GUANGZHOU, China, Nov. 23 /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 $6,395,457 in revenues as compared to $13,037,014 during the same period in 2008, representing a decrease of $6,641,557 or approximately 51%. The decrease has mainly resulted from the revenue of the discontinued operations of 4 entities not being included in the 3 months ended September 30, 2009, while these entities contributed revenue of $3,691,806 during the same period of 2008. Furthermore, by the effect of financial crisis, our revenue from other subsidiaries decreased as well. However, our revenue increased 68% compared to $3,795,931, which is the revenue of the quarter ended June 30, 2009. The increase showed that we are gradually recovering from the economic recession.
Similar to our revenue, our gross profit decreased to $465,394 during the three months ended September 30, 2009 from $905,184 in the same period of 2008, representing $439,790 or a 49% decrease. The gross margin slightly increased from 6.9% to 7.2%. The decrease in gross profit is mainly due to the decreased revenue as explained above. While the slight increase of gross margin has contributed to the reason that certain thin margin business in our branches was discontinued during the quarter ended September 30, 2009. On the other hand, our gross profit increased from $251,644 for the quarter ended June 30, 2009, which is 85%. The increase from quarter to quarter has mainly resulted from the increase of revenue as explained above.
Our selling, general and administrative expenses ("SG&A expenses") were $197,362 during the three months ended September 30, 2009 as compared to $300,797 during the same period of 2008, representing a decrease of $103,435 or approximately 34%. The decrease in SG&A expenses have generally resulted from the following reasons: 1) the exclusive of discontinued operations, which contributed SG&A expenses of $46,896 during the 3 months ended September 30, 2008; 2) expense cut-backs to fit with the current market.
During the first quarter of 2009, we recorded an operating gain of $268,032, as compared to a gain of $604,387 during the three months ended September 30, 2008 and a gain of $120,927 during the three months ended June 30, 2009. However, during the quarter ended September 30, 2009, we still recorded a net loss of $79,948, which mainly resulted from one-off other expenses and discontinued operations.
"The financial crisis did hit our business significantly like most other sectors. We have taken measures to lower our losses such as cut-off un-profitable branches in order to concentrate our resources on profit-making businesses. Fortunately, our revenue already grew from the bottom. We hope this trend can continue and make the company more profitable to reward our investors. Our managements are also shaping themselves to be comfortable 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
