GEOSENTRIC OYJ BULLETIN March 27, 2008 at 18:50
FINANCIAL STATEMENTS ANNOUNCEMENT FOR THE YEAR 2007
This report does not contain any material changes to the advance report
published on March 6, 2008. The annual reports are available at
www.geosentric.com.
Contents
Essential events during the financial year
Essential events after the end of the financial year
Assessment and key figures about the financial position and result
Assessment about likely future development
Assessment about significant operational risks
Review of the volume of R&D-activities
Investments
Personnel
Environmental issues
Company´s organisation, top management and auditors
Structural arrangements
Financing arrangements
Capital loans
Convertible loans
Option rights
Company´s shares and shareholders
Board´s share issue authority
Board proposal for measures concerning handling of the result
1. Essential events during the financial year
General
The most essential events in 2007 were the acquisition of GeoSolutions B.V. and
ensuing financing and shareholding arrangements and changes in business strategy
and focus, structure and management of the Company.
Operational overview
GeoSolutions/GyPSii
GyPSii development accelerates
The Company accelerated its engineering efforts and geo-social engineering
platform focus in 2007. Deliverables were accomplished in interoperable mobile
device support and extended development of the GyPSii platform. Data center
architecture and development was ramped to include the full-live public beta of
the GyPSii social networking site. Further plans and specifications were made
for additional data center support in the Company's Shanghai location and in
India.
Full International Multi-lingual releases
On November 9, 2007, the Company announced that its GyPSii webtop client is
available for users in ten different languages - US English, UK English, German,
Spanish, French, Italian, Korean, Russian, Simplified Chinese and Traditional
Chinese. The GyPSii webtop's extended language support comes as consumer demand
increases for the GyPSii application and service from users in different
countries around the world. Subscribers can now use the site for social
networking, sharing user-generated content, friend-finding and accessing
location based content, services and points of interest - all in their own
language. The current public beta Microsoft-Certified Windows Mobile client is
accessible in English and Simplified Chinese, with the other languages targeted
to roll out over the coming quarter. GyPSii rolled out the Windows Mobile client
in September in a public beta program, for users to test the application in the
real world. The Symbian & J2ME Blackberry mobile clients are currently being
user tested in private beta, with impending announcements. GyPSii is current in
testing with several large telecomm OEM's and network operators on various
mobile operating platforms, in global geographies.
GyPSii Symbian application accredited by Nokia
On November 23, 2007, the Company announced that its GeoSolutions Business Unit
had confirmed that the Symbian version of its flagship GyPSii application had
been accredited by Nokia for its N95 and 6110 Navigator mobile phones. GyPSii
combines - in a web-based application - a social networking platform,
location-based news and services such as search and friend-finder, and user
generated content-creation and sharing. Designed specifically for use on a
mobile phone, the GyPSii platform is already compatible with Windows Mobile
devices and by adding Symbian and Nokia support, GyPSii is now available on the
vast majority of mobile phones and almost any Internet connected device. GyPSii
for Nokia and Windows Mobile is available for download at the company's website
(www.gypsii.com).
TWIG
In 2007, focus points of the Company´s TWIG business unit operations and product
development were continuing market launches of TWIG Discovery Pro and TWIG
Locator products and further upgrading of their functionalities, on one hand,
and introduction of TWIG Web Finder on the other hand.
TWIG Discovery Pro GSM/GPRS/GPS handset is targeted for safety and security
market and TWIG Locator tracking unit for asset and vehicle tracking market.
Both products were successfully launched in various European countries during
2007.
The TWIG Web Finder is a service for tracking vehicles and other mobile assets
as well as for securing persons. The location of mobile objects can be seen on
detailed street maps on three continents. The service enables users of TWIG
products also to receive locations on normal mobile phones as address
information. Further features include alarm reception, history functions,
sending of SMS and GPRS messages and workstation operation from multiple sites.
The TWIG tracking solutions are made with easy use and competitive prices in
mind. No extra installation is required. Further credits and service extensions
can be conveniently purchased at the TWIG eShop.
Shanghai
The Shanghai subsidiary has a primary focus for market development in Asia.
Further, product quality assurance, testing, and multi-lingual review is
assisted by the Shanghai team, led by Jeff Lin, Managing Director, China
Operations.
Essential events in detail
GeoSolutions acquisition
The Company announced on March 5, 2007, that it has signed a letter of intent to
acquire GeoSolutions BV, a developer of location-based technologies, products,
and services for mobile and Internet-connected devices. This start-up firm
employs 13 people and it did not have activities in 2006. The actual share
exchange agreement was signed on April 27, 2007.
The acquisition was finalised in July 2007 when the shares issued in the
acquisition, realised as a share exchange, were listed for public trading at
Helsinki Exchanges.
The first part of the purchase price agreed in the terms of the Share Exchange
Agreement entered into with GeoHolding B.V. was paid by issuing 21,000,000 new
investment series shares at the closing.
In addition to the First Issue, in accordance with the Share Exchange Agreement,
the Board decided to issue a maximum of 9,000,000 new investment series shares
for subscription by GeoHolding without charge.
Decisions by the Annual General Meeting
The Annual General Meeting of Benefon Oyj confirmed the income statement and the
balance sheet of the company from the financial period of year 2006, resolved
that the loss from the period shall be booked on the previous years' profit/loss
account and no dividend is paid and resolved to discharge from liability the
members of the Board and the CEO. The General Meeting resolved further that the
number of Board members is six and elected the following persons to the Board:
Peter Bamford, Brian Katzen, Jeffrey Crevoiserat, Juha Kiikeri, Simon Wilkinson
and Daniel Harple.
The General Meeting resolved further to keep the number of ordinary auditors at
one and re-elected Ernst & Young Oy as the ordinary auditor with Mr. Erkka
Talvinko, CPA, acting as the responsible auditor, and Mr. Veikko Soinio, CPA, as
the deputy auditor.
The Annual General Meeting approved the purchase of the entire share capital of
GeoSolutions B.V. through a share exchange in accordance with the proposal of
the Board. The Board was also authorized to decide on increasing the share
capital and issuing new shares, option rights and specific rights such that the
maximum amount of share capital increase is EUR 1,902,500 and number of issued
new investment series shares 190,250,000.
Daniel Harple as Executive Chairman
On June 28, 2007, the Company informed about resignations of the Board Chairman
Peter Bamford and Board member Simon Wilkinson and about election of Daniel
Harple as the Executive Chairman.
Office in Shanghai
In May 2007, the Company opened in Shanghai an office with a planned personnel
of 15. The task of the said new business unit is to adapt the Company´s product
range for the local conditions.
New TWIG service
The Company announced on May 4, 2007, that it offers a free introductory TWIG
Web Finder service subscription with purchase of TWIG Locator GPS/GSM tracking
device. The TWIG Web Finder is a service for tracking vehicles and other mobile
assets as well as for securing persons.
Company Strategic Focus
In June, the Company announced several strategic initiatives to fully leverage
the recent acquisition.
At the core of the strategy is the integration of the GeoSolutions platform
across the product portfolio of the Company.
Change of the Company name
As announced by the Company on June 28, 2007, the Board of the Company has
decided that the name of the Company will be changed into GeoSentric Oyj. The
reason for the name change is a desire to make the name of the Company to better
match with the new business according to the Company´s renewed strategy.
Listing prospectus issued in July
On July 24, 2007, the Company published the prospectus approved by the Finnish
Financial Supervision (”FSA”), prepared for listing new shares at Helsinki
Exchanges for public trading issued in the share exchange of GeoSolutions
acquisition, in the eighth financing tranche and in the set-off issue. The
Prospectus is available for downloading now at the Company website
www.geosentric.com.
Decisions by September Extraordinary General Meeting
The Extraordinary General Meeting of Benefon Oyj convened on September 10, 2007,
decided to confirm the remaining part of the financing and the main terms and
conditions thereof in accordance with the proposal of the Board. The Board was
also authorised to decide on increasing the share capital and issuing new
shares, option rights and specific rights such that the maximum amount of share
capital increase is EUR 8,000,000 and number of issued new investment series
shares 800,000,000. The share capital can be increased by means of using the
premium fund or invested unrestricted equity fund for the increase. The
authorisation entitles the Board to deviate from the pre-emptive right of
shareholders and also accept set-off or other consideration in kind as a payment
for the shares, option rights or specific rights. The shares can also be issued
without payment provided that there is an especially weighty financial reason
for this as required by the Companies Act. The Board has the right to decide the
terms of any issue by virtue of the authorization for all other parts. The
authorisation is valid for two years from the date of the Extraordinary General
Meeting. The authorisation granted by the Annual General Meeting of April 16,
2007 remains to be valid.
Extraordinary General Meeting resolved also that the number of Board members
remains to be six and elected the following new persons to the Board: David
Francis, Gary Bellot and Michael Vucekovich. Daniel Harple, Jeffrey Crevoiserat
and Juha Kiikeri shall continue as the members of the Board.
Decisions by November Extraordinary General Meeting - Company name change
finalised
The Extraordinary General Meeting of the Company on November 16, 2007, resolved
in accordance with proposal of the Board to alter the Articles of Association in
its entirety and at the same change the Company's business name to GeoSentric
Oyj. The official registration of the altered Articles of Association with the
name change was received on December 10, 2007, from which date the official name
of the Company has been GeoSentric Oyj.
The Extraordinary General Meeting of the Company on November 16, 2007 also
resolved to merge Company's two different share series into one with equal
rights, remove clauses limiting the minimum and maximum amount of share capital
and number of shares and to change the right to represent the company granting
the right to sign for the company to the Chairman and CEO, both alone, and to
the majority of the Board together.
2. Essential events after the end of the financial year
Launch of GyPSii on Blackberry Devices
A bulletin was released 06 February 2008 announcing the availability of the
GyPSii mobile application on the Blackberry smartphone product family from
Research in Motion (RIM).
GyPSii announces launch of China Mobile Social Network with Dopod Club
A bulletin was released on 07 February 2008 announcing the partnership with
China's leading online community, Dopod Club, (www.club.dopod.com).
GyPSii announces India distribution deal with Broadway
A bulletin was released 11 February 2008 announcing a signed agreement with
India's Broadway Pvt Ltd., to offer the full suite of GyPSii services and
applications into the Indian market. With over 233 million mobile subscribers
and growing at over 8 million per month, India is the world's second largest and
fastest growing mobile market.
GyPSii announces partnership with NAVTEQ
A bulletin was released on 12 February, 2008, announcing the signing of an
agreement between the world's leading mapping data provider, NAVTEQ, and
GeoSentric.
GyPSii announces partnership in China with China Unicom and Shanghai Rannuo
A bulletin was released 20 February, 2008, announcing the signing of an
agreement between GyPSii, China Unicom and Shanghai Rannuo, for the largest
mobile social networking global launch on-record, the 2008 Beijing Olympics.
GyPSii announces launch on Apple iPhone devices
A bulleting was released 05 March 2008, announcing the availability of the
GyPSii applications on the innovative industry-leading Apple iPhone product
line.
Listing prospectus supplement publicized
The Company announced on January 23, 2008, that it is publicising the listing
prospectus supplement, needed for listing for public trading of the shares that
were issued in the financing arrangements of autumn 2007 as detailed above. With
the same, the Company released some information in the said supplement not made
public before, and informed that the said shares will be applied for public
trading on approximate January 25, 2008.
A convertible loan converted into shares
On January 29, 2008, the Company informed that by virtue of convertible loan
2007G-J a total of 93,653,333 new shares of the Company have been subscribed
for, and that the shares will be registered on approximate January 31, 2008, and
applied for public trading at Helsinki Exchanges as soon as practically
possible. After the registration, the total number of GeoSentric shares is
618,236,440.
GyPSii platform wins in NAVTEQ Global LBS Challenge
The Company announced on March 10, 2008 that it was awarded with third runner up
award in NAVTEQ LBS Challenge, a contest in which over 300 companies competed.
Issue of new shares and increase in share capital in March
The Company announced on March 19, 2008, that the Company's Board of Directors
has decided to raise additional financing of EUR 131,000 by issuing a maximum of
582,222 new shares and convertible bond loan entitling to subscribe a maximum of
2,328,889 new shares according to the respective terms and conditions disclosed
in bulletin released on September 10th 2007. All the shares and convertible bond
have been subscribed at the same.
The Company announced further that the Board has decided to adopt new option
plan by issuing a maximum of 4,451,632 new option rights to certain key
resources of the company. Each option right entitles its holder to subscribe for
one (1) new share at subscription price of EUR 0.06 during the subscription
period which ends on December 31st 2010. Subscription period for the option
rights ends on December 31st 2009.
Finally, the Company announced that a total of 85,713,390 shares of the Company
were subscribed for on February 2008 by virtue of convertible bond loans 2004A
and 2007G-I. As a result of the share subscriptions, the Company's share capital
was increased by EUR 857,133.90. The new shares subscribed for were registered
in the trade register on March 20th 2008 and applied for listing at OMX together
with the Company's existing shares as soon as practically possible.
After the registration of the now announced share capital increases, the total
number of GeoSentric shares is 704,532,052.
3. Assessment and key figures regarding the financial position and result
The Company continued to operate at a loss. Notwithstanding, due to the equity
based financing arrangements during the year, the Company retained reasonable
solidity and liquidity situation.
Key figures characterising the Company´s financial position and result (IFRS):
Financial year 2007 2006 2005
Net sales (teuros) 4435 6959 7562
Operating result (teuros) -18726 -11543 -3398
Operating result (% of net sales) -422 -166 -45
Yield on shareholders´ equity (%) -161 -286 n/a
Solidity (%) 75 61 -47
4. Assessment about likely future development
The outlook for 2008 appears to be strong for the GyPSii platform, both in its
ability to drive subscribers and in the ability to generate partnerships. More
detail is covered in the next section, Developments after the end of the
reporting period. The GyPSii Business team has a focus in 2008 of generating
significant volumes of users on a global basis. Revenue generation is planned to
come 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.
TWIG product demand at this point, appears to be steady state focused on TWIG
Discovery Pro GSM/GPRS/GPS handset which is targeted for safety and security
market and the TWIG Locator tracking unit for asset and vehicle tracking market.
The market continues to develop in both of the focused sectors, and, activity
after the reporting period has generated business potentials that may have a
material positive impact on 2008 results.
5. Assessment about significant operational risks
There are significant financial risks related to the Company´s business,
competitivenes and industry and it is possible that the investor will lose all
or a part of the invested capital.
The current refocused business plan of GeoSentric is factually in the beginning
of its life cycle. Therefore, there is no certainty of the success regarding the
implementation and realisation of the business plan. According to the renewed
business strategy, the Company is pursuing entrance also to new business
segments with competitive situation new to it, or which may be only in the early
market phase. Unless the Company is able to successfully respond to this
development it may significantly impair the Company´s operating result.
A key issue about the business model of GeoSolutions is sufficient and
sufficiently rapid growth of users of the services, of which the Company has no
certainty.
The Company´s sales and result may be endangered also if its products or service
solutions will not fulfill the quality, safety or other requirements by
customers, officials or by itself, or if it is not able to deliver them in
agreed schedule.
In addition, the Company carries a special risk due to the still significant
size of TWIG product inventory. Should the implemented measures undertaken by
the Company in response prove insufficient, the Company will need to make new
write-offs which would impair the operating result. The new strategy of the
Company and focusing the TWIG product offering to B2B customers may affect on
demand of older TWIG product targeted to consumer markets and have adverse
effect on orders received earlier for these products.
Should the Company not be able to sufficiently protect our industrial rights and
other intangible assets, its competitive position may suffer. It is also
possible that other parties will sue the Company on grounds of alleged
infringement of industrial rights and, should they be successful, the Company
may be obligated to pay significant compensations. As made public by the
Company, it is involved in a patent case in Italy, in which the Company has
forcefully refuted all claims made towards the Company.
The financial statements of the Company have been prepared on going-concern
principle. The Company´s business plan has been prepared by assuming that the
Company´s result and cashflow will improve significantly. Should the result and
cashflow essentially fail to meet the planned figures, the Company´s financing
plan may turn out to be insufficient causing a need to acquire additional
financing.
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 per December 31, 2007 was about 3068 teuros at nominal
value, consisting solely of the convertible bond loans issued by the Company.
Regarding future dividend payments, there is also uncertainty about the ability
of the Company to accrue distributable capital. According to the latest
financial statements of the Company, there was no distributable capital in the
balance sheet of the Company.
All members of the Board of Directors are dependent on the Company or on a
shareholder.
Investor groups led by GeoHolding B.V., Horizon House Ltd, Schroders Private
Bank and Octagon Solutions Ltd use significant influence in GeoSentric, each of
them separately. Shares held by GeoHolding B.V. correspond to 29,99 % of the
registered shares of the Company. With using all of its special rights, holding
of GeoHolding B.V. may increase to 41,4 % of shares after conversion.
Review of the volume of R&D-activities
In the financial year, the volume of the Company´s R&D activities in relation to
the net sales was high due to the on-going R&D-programs by means of which the
Company intends to significantly expand its business over the next few years.
The Company has own R&D units in Salo (Finland), Amsterdam (the Netherlands),
Windsor (UK), Warwick (USA) and Shanghai (China).
The development of R&D costs in years 2005-2007 was the following:
R&D costs Of which capitalised
Year teuros % of sales teuros % of sales
2005 2726 36.0 0 0.0
2006 5510 79.2 4163 59.8
2007 3933 88.7 0 0.0
7. Investments
Gross investments in financial period were 6283 teuros, which amount almost
entirely came from GeoSolutions acquisition. In year 2006 gross investments were
4393 teuros and in year 2005 they were 40 teuros.
8. Personnel
The number of employed personnel at GeoSentric in 2007 averaged 83, of which 42,
at most, were affected by alternate forced leaves. The alternate forced leave
program, agreed in autumn 2007 to apply for the time being, continue also in
2008. The average number of personnel in year 2006 was 82 and in year 2005 it
was 76.
Environmental issues
The Company changed into a no-lead manufacturing process according to so called
ROHS-directive during summer 2006. The Company pays for its products a statutory
recycling fee and has organised the recycling of disposed materials
contractually through Jalopinta Ky. Altogether, the Company´s operations cause
no significant environmental impact.
10. The Company´s organisation, top management and auditors
The Board of Directors of the Company comprised five members in the beginning of
the year and six members at the year end. The number of Board members was
increased in the Annual General Meeting convened on April 16, 2007. Mr. Brian
Katzen served as the Chairman of the Board in period 1.1.2007-16.4.2007 and Mr.
Peter Bamford from 16.4.2007 until 28.6.2007 on which date Mr. Daniel Harple was
elected as the Executive Chairman of the Company.
As the Company´s CEO in the financial year served Mr. Tomi Raita.
The Company´s organisation was expanded and re-arranged with the acquisition of
GeoSolutions B.V. There are now three business units in the Company: GyPSii in
Amsterdam, TWIG in Salo and Shanghai unit.
In financial year 2005, the audit firm Ernst & Young Oy has served as the
ordinary auditor of the Company, with Mr. Tapio Ali-Tolppa, CPA, as the
responsible auditor, and Mr. Veikko Soinio, CPA, as the deputy auditor. In
financial years 2006 and 2007, the audit firm Ernst & Young Oy continued to
serve as the ordinary auditor of the Company, but with Mr. Erkka Talvinko, CPA,
as the responsible auditor. Mr. Veikko Soinio, CPA, continued to serve as the
deputy auditor. In addition, in the Extraordinary General Meeting convened on
November 16, 2007, audit firm PriceWaterhouseCoopers Oy was elected as the
second deputy auditor of the Company.
Mr. Ali-Tolppa has served as the responsible auditor of the Company in years
1996-1999 and thereafter again from year 2001 until May 2006, when Mr. Erkka
Talvinko, CPA, was elected as the responsible auditor for Ernst & Young Oy. Mr.
Soinio has served as the responsible auditor of the Company from year 1997 until
21.5.2003 when the number of responsible auditors in the Company was decided to
be reduced to one, and he was elected as the deputy auditor.
11. Structural arrangements
In addition to acquisition of GeoSolutions B.V., detailed in section 1 above,
the Company established in Netherlands a holding company Benefon Solutions B.V.,
to which the shares of GeoSolutions B.V. were transferred, and in Shanghai a
marketing company GyPSii Information Technology (Shanghai) Corp. In addition,
the Company has a U.K. subsidiary Benefon UK Ltd. and GeoSolutions B.V. a US
subsidiary GyPSii Inc. The Company´s French subsidiary Ismap S.A. was closed.
12. Financing arrangements
Financing program in the first half year
The Company announced on January 12, 2007, that it had agreed with Octagon
Solutions Limited about extending the financing commitment between the parties
announced on September 28, 2006, to cover also the agreed additional financing.
Accordingly the Board decided to raise the sixth tranche of 400,000 euros on
January 12, 2007, seventh tranche of 1,290,000 euros on February 27, 2007,
extended seventh tranche of 561,000 euros on March 15, 2007, first part of eight
trance of 400,000 euros on May 8, 2007 and the second part of eight trance of
1,350,000 euros on June 4, 2007.
To enable the Company to extend the financing program, the extraordinary general
meeting of the Company convened on February 1, 2007, granted an authorization to
the Board to decide on the increase of share capital by a maximum of EUR
526,832.71 and on issue of new investment series shares, option rights or
specific rights in terms of Article 1 of Chapter 10 of the Companies Act in one
or more installments such that the maximum number of new investment series
shares issued is 52,683,271.
Through the above described financing tranches from sixth to eighth the Company
issued in total 18,915,105 shares, 16,232,118 convertible bonds, each
convertible to one new Company's share, and 4,041,667 option rights, each
entitling to subscribe for one new share, as in more detailed described in the
respective stock exchange releases.
The Annual General Meeting of the Company convening on 16.4.2007 cancelled the
above detailed authorization granted by the Extraordinary General Meeting of
February 1, 2007 for the unused part while it authorized the Board to decide on
increasing the share capital and issuing new shares, option rights and specific
rights such that the maximum amount of share capital increase is EUR 1,902,500
and number of issued new investment series shares 190,250,000. The authorization
is valid for two years from the date of the Annual General Meeting.
Set-off issue
The Company announced on May 23, 2007 that it has decided to arrange a directed
set off issue for a total maximum amount of EUR 1,134,181.20 to the Company's
certain creditors. The maximum number of new investment series shares offered
for subscription was 7,974,724 and subscription price was between EUR 0.12 and
EUR 0.26 per share.
Financing program in the second half year
The Company informed on August 21, 2007, that the Company´s Board had accepted
the terms for the financing package of a total of approximately 9.575 million
euros negotiated with investors and consisting of new investment series shares
of the company and a convertible bond loan. The agreed financing was conditional
for restructuring the ownership of the Company by issuing new investment series
shares to GeoHolding B.V. without charge in order to correct the erraneous
valuation of the acquisition of GeoSolutions B.V. on April 27, 2007. At first
the Board decided to raise a maximum of EUR 4,950,000 by virtue of authorization
granted by the Annual General Meeting of April 16, 2007, by offering new
investment series shares and convertible bond loan to certain investors.
The rest of the financing, totaling a maximum of EUR 4,050,000 was decided to be
raised subject to Extraordinary General Meeting of September 10, 2007 granting
new authorization needed also for the said directed free share issue to
GeoHolding B.V.
Accordingly, the Board decided to issue new investment series shares and
convertible bond loan for a total maximum of EUR 4,950,000 to investors accepted
by the Board. The maximum number of new investment series shares offered for
subscription was 22,000,000 and subscription price EUR 0.18 per share. In
addition, each subscribed share entitled investors to subscribe for four
convertible notes with a principal value of 0.01125 each. Therefore, the maximum
principal amount of the convertible loan is EUR 990,000 and the maximum number
of new investment series shares that can be subscribed for by virtue of the loan
was 88,000,000.
According to the conditions set by the investors for the financing, the Company
issued new investment series shares and option rights to GeoHolding B.V without
charge in order to restructure the acquisition of GeoSolutions B.V. executed on
April 27th 2007 and to increase the fully diluted ownership of GeoHolding B.V.
up to 30 % as agreed with the investors.
Company's financing arrangements completed
On November 14, 2007, the Company informed that it had decided to raise the
remaining part of the 9.575 million euro financing package announced on
September 10, 2007 by offering new investment series shares of the Company and a
convertible loan as agreed with the committed investors and to accept the
related subscriptions.
By accepting the financing of 9,575,000 euro, according to its terms, the
Company had committed to issue new investment series shares, special rights and
options rights in free issues directed to GeoHolding B.V. to increase its fully
diluted holding share. Therefore, the maximum amount of issued new investment
series shares is 264,785,555 comprising 1) 127,308,932 new investment series
shares, 2) 102,171,068 special rights according to the companies´ act chapter 10
section and 3) 35,305,555 option rights. The Company´s share capital was
simultaneously increased by 0.01 euros for each issued share by transferring a
corresponding amount from share premium account into share capital.
In addition, by virtue of authorization granted to it by the Extraordinary
General Meeting on September 10, 2007, the Board of the Company decided to
arrange a set-off issue of a total maximum of 265,000.00 euros directed to
certain creditors as follows. The set-off issue consisted of a maximum of
1,177,777 new investment series shares and of a convertible loan of 53,000.00
euros, entitling its bearer to subscribe for a total maximum of 4,711,111 new
investment series shares.
13. Capital loans
The Company did not raise any new capital loans in 2007.
14. Convertible loans
The extraordinary general meeting of the Company convened on 26.2.2004 decided
about a convertible bond loan on equity terms Benefon 2004A for the amount of
1,130,440.73 euros which was subscribed by a total of eight investors in the
investor group led by Octagon Solutions Ltd. and a total of six private
investors being part of the management of the Company or customers of the
Company. The convertible bond loan may be converted in the period of
1.6.2004-31.12.2008 into a total maximum of 113,044,073 new shares GEO1V of the
Company.
Of the convertible bond loan Benefon 2004A, until now, an amount of 175,502.69
euros has been converted into a total of 17,550,269 new investment series shares
of the Company. The remaining loan totalling 954,938.04 euros may be converted
by December 31, 2008 into a total maximum of 95,493,804 new shares of the
Company.
In 2007 the following convertible bond loans were converted into Company shares
in full:
Convertible Bond Loan: Loan Amount: Converted Shares:
2006A 290,000.00€ 5,800,000
2006B 300,000.00€ 6,000,000
2006C 290,000.00€ 5,800,000
2007A 50,000.00€ 555,556
2007B 2,950,000.00€ 21,071,429
2007C 302,343.75€ 6,046,875
2007D 131,484.35€ 2,629,687
2007E 40,000.00€ 1,600,000
The Board of the Company decided on 4.6.2007 to direct convertible loan 2007F
for a total maximum of 135,000 euros. The maximum number of shares that may be
subscribed for by virtue of the loan by December 31, 2012 is 5,400,000.
The Board of the Company decided on September 10, 2007 to direct convertible
loan 2007G for a total maximum of 990,000 euros for subscription to certain
investors accepted by the Board. The loan entitles its holders to subscribe for
a maximum of 88,000,000 shares by December 31, 2012.
The Board of the Company decided on October 19, 2007 to direct convertible loan
2007H for a total maximum of 990,000 euros for subscription to certain investors
accepted by the Board. The loan entitles its holders to subscribe for a maximum
of 82,222,221 shares by December 31, 2012.
The Board of the Company decided on November 14, 2007 to direct to certain
creditors of the Company a convertible loan 2007I of a total maximum of
53,000.00 euros, entitling its holders to subscribe for a total maximum of
4,711,111 new shares until 31.12.2012.
The Board of the Company decided on December 10, 2007, to issue a convertible
loan Benefon 2007J, with a maximum capital of 9,900 euros. The loan may be
converted into a maximum of 880,000 new shares of the Company.
Part of the convertible bond loans 2004A and 2007G-I have been converted into
shares during the first quarter of 2008 as described in section 2 above.
15. Option rights
The Company has issued the following option rights:
Option rights Benefon 2004A
Option decision: EGM 26.2.2004, registered 16.12.2004
Option amount: 39,597,988 pcs
In book entry system: Since 23.9.2005
Subscriber: Options have been subscribed for holding by Octagon Capital Limited
Options given: By Board decisions to a total of 35 parties a total of 35,800,000
options.
Options not given: 3,797,988 pcs
Share subscription period: 1.12.2004-31.12.2009
Share subscription price: 0.14 euros per share
Used for share subscription: 3,100,000 pcs
Option rights Benefon 2005A
Option decision: EGM 5.9.2005, registered 8.9.2005
Option amount: 1,500,000 pcs
In book entry system: From 15.2.2006
Subscriber: Tomi Raita, CEO
Share subscription period: 15.12.2008-31.12.2012
Share subscription price: 0.10 euros per share
Used for share subscription: None
Option rights Benefon 2006A
Option decision: Board on authority by AGM on 24.5.2006, registered 17.11.2006
Option amount: 2,175,000 pcs
In book entry system: No
Subscriber: Luben Limited
Share subscription period: 2.1.2007-31.12.2012
Share subscription price: 0.10 euros per share
Used for share subscription: None
Option rights Benefon 2006B
Option decision: Board on authority by AGM on 24.5.2006, registered 17.11.2006
Option amount: 2,250,000 pcs
In book entry system: No
Subscriber: Luben Limited
Share subscription period: 2.1.2007-31.12.2012
Share subscription price: 0.10 euros per share
Used for share subscription: None
Option rights Benefon 2007-1
Option decision: Board on authority by AGM on 16.4.2007
Option amount: 9,778,500 pcs
In book entry system: No
Subscriber: Key persons of GeoSolutions B.V., not yet subscribed for
Share subscription begins: 27.4.2007-7.4.2009
Share subscription ends: 27.4.2012-7.4.2014
Share subscription price: 0.045 euros per share
Used for share subscription: None
Option rights Benefon 2007-2
Option decision: Board on authority by AGM on 16.4.2007
Option amount: 666,667 pcs
In book entry system: No
Subscriber: Killarney Partners
Share subscription begins: 18.5.2007
Share subscription ends: 31.5.2011
Share subscription price: 0.15 euros per share
Used for share subscription: None
Option rights Benefon 2007-3
Option decision: Board on authority by AGM on 16.4.2007
Option amount: 3,375,000 pcs
In book entry system: No
Subscriber: Tradewind Investments and Biggles Ltd
Share subscription begins: 4.6.2007
Share subscription ends: 30.6.2011
Share subscription price: 0.15 euros per share
Used for share subscription: None
Option rights Benefon 2007-6
Option decision: Board on authority by EGM on 10.9.2007
Option amount: 35,305,555 pcs
In book entry system: No
Subscriber: GeoGolding B.V.
Share subscription begins: 19.10.2007
Share subscription ends: 2.1.2013
Share subscription price: 0.045 euros per share
Used for share subscription: None
Special rights Benefon 2007-I
Decision: Board on authority by EGM on 10.9.2007
Rights amount: 102,171,068 pcs
In book entry system: No
Subscriber: GeoHolding B.V.
Share subscription begins: 19.10.2007
Share subscription ends: 2.1.2013
Share subscription price: 1 euros per 100,000 shares
Used for share subscription: None
Option rights Benefon 2007-7
Option decision: Board on authority by EGM on 10.9.2007
Option amount: 3,367,500 pcs
In book entry system: No
Subscriber: Certain key persons of the Company, not yet subscribed for
Share subscription begins: 19.11.2007
Share subscription ends: 19.11.2009
Share subscription price: 0.07 euros per share
Used for share subscription: None
The effects of the option programs and the special right program in the
financial statements are detailed in section ”22 Option Rights” of the notes to
the financial statements.
Company´s shares and shareholders
The shares of GeoSentric Oyj (GEO1V) are listed at the Helsinki Exchanges (OMX
The Nordic Exchange) on the Small Cap-list and issued in the book entry system
held by the Finnish Central Securities Depository, address PL 110, FIN-00131
Helsinki, Finland. The ISIN-code of the share is FI 0009004204. Company's share
has been on surveillance list since February 11, 2003.
The Company has not issued shares that are not included in the shareholders´
equity. The Company or its subsidiaries do not have the Company´s shares owned
by or administered for the Company.
The number of shares of the Company (GEO1V) on December 31, 2007, was
524.583.107, all fully paid. The number of outstanding shares in the beginning
of the financial year 2007 was 263.416.356.
Shareholdings exceeding 1 % as of 31.12.2007 according to share register of the
Finnish Central Securities Depository
--------------------------------------------------------------------------------
| Shareholder | Shares | Voteshare % |
--------------------------------------------------------------------------------
| Halyard Oy + Jorma | 6.621.251 | 1,24 % |
| Nieminen | | |
--------------------------------------------------------------------------------
| Jonninen Henry | 8.087.057 | 1,54 % |
--------------------------------------------------------------------------------
| Skandinaviska Enskilda | 32.596.614 | 6,21 % |
| Banken (custodian shares) | | |
--------------------------------------------------------------------------------
| Nordea Pankki Suomi Oyj | 208.940.340 | 39,82 % |
| (custodian shares) | | |
--------------------------------------------------------------------------------
| TOTAL | 256.245.262 | 48,84 % |
--------------------------------------------------------------------------------
Other shareholdings exceeding 1 % than those in the above table to the best
knowledge of the Company (custodian shares)
--------------------------------------------------------------------------------
| Shareholder | Shares | Voteshare % |
--------------------------------------------------------------------------------
| GeoHolding B.V | 157.308.932* | 29,99 % * |
--------------------------------------------------------------------------------
| Luben Limited | 53.034.569*** | 10,11 % *** |
--------------------------------------------------------------------------------
| Nobolles Investment + | 29.624.580 *** | 5,65 % *** |
| Octagon Solutions | (26.633.183 + | (5,08 % + 0,57 %) |
| | 2.991.397) | |
--------------------------------------------------------------------------------
| Ashland Partners | 23.404.358**** | 4,46 % **** |
--------------------------------------------------------------------------------
| Schroders Private Bank | 22.220.000* | 4,24 % * |
--------------------------------------------------------------------------------
| Horizon Group | 20.555.555* | 3,92 % * |
--------------------------------------------------------------------------------
| MMA Invs Ltd (together | 16.930.861** | 3,23 % ** |
| Luben Limited + MMA Invs | (69.965.430) | (13,34 %) |
| Ltd) | | |
--------------------------------------------------------------------------------
| Boris Trust | 13.097.122*** | 2,50 % *** |
--------------------------------------------------------------------------------
| Octagon Situations | 12.411.112** | 2,37 % **(8,01 %) |
| (together Nobolles + | (42.035.692) | |
| Octagon) | | |
--------------------------------------------------------------------------------
| Killarney Partners | 12.422.874**** | 2,37 % **** |
--------------------------------------------------------------------------------
| Villiers Securities | 8.247.545*** | 1,57 % *** |
--------------------------------------------------------------------------------
| Vanguard Ltd | 6.479.909*** | 1,26 % *** |
| | | |
--------------------------------------------------------------------------------
| Tradewind Investment | 6.518.882*** | 1,24 % *** |
--------------------------------------------------------------------------------
| TOTAL | 369.257.508 | 70,39 % |
--------------------------------------------------------------------------------
* Investor Issue and Free Issue and bulletin 5.9.2007. By virtue of special
rights, share holding of GHBV may rise to 41.4 % of post-conversion shares. The
figures are based on the best knowledge of the Company.
** Bulletins 15.2.2007, 5.9.2007 (flaggings) and share register per 31.8.2007.
*** Share register per 6.11.2007, bulletin 5.9.2007 (flaggings).
**** Financing round spring 2007, bulletin 5.9.2007 (flaggings).
--------------------------------------------------------------------------------
| Total inner circle | 354.407.693 | 66,17 % |
| holdings according to | | |
| Companies´ Act | | |
--------------------------------------------------------------------------------
| Total shares in the | 524.583.107 | 100,00 % |
| Company | | |
--------------------------------------------------------------------------------
Ownership dilution
At the date of this report the number of shares in fully diluted situation was
the following:
--------------------------------------------------------------------------------
| Registered listed shares | 524.583.107 |
--------------------------------------------------------------------------------
| Registered unlisted shares | 179.948.945 |
--------------------------------------------------------------------------------
| Registered options, convertible | 322.508.212 |
| bonds and special rights | |
--------------------------------------------------------------------------------
| TOTAL | 1.027.040.264 |
--------------------------------------------------------------------------------
By virtue of the remaining granted authorisation the Board may issue a maximum
of 415,561,535 new shares, corresponding to a maximum of 58.98% of the Company´s
registered shares and 40.46% of the shares after all shares and instruments
entitling to shares, effecting a corresponding immediate dilution to existing
shareholdings. The Company´s all issued instruments entitling to shares together
correspond to a maximum of 45.78 % of the Company´s registered number of shares
and approximately 31.40 % of the share capital after all instruments entitling
to shares issued by the Company, effecting a corresponding direct dilution to
existing holdings.
17. Equity issue authority of the Board
As detailed in section 12 above, the Board holds an authorisation granted by the
annual general meeting convened on 16.4.2007 to increase share capital by a
maximum of 1,902,500 euros. Of this authorisation, valid until 16.4.2009, was
unused about 8.440 euros as of 31.12.2007 and at the date of this report.
In addition, the extraordinary general meeting convened on September 10, 2007
authorised the Board to increase share capital by a maximum of 8,000,000 euros.
Of this authorisation, valid until September 10, 2009, was unused about
4,147,175 euros as of 31.12.2007. After the decisions to increase share capital
announced on March 19, 2008, detailed in section 2 above, the remaining amount
of this authorisation was 4,155,615.35 euros at the date of this report.
18. Board proposal regarding the handling of the result
The Board proposes to the general meeting that no dividend is distributed and
that the loss of the period is booked on the prior years´ result account.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | GEOSENTRIC OYJ | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | 2007 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GROUP INCOME | | | | | | |
| STATEMENT | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1000 | | | | | 4Q/200 | 2007 | 4Q/200 | 2006 |
| EUR | | | | | 7 | | 6 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net | | | | | 892 | 4435 | 3055 | 6959 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other | | | | 29 | 61 | 10 | 25 |
| operating | | | | | | | |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Increase (+)/decrease (-) in | | | | | |
| inventories | | | | | |
--------------------------------------------------------------------------------
| of finished | | | | -386 | -691 | 1939 | 2625 |
| products | | | | | | | |
--------------------------------------------------------------------------------
| Production | | | | 0 | 0 | 0 | 0 |
| for own use | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Use of raw materials and | | -377 | -4246 | -4033 | -7190 |
| consumables | | | | | |
--------------------------------------------------------------------------------
| Total expense of | | | -1567 | -6429 | -1484 | -4915 |
| employees | | | | | | |
--------------------------------------------------------------------------------
| Depreciations | | | | -775 | -4013 | -504 | -563 |
--------------------------------------------------------------------------------
| Impairment | | | | 0 | -440 | -872 | -872 |
| loss | | | | | | | |
--------------------------------------------------------------------------------
| Other operating | | | -1366 | -7403 | -6324 | -11775 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| Capitalised R&D | | | 0 | 0 | 500 | 4163 |
| expenses | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating | | | | -3550 | -18726 | -7713 | -11543 |
| result | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial | | | | 43 | 69 | 41 | 145 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | -19 | -353 | -35 | -162 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result before | | | | -3526 | -19010 | -7707 | -11560 |
| taxes | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | | | | 127 | 382 | 0 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result for | | | | -3399 | -18628 | -7707 | -11560 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GROUP BALANCE SHEET | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1000 | | | | | | 31.12.2 | | 31.12.2 |
| EUR | | | | | | 007 | | 006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSET | | | | | | | | |
| S | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Property, plant and | | | | 199 | | 244 |
| equipment | | | | | | |
--------------------------------------------------------------------------------
| Development | | | | | 0 | | 2841 |
| costs | | | | | | | |
--------------------------------------------------------------------------------
| Goodw | | | | | | 216 | | 0 |
| ill | | | | | | | | |
--------------------------------------------------------------------------------
| Other | | | | | 4531 | | 32 |
| intangible | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Other | | | | | 62 | | 61 |
| financial | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Deferred tax | | | | | 0 | | 0 |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | 5008 | | 3178 |
--------------------------------------------------------------------------------
| Current | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Inven | | | | | | 2818 | | 6194 |
| torie | | | | | | | | |
| s | | | | | | | | |
--------------------------------------------------------------------------------
| Trade receivables and other | | | 2049 | | 4585 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Prepaid | | | | | 965 | | 898 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | | 6520 | | 2542 |
| equivalents | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | 12352 | | 14219 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | | | | 17360 | | 17397 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND | | | | | | |
| LIABILITIES | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders´ | | | | | | | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Share capital | | | | | 5246 | | 2634 |
--------------------------------------------------------------------------------
| Share issue | | | | | 0 | | 400 |
--------------------------------------------------------------------------------
| Share premium account | | | | 14652 | | 15936 |
--------------------------------------------------------------------------------
| Invested distributable equity | | | 23695 | | 4866 |
| account | | | | | |
--------------------------------------------------------------------------------
| Retained | | | | | -30856 | | -13415 |
| earnings | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´ | | | | 12737 | | 10421 |
| equity | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current | | | | | | | |
| liabilities | | | | | | | |
--------------------------------------------------------------------------------
| Deferred tax | | | | | 1148 | | 0 |
| liabilities | | | | | | | |
--------------------------------------------------------------------------------
| Interest | | | | | 0 | | 2319 |
| bearing debt | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | 1148 | | 2319 |
--------------------------------------------------------------------------------
| Current | | | | | | | |
| liabilities | | | | | | | |
--------------------------------------------------------------------------------
| Trade payables and other | | | 2431 | | 4500 |
| payables | | | | | |
--------------------------------------------------------------------------------
| Provi | | | | | | 104 | | 157 |
| sions | | | | | | | | |
--------------------------------------------------------------------------------
| Interest | | | | | 940 | | 0 |
| bearing debt | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | 3475 | | 4657 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | | | | | 4623 | | 6976 |
| liabilities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders´equity and | | | 17360 | | 17397 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
GeoSentric Oyj
Board of Directors
