(Reported in thousands of U.S. Dollars and thousands of Swedish Krona; unaudited)
STOCKHOLM – February 26, 2008 - Global IP Solutions (GIPS) Holding AB, the leading provider of multimedia processing technologies, announced the financial results for the fourth quarter and the twelve months ending December 31, 2007. The company has also announced financial adjustments within the quarter, and elaborated on its upcoming share offering. The company is reporting its financial results in both U.S. Dollars (USD) and Swedish Krona (SEK).
Revenues for the fourth quarter of 2007 were 2,595 USD/SEK 16,657, a 49 percent decrease from the fourth quarter of 2006 but a 55 percent increase from the third quarter of 2007. Revenues for the twelve months of 2007 were 14,428 USD/SEK 98,303 compared to 17,089 USD/SEK 126,032 for the twelve months of 2006, a decrease of 16 percent. The decrease in revenues was primarily the result of a drop-off in new design wins and a shortfall in royalty revenue.
Gross margin for the fourth quarter was 2,472 USD/SEK 15,867 compared to 4,491 USD/SEK 32,091 for the comparable quarter of 2006 and 1,235 USD/SEK 8,174 in the third quarter of 2007. Gross margin for the twelve months of 2007 was 12,824 USD/SEK 87,306 compared to 14,860 USD/SEK 109,593 for the twelve months of 2006. Gross margin for the fourth quarter of 2007 was 95 percent, compared to 88 percent for the fourth quarter of 2006 and 74 percent for the prior quarter.
Operating expenses were 10,303USD/SEK 66,472 for the quarter, versus 2,444USD/SEK 17,216 for the 2006 fourth quarter and 5,847 USD/SEK 39,817 in the third quarter of 2007. Operating expenses for the twelve months ended December 31, 2007 were 25,134USD/SEK 168,630 versus 6,794USD/SEK 50,109 for the twelve months ended December 31, 2006. The increase in operating expenses was due to an increase in the number of employees, increased expenses related to professional services, increases to bad debt reserves and one-time charges due to reductions in personnel in the third quarter of 2007. In addition, a write down of the Company’s remaining investment in CrystalVoice of approximately 5.9 million USD/SEK 38.2 million was completed.
EBITDA for the fourth quarter of 2007 was a loss of (7,831) USD/SEK (50,605), compared to 2,047USD/SEK 14,875 for the fourth quarter of 2006. EBITDA for the twelve months ended December 31, 2007 was a loss of (12,310) USD/SEK (81,324) versus 8,066USD/SEK 59,484 for the comparable period of 2006.
An additional financial adjustment in the fourth quarter of 2007 was made to write down approximately 2.4 million USD/SEK 15.4 million related to deferred tax assets. The net loss for the quarter was (10,505) USD/SEK (67,921), compared to a net profit of 2,512 USD/SEK 17,906 for the fourth quarter of 2006. The net loss for the twelve months of 2007 was (16,468) USD/SEK (107,575) compared to a net profit of 8,762 USD/SEK 64,617 for the twelve months ended December 31, 2006.
Cash and cash equivalents at the end of the fourth quarter were 6,146 USD/SEK 39,689, down from the ending balance at September 30, 2007 of 6,858 USD/SEK 45,971. For 2007, the company generated (14,209) USD/ SEK (92,372) in negative operating cash flow, primarily as a result of decreased revenues and increased operating expenses and the acquisition of CrystalVoice in January 2007.
“Moving forward the company is focused on both broadening its relationship with existing customers and targeting emerging markets with its suite of new and current product offerings,” said Ditlef de Vibe, Chairman and acting Chief Executive Officer of Global IP Solutions. “The major write-off in Q4 ‘07 has overshadowed the improved performance over Q3 ’07. However, we see a demand for GIPS high-quality multimedia and we have set measurable objectives aimed at expanding growth opportunities with GIPS’ current customers and emerging markets. We still believe these significant developments will take a number of quarters to be realized.”
“The company has recently appointed Emerick Woods to lead the company as CEO and with the guarantee of at least $8 million for the share offering to ensure GIPS’ financial stability, we expect GIPS to make progress in 2008, ” added de Vibe. Mr. Woods will assume his new CEO role on April 1, 2008 and his stock option grant is due to be approved by an extraordinary general assembly on March 18, 2008.
The company also announced that the previously declared share issue offering for up to $10 million in ordinary shares will be approved by the extraordinary general assembly on March 18, 2008. The share offering subscription period is due to commence on March 31 and will be open for a period of two weeks.
For further information, please see. www.gipscorp.com .
