GUANGZHOU, China, May 15 /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 $11,022,375 revenues during Q1 2009 as compared to $7,672,427 during Q1 2008, representing an increase of $3,349,948 or approximately 44%. Renwoxing and Beijing Lihe, our new acquired two subsidiaries, contributed $3,459,333 revenue during the quarter ended March 31, 2009, while only $857,350 during the same period of 2008. As a result, the revenue increase is mainly resulted from our geography expansion strategy.
However, our gross profit decreased to $175,496 during the three months ended March 31, 2009 from $684,643 in the same period of 2008, representing $509,147 or 74% increase. The gross margin also decreased from 8.9% to 1.6%. The decrease both in gross profit and gross margin contributed to the reasons as follows: (1) financial crisis take effect to the cell phone and calling cards demand in China mainland and Macau; (2) selling our products at negative margin to close our Wuhan Branch, Beijing Branch and Zhengzhou Branches due to their un-expected performance.
Our selling, general and administrative expenses ("SG&A expenses") were $917,266 during the three months ended March 31, 2009 as compared to $872,189 during the same period of 2008, representing an increase of $54,923 or approximately 6%. The slight increase in SG&A expenses are generally resulted from the sales increase.
During first quarter of 2009, we recorded a net loss of $756,446, as compared to a net loss of $416,757 during the three months ended March 31, 2008. The increase of net loss is mainly due to decrease of gross profit as explained above.
"Financial crisis does hit our business significantly like most of other sectors. We have taken measures to lower our losses such as cut-off un-profitable branches in order to concentrate our resources into profit-making business. Q1 2009 is difficult for Guangzhou Global, but we will continue to try our best to grow in terms of revenue and market size even in the bad market conditions. Our managements are also shaping themselves to be comfort with new challenges," said CEO Li Yankuan.
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
Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.
For more information, please contact:
Judy Chen
Tel: +86-20-8317-2821
Email: info@guangzhouglobaltelecom.com
