Trunkbow Intl (NASDAQ:TBOW)

First Quarter Results

• Gross revenue increased 33.2% year-over-year to $6.8 million, from $5.1 million in the first quarter of 2011.
  • MVAS gross revenue decreased to $2.4 million, compared with $3.7 million a year ago.
  • MPS gross revenue totaled $4.4 million, compared with $1.4 million in the first quarter of 2011.
• Gross profit increased 20.6% year-over-year to $5.3 million, from $4.4 million in the first quarter of 2011; gross margin was 80.0%, compared with 88.9% in the first quarter of 2011.
• Net income decreased 34.2% year-over-year to $2.2 million, or $0.06 per diluted share, compared with $3.4 million, or $0.09 per diluted share in the first quarter of 2011. The year-over-year decline in net income was attributable to a $1.3 million refund of value-added tax ("VAT") refund received in the first quarter of 2011, compared to no such refund in the first quarter of 2012. The Company received a VAT refund of approximately $1.0 million in April 2012, which it expects to recognize in the current fiscal quarter.
• As of March 31, 2012, cash and cash equivalents totaled $6.1 million, unchanged from the level as ofDecember 31, 2011.
• Extended its cooperation with China Unicom through the deployment of a new terminal-based MPS platform in Sichuan and Heilongjiang Province.
• Partnered with the Shandong branch of China UnionPay for the development and deployment of a new online-to-offline payment system.
• Reiterated full-year 2012 net income guidance of $23 million, representing 36% growth over 2011.

"Our first quarter operational performance has Trunkbow firmly on-track to meet our 2012 objectives with respect to overall growth and the continued development of our emerging MPS segment. We achieved solid growth over the first quarter of last year, with gross revenue up more than 30% in addition to gains in both gross profit and operating income. The year-over-year decline in net income was primarily caused by the timing of receipt of our VAT refund, which was recognized in the first quarter of 2011, but it expects to record in the second quarter this year," said Mr. Qiang Li, Chief Executive Officer of Trunkbow. "Our most notable accomplishment in the first quarter was the growth of our mobile payments business, in which we increased revenue more than three-fold on a year-over-year basis with shared revenue growing over 100% from the level we achieved in the first quarter of 2011. We continued increasing the reach of our technology through expansion of our partnerships with China Unicom and China UnionPay, which have strengthened our nationwide merchant acquisition efforts, which are critical to Trunkbow's long-term success and the continued advancement of our business model."

"Through our growing collaboration with China's Big 3 telecom carriers, our terminal-based MPS systems are being marketed to corporations and academic institutions as a SAAS and enterprise automation tool, giving us access to another potentially lucrative end market in addition to the traditional contactless payment functionality. Bestpay, our proprietary app developed with China Telecom, has been activated on over 600,000 mobile handsets to-date. In addition, our partnership with China UnionPay has progressed well in its early stages, as the Trunkbow-UnionPay mobile applet is being used to power a growing number of web and app-based mobile storefronts, while our new online-to-offline payment system has generated significant interest from merchants and consumers alike. Our strong start to 2012 has set the stage for important near- and longer-term success for Trunkbow, and we look forward to the opportunities that lie ahead."

Business Outlook

Trunkbow reaffirmed its 2012 financial guidance, which calls for approximately $23 million in net income, representing 36% growth over 2011. The Company expects that this growth will be largely the result of the continued expansion of its MPS business, as it continues to develop its merchant network, broadens its presence in new provinces, increases its penetration withinChina's leading mobile carriers and launches its technology in strategically targeted international markets.

Mr. Li concluded, "We are proud of what we have accomplished in the first quarter with regard to the ongoing development of our MPS operations and our efforts to migrate this segment of the business from a model focused on one-time platform installations to one that is built upon a solid foundation of recurring revenue from transaction processing and shared services. Our efforts last year were centered around the development of infrastructure needed to support a concentrated merchant acquisition and consumer engagement program. With these resources in place nationwide, we are working closely with our carrier partners and China UnionPay to build awareness of the benefits of MPS among merchants and mobile subscribers to make the technology more prevalent in the market. Our ultimate goal is to help make the mobile phone as synonymous with payments as cash, credit and debit cards. We not only believe that this goal can be accomplished, but that 2012 will be a transformational year for the MPS industry and our Company, in which substantial progress can be made toward this objective."

BEIJING, April 19, 2012 /PRNewswire-Asia/ -- Trunkbow International Holdings Limited (NASDAQ: TBOW) ("Trunkbow" or the "Company"), a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Solutions ("MVAS") in China, today announced that it has extended its cooperation with China Unicom through the deployment of a new terminal-based MPS platform in Heilongjiang Province. Installation is expected to begin in the second quarter, with services scheduled to launch in the second half of 2012.

"We are pleased to extend our MPS footprint into Heilongjiang Province and bring this technology to China Unicom's 5.7 million subscribers in the region. This represents a sizeable opportunity, as we will simultaneously roll out user authentication and payment processing services, making the solution more attractive to end-users and increasing the value proposition for retailers, enterprise and institutional users," said Mr. Qiang Li, CEO of Trunkbow. "Similar to our efforts in Sichuan Province, we are working closely with our partners at China Unicom to build awareness of the significant benefits of MPS technology among merchants and corporate IT executives, with a goal of evangelizing the technology and supporting broad adoption of MPS for multiple applications. Handset technology and wireless network infrastructure are improving rapidly, and we are confident that this ongoing mobile revolution will help drive mass-market usage of MPS as we enhance the solution through the addition of new features and functionalities."

Under the agreement, Trunkbow will receive recurring revenue payments based on a percentage of monthly function fees and transactions processed using the MPS platform. Trunkbow and China Unicom plan to jointly market this MPS technology to retailers for phone-based payments at the point-of-sale, and to corporations, academic institutions and other organizations as a SAAS and enterprise automation tool for user authentication and internal payment capabilities.

This platform will allow China Unicom's 5.7 million subscribers in Heilongjiang province to make purchases at retail locations using their mobile phones at the point-of-sale, and will function as a convenient, secure electronic identification card for students and employees at schools and other locations that adopt the technology.

Full Year 2011 Financial Highlights

• Gross revenue increased 19.6% year-over-year to $29.7 million, compared with $24.8 million in 2010.
  • MVAS gross revenue grew 37.7% to $17.4 million
  • MPS gross revenue grew 0.8% to $12.3 million
• Gross profit increased 17.9% year-over-year to $22.9 million, compared with $19.5 million in 2010.
• Net income increased 25.1% year-over-year to $16.9 million, or $0.47 per diluted share. This compared with net income of $13.5 million, or $0.44 per diluted share, in 2010.
• As of December 31, 2011, cash and cash equivalents totaled $6.1 million, compared with $10.3 million as ofDecember 31, 2010.
• Introduced full-year 2012 guidance of approximately $23 million in net income, representing 36% growth compared with 2011.

"2011 began with our initial public offering on the Nasdaq, and throughout the year we made progress against our key strategic growth objectives while generating record full-year revenue, gross profit and net income. We significantly expanded our geographic presence with wireless carriers, finishing the year with 27 platform installations in 19 provinces nationwide and signed two important software partnerships, with China Telecom and China UnionPay, which will greatly increase our subscriber penetration and position us well to ramp our merchant acquisition efforts in the new year," said Mr. Qiang Li, Chief Executive Officer of Trunkbow." Through the end of 2011, approximately 1 million mobile users had made a purchase using our physical Point-of-Sale or software-based MPS technology, a number that we expect to increase dramatically in 2012 as we continue to grow our merchant network through new POS terminal installations and application partnerships.

"We believe that MPS adoption presents a compelling value proposition for merchants both online and off-line, and is an important tool that can be used for customer engagement and to improve the overall purchasing experience. By integrating features such as loyalty and rewards programs, location-based services, mobile couponing and handset-based alerts, we believe that MPS can simplify consumers' lives while helping merchants attract new shoppers and retain existing customers. We expect that the recurring revenue generated by the shift in our MPS business will provide a solid foundation for our expected 20% top-line growth in 2012. We are well positioned to build upon our leadership position in the world's largest mobile phone market, not only growing our business, but helping drive the growth of this emerging industry."

Business Outlook

Trunkbow introduced 2012 financial guidance, which calls for approximately $23 million in net income, representing 36% growth over 2011. The Company expects that this growth will be largely the result of the continued expansion of the MPS and MVAS markets, as it develops its merchant network, broadens its presence in new provinces, increases its penetration within China's leading mobile carriers and launches its technology in strategically targeted international markets.

Mr. Li concluded, "Our accomplishments in 2011 included strong double-digit growth across each of our key operating metrics. Looking ahead, as we execute on our merchant acquisition strategy and shift the mix of MPS sales form one-time system installations toward a recurring revenue model driven by function fees and transaction-based revenue, we expect to see greater top-line stability and a steadier revenue ramp. Mobile phones are already an integral part of consumers' lives, and their importance is increasing every day through enhancements and the addition of new functionalities. One such functionality is the use of the handset as a payment method, something that Chinese consumers are just beginning to adopt. We expect to see rapid growth in end-user uptake as more merchants implement MPS to give their customers a new, simple and secure payment alternative. Through our partnerships withChina's three mobile carriers and its dominant financial clearing house, our technological leadership and concentrated growth strategy, Trunkbow is poised to lead the MPS revolution in China, and we look forward to the opportunities that lie ahead."

BEIJING, March 28, 2012 /PRNewswire-Asia/ -- Trunkbow International Holdings Limited (NASDAQ: TBOW) ("Trunkbow" or the "Company"), a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Solutions ("MVAS") in the PRC, today announced that it has entered into a partnership agreement with the Shandong branch of China UnionPay ("UnionPay"), China's leading bankcard association, for the development and deployment of a new online-to-offline payment system. This system will launch in Shandong Province, one of the country's most popular tourist destinations in the second quarter of 2012, and will be deployed with the Shandong Tourist Administration to enable the purchase of admission tickets to various points of interest throughout the province.

"We are delighted to further expand our relationship with China UnionPay to include this new mobile payment solution, which provides further evidence of our technological leadership and important first-mover advantage in the market. The convergence of online and offline transactions represents an exciting breakthrough in MPS technology, and one that we believe will significantly increase end-user adoption of the technology," said Mr. Qiang Li, CEO of Trunkbow. "In addition to prepayment and redemption functionality, we believe that the potential exists for additional applications to enhance the value proposition for merchants by enabling new customer engagement tools. With approximately 150,000 UnionPay POS terminals deployed in Shandong Province, this represents a sizeable launch market for the technology, particularly given Shandong's popularity as a tourist destination. We believe that this new application will be well-received by brick-and-mortar retailers and consumers and look forward to further collaboration with China UnionPay in other regions and other segments of the market."

Under the agreement, Trunkbow and China UnionPay will jointly deploy this new payment system, which supports the purchase of event and attraction tickets, as well as physical goods in a variety of retail locations. The application will enable consumers to purchase products or services via a smartphone browser or dedicated app, with proof of purchase delivered to a customer's handset in the form of a digital voucher or scannable code. The purchase is verified and completed when the subscriber inputs or scans this code on a China UnionPay Point-of-Sale terminal at the merchant location, and payment is processed through the China UnionPay clearing system at the time of redemption. Trunkbow will receive sales commission, transaction fees, as well as advertising revenue from this system and related apps.

BEIJING, March 22, 2012 /PRNewswire-Asia/ -- Trunkbow International Holdings Limited (NASDAQ: TBOW) ("Trunkbow" or the "Company"), a leading provider of Mobile Payment Solutions ("MPS") and Mobile Value Added Solutions ("MVAS") in China, today announced that it has engaged the independent registered public accounting firm Holtz Rubenstein Reminick LLP ("HRR") to review and issue a new audit report regarding its consolidated financial statements for the year ended December 31, 2009. Trunkbow expects to file amended documents with the U.S. Securities and Exchange Commission ("SEC") upon the completion of their work.

In reviewing the Company's Annual Report on Form 10-K for the year ended December 31, 2010, the SEC informed the Company that because its Chief Financial Officer was previously employed by Bernstein and Pinchuk LLP ("B&P"), the Company's outside auditors, and had performed more than 10 hours on the Trunkbow audit for the year ended December 31, 2009, it did not consider B&P "independent" as defined in the SEC's rules regarding auditor independence. The Company disagreed, arguing that the hiring of Ms. Alice Ye was in accordance with an exemption for such situations involving emergency or unusual circumstances approved by the Company's board of directors or audit committee, and noting the limited work performed by Ms. Ye and her status as a non-partner in B&P at the time. The SEC disagreed, indicating that they believe such exemption is to be relied upon only in very rare circumstances and that Trunkbow's situation was not consistent with their views of the scope of the exemption.

In the interests of investor transparency and to avoid a complicated on-going regulatory process, on March 20, 2012 the Company engaged HRR to review and issue a new audit report regarding its consolidated financial statements for the year ended December 31, 2009. The SEC has not raised any other issues with the B&P audit and the Company has no reason to believe that the HRR audit will result in a report different from the report that followed the B&P audit, subject to the full scope of review being solely within HRR's professional determination. The Company expects the re-audit to proceed as quickly as possible.

"Since our initial public offering in February 2011, we have taken steps to ensure maximum transparency and accountability to our shareholders and U.S. regulators," said Mr. Qiang Li, CEO of Trunkbow. "The effectiveness of our accounting controls and policies are extremely important, and while the SEC and the Company disagree on the technical application of their independence rules to Trunkbow's situation, the SEC has no outstanding questions related to our business or actual results. We will work closely with the team at Holtz Rubenstein Reminick to complete the re-audit process in a timely manner."

After various submissions to and discussions with the Staff of the SEC, and in recognition of the Staff's position with respect to this matter, management and the Audit Committee of the Company's Board of Directors determined that it was necessary to have the Company's consolidated financial statements as of and for the year ended December 31, 2009 reviewed and reported on by an independent publicly registered independent accounting firm. The 2009 financial statements were previously included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, as well as in Trunkbow's registration statements filed with the SEC regarding its initial public offering in 2011. As a result, on March 16, 2012, the Audit Committee met and concluded that the 2009 Financial Statements should no longer be relied upon.

Management is in the process of evaluating the effect, if any, of the matters discussed above on the Company's prior conclusions with respect to the effectiveness of its internal control over financial reporting and disclosure controls and procedures as of the end of December 31, 2009. If the Company determines that a revision of any disclosures pertaining to such prior conclusion is appropriate, such revision will be included in the revised filings, which will be made upon the conclusion of the re-audit.

Third Quarter 2011 Results

First Quarter Results:

Fourth Quarter Results:

• Net revenue increased 200.3% year-over-year to $13.7 million
• Gross profit increased 127.8% year-over-year to $10.1 million
• Net income increased 154.1% year-over-year to $8.2 million, or $0.25 per diluted share vs. $0.16 the year before.
• MPS gross revenue grew 487.1% to $7.0 million
• MVAS gross revenue grew 105.3% to $6.9 million

"We are extremely pleased with our results in the quarter that close a year of many important achievements.  We delivered strong growth in revenue and net income in 2010, and we continued to make progress in the roll-out of our MPS solutions," said Mr. Qiang Li, Trunkbow's Chief Executive Officer. "Subsequent to the end of the quarter we completed our initial public offering on the NASDAQ Global Market and raised $20 million in gross proceeds to fund the aggressive deployment of our MPS solution in 2011. We expect our growth momentum to continue as we expand into new provinces and reach agreements with additional carriers, and we look forward to reporting on our progress as we reach important milestones."

"In 2011, we expect to grow revenues and net income 30%," continued Mr. Li

In February 2010 Trunkbow International Holdings Limited became a public company via a reverse merger transaction.

Note that shares have yet to be assigned a trading symbol

Company Snapshot:

A leading and innovative mobile application enabler, offering telecom operators in China application platforms on which to offer Mobile Value Added Solutions (“MVAS”) to subscribers.

Industry Snapshot:

The Chinese Telecom Market

In terms of the mobile phone industry, China has the fastest growing mobile subscriber base in the world and has become the largest mobile phone market in the world. The country had 610 million mobile subscribers in 2008 and increased to 747 million mobile subscribers by end of 2009. Based on figures released by the Ministry of Industry and Information Technology (“MIIT”) for January to April 2010, the wireless subscriber base could reach an estimated 864 million by the end of 2010, representing a six year CAGR of 14%. Similarly the MIIT data indicate that total revenue for the telecom sector in China could grow to approximately $425 billion for 2010. 3G deployment in China, which officially began in 2009, will act as a catalyst for continued growth in the telecom industry in China. Overall, the positive mobile phone industry trends in China are driven by the increasing affluence of the middle class, a growing subscriber base and increasing per subscriber spend.

The Chinese Mobile Payment Market

Based on China Computer World (“CCW”) research projections, by 2009 Chinese mobile payment users will reach 108 million, and is expected to nearly double by 2011. According to China Mobile’s 2009 Annual Report, China Mobile will be operating in 238 cities by the end of 2009, providing service to 70% of urban populations in the PRC, and approaching 100% of urban populations in the PRC by the end of 2011. According to China Telecom’s 2009 Annual Report, China Telecom expects to provide services to 98% of urban populations in the PRC and 93% of rural populations in the PRC by the close of 2009. According to China Unicom’s 2009 Annual Report, China Unicom expects to provide services to 282 cities in the PRC by end of 2009 and 75% of the total population of the PRC by the end of 2011. As with the rollout of any new technology, there is a period of time known as “end user adoption” where a customer first receives marketing contact by a supplier (in this case, China Telecom, China Mobile and China Unicom) followed by early adopters where the technically savvy will be the first to use a new technology, then followed by mass adoption where the public accepts the technology and rapidly employs the technology. The PRC cellular carriers target 2010-2011 as significant growth windows where marketing efforts should generate desired results.

Post Merger Share Calculation:

•      241,017: Pre reverse merger outstanding shares and after two reverse splits. 
• 19,562,888: Newly issued shares of Common Stock
•   2,774,500: Warrants exercised by shell company. 
•   8,447,575: Shares associated with private placement
•   1,689,515: Shares from warrants associated with private placement. Exercise price is @ $2.00.
•      554,900: Shares from warrants associated with the shell. Exercise price is @ $2.00.
•      561,900: Warrants issued to financial advisors. Exercise price is @ $2.00.

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions:  33,832,295

Financial Snapshot:

We have experienced strong revenue growth and profitability over the last two years driven by customer additions and the introduction of innovative products and services.  Positive macro economic trends, strong consumer demand and our suite of unique platform solutions present us with the opportunity to expand sales rapidly and increase market share.

• Our revenues increased to $13.5 million in 2009 from $12.9 million in 2008
• Net income to $8.3 million in 2009, from $5.1 million in 2008.

Special Note:  We found it interesting that a reputable company has invested in this deal.

Concurrently with the Closing, we entered into a master engagement agreement  with VeriFone, Inc. to be its exclusive provider of point of sale hardware, software and services that are purchased or deployed by the Company and its affiliates and has agreed to use its best efforts to ensure that VeriFone will receive at least 80% of the orders for point of sale systems placed by the Company’s mobile operator partners. Pursuant to the terms of the VeriFone Agreement, we submitted a binding, non-cancellable purchase order to VeriFone covering an initial order of $5 million of VeriFone’s point of sale systems for deployment in China as part of its rollout. The full amount of the purchase order was paid upon submission to VeriFone. Additionally, the Master Engagement Agreement contains a non-binding deployment schedule covering a total of 125,000 point of sale systems to be supplied by VeriFone through the end of 2012.

VeriFone invested $5 million in the February 2010 Offering. We have granted VeriFone the ability to name one of the directors on our Board of Directors so long as it beneficially owns at least 4.99% of our outstanding Common Stock

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