press release contains certain statements that may include "forward looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
John Marco, Partner
Elite IR
Tel: +1-310-819-2948
Email: John.marco@elite-ir.com
