omniture

New Energy Systems Group Reports First Quarter 2012 Financial Results

2012-05-17 05:00 1511

SHENZHEN, China, May 17, 2012 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically integrated original design manufacturer and distributor of Anytone® and MeePower® braned consumer backup power systems for mobile devices and solar panels and related solar application products to service municipal power applications, today announced financial results for the first quarter ended March 31, 2012.

Mr. Jack Yu, Chairman of New Energy stated, "We took additional actions we deemed necessary to make New Energy more focused and efficient. Since we divested our battery components business in the fourth quarter of last year, we have focused all of our efforts on growing the consumer products and solar businesses. This comprehensive transformation includes developing new products, expanding our distribution channels and consolidating our fixed overhead. While this will take several quarters to gain traction, we believe this is the right strategy to pursue in order to maximize shareholder value."

For the Three Months Ended March 31,


2012

2011

CHANGE

Net Sales

$5.0 million

$12.5 million

-60%

Gross Profit

$0.2 million

$5.3 million

-96%

Net Income (Loss) from Continued Operations

-$1.7 million

$2.6 million

N/A

Adjusted Net Income (Loss)* from Continued Operations

-$1.0 million

$3.3 million

N/A

GAAP EPS (Diluted) from Continued Operations

-$0.11

$0.18

N/A

Adjusted EPS (Diluted)* from Continued Operations

-$0.07

$0.23

N/A


*Adjusted net income and adjusted EPS exclude $0.2 million of non-cash stock-based compensation expenses and 0.5 million of amortization expenses during Q1 2012 and Q1 2011, respectively. Fully dilued shares on March 31, 2012 were 14.6 million versus 14.6 million on March 31,2011.

Revenues declined 60% year-over-year to $5 million due to lower demand for batteries in China and price reductions as a result of competitive pricing pressures. Solar panel and related solar product sales were down 65% to $2 million due to the downturn pressure of the entire solar market and the formal market competition.

Anytone® consumer products division sold 306,380 units in the first quarter of 2012, down 50% from the same period last year. Anytone introduced three new products during the quarter, including products for Apple and Andorid series devices.

Gross profit in the first quarter of 2012 was $0.2 million compared to $5.3 million, a 96% decrease compared to the same period last year. Consolidated gross margin fell to 4% from 43% in the first quarter of 2011 as a result of higher raw materials costs and a significant decrease in production and sales volumes.

Operating expenses for the three months ended March 31, 2012 were $2.1 million representing approximately 42% of sales compared to $1.7 million and 14% of sales in the same period last year. The increase was primarily a result of higher labor costs and marketing expenses.

The Company incurred $0.2 million of non-cash stock-based compensation expenses and 0.5 million amortization expenses during the first three months of 2012 and 2011. Excluding these expenses, operating loss was $1.0 million for the first quarter of 2012.

Net income from continuing operations was a net loss of $1.7 million compared to net income of $2.6 million in the first quarter of 2011. GAAP net loss per share were was $0.11 compared to earnings per share of $0.18 in the first quarter of 2012 and 2011, respectively. Non-GAAP adjusted net loss and net loss per share were $1.0 million and $0.07, respectively, in the first three months of 2012.

Balance Sheet and Cash Flow Summary

As of March 31, 2012, cash and equivalents of the Company stood at $8.5 million, up from $4.5 million as of December 31, 2011. Working capital was approximately $23.4 million at March 31, 2012; accounts receivable was $5.6 million, compared to $6.6 million as of December 31, 2011. New Energy generated $0.3 million of cash flow from operations during the three months ended March 31, 2012 versus $3.6 million in the same period a year ago.

Business Update:

Effective on January 13, 2012, Kim Fai's business, including all the assets and liabilities, has been transferred into Shenzhen Anytone to maximize operations efficiency and save cost. All of Kim Fai's products will be sold under "Anytone" brand name.

Anytone signed an agreement with New Trent Corporation ("New Trent") to begin selling products in the U.S. starting in the second quarter of 2012. The agreement will initially focus on Anytone's mobile power products. The two parties expect this agreement to generate at least $1 million in sales during the first full year.

On March 6, 2012, the Company launched two online stores in China. Consumers nationwide are now able to purchase Anytone's mobile power devices and accessories for their laptops, mobile phones and tablets through www.taobao.com and www.paipai.com. The online expansion is a part of Anytone's strategic efforts to expand into the retail segment.

Conference Call

To attend the call, please use the dial-in information below. When prompted, ask for the "New Energy Call " and/or be prepared to provide the conference ID.

Date:

May 18th, 2012

Time:

9:00 a.m. Eastern Time, US.

Conference Line Dial-In (U.S.):

1-877-317-6776

International Dial-In:

1-412-317-6776

Conference ID:

10014483 "New Energy"

Webcast link:

http://webcast.mzvaluemonitor.com/Home/Login/1738279b-58f5-4125-9cdb-3fd6672e9090

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 27, 2012. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 if calling internationally. Utilize the pass code 4440646 for the replay.

About New Energy Systems Group

New Energy Systems Group is a vertically integrated original design manufacturer and distributor of lithium ion batteries and backup power systems for mobile phones, laptops, digital cameras, MP3s and a variety of other portable electronics. The company's end-user consumer products are sold under the Anytone® brand in China, and the company has begun expanding its international sales efforts. The fast pace of new mobile device introductions in China combined with a growing middle class make it fertile ground for New Energy's end-user consumer products, as well as its high powered, light weight lithium ion batteries. In addition to historically strong organic growth, New Energy is expected to benefit from economies of scale, broader distribution, and higher production capacity and higher profit margins. Additional information about the company is available at: www.newenergysystemsgroup.com

Forward Looking Statements

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary and affiliated companies. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

For more information, please contact:

COMPANY
New Energy Systems Group
Ken Lin, VP of Investor Relations
Tel: +1-917-573-0302
Email: klin1330@hotmail.com

INVESTOR RELATIONS
John Mattio, SVP
HC International, Inc.
Tel: US +1-212-301-7130
Email: john.mattio@mzgroup.us
Web: http://www.mz-ir.com

NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



March 31, 2012 (Unaudited)


December 31, 2011






Current assets





Cash and equivalents


$

8,540,268


$

4,528,731

Accounts receivable



5,644,163



6,614,814

Inventory



829,823



1,661,515

Prepayments



324,631



554,375

Other receivables



9,802,811



14,121,556

Taxes receivable



251,930



217,106

Due from shareholders



284,636



284,337

Prepaid expense



100,000



-

Deferred compensation



683,838



686,979








Total current assets



26,462,100



28,669,413








Noncurrent assets







Property and equipment



196,959



208,271

Deferred compensation - noncurrent



254,742



423,493

Goodwill



39,888,807



39,888,807

Intangible assets, net



10,533,645



11,051,910








Total noncurrent assets



50,874,153



51,572,481








Total assets


$

77,336,253


$

80,241,894








Current liabilities







Accounts payable


$

1,991,134


$

2,837,889

Accrued expenses and other payables



996,981



818,452

Taxes payable



121,112



21,103

Loans payable to related parties



-



571,347








Total current liabilities



3,109,227



4,248,791








Deferred tax liability



2,635,005



2,764,571








Total Liabilities



5,744,232



7,013,362








Commitments and Contingencies














Stockholders' equity







Preferred stock, $.001 par value, 60,000,000 shares authorized, 0 shares issued and outstanding



-



-

Common stock, $.001 par value, 140,000,000 shares authorized, 14,571,731 shares issued and outstanding



14,571



14,571

Additional paid in capital



74,261,543



74,255,585

Statutory reserves



2,410,573



2,410,573

Other comprehensive income



3,301,907



3,292,074

Accumulated deficit



(8,396,573)



(6,744,271)








Total stockholders' equity



71,592,021



73,228,532








Total liabilities and stockholders' equity


$

77,336,253


$

80,241,894

NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)








Three Months Ended March 31,



2012


2011



(Unaudited)








NET SALES





Battery


$

2,996,861


$

6,968,898

Solar panel



1,958,404



5,514,918

Total revenue



4,955,265



12,483,816








COST OF SALES







Battery



2,875,569



3,279,195

Solar panel



1,862,693



3,876,878

Total cost of sales



4,738,262



7,156,073








GROSS PROFIT



217,003



5,327,743








OPERATING EXPENSE







Selling



395,355



321,863

General and administrative



1,665,598



1,382,432

Total operating expenses



2,060,953



1,704,295








INCOME (LOSS) FROM OPERATIONS



(1,843,950)



3,623,448








OTHER INCOME (EXPENSES)







Other expense (income)



(259)



2,614

Interest income



7,178



1,275

Total other income, net



6,919



3,889








INCOME (LOSS) BEFORE INCOME TAXES



(1,837,031)



3,627,337








INCOME TAX BENEFIT (EXPENSE)



184,729



(987,101)








INCOME (LOSS) FROM CONTINUED OPERATIONS



(1,652,302)



2,640,236

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX



-



2,820,319








NET INCOME (LOSS)



(1,652,302)



5,460,555








OTHER COMPREHENSIVE INCOME







Foreign currency translation



9,833



114,851








COMPREHENSIVE INCOME (LOSS)


$

(1,642,469)


$

5,575,406








WEIGHTED AVERAGE SHARES OUTSTANDING







Basic



14,571,731



14,286,511

Diluted



14,571,731



14,558,566








NET INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS







Basic


$

(0.11)


$

0.18

Diluted


$

(0.11)


$

0.18








NET INCOME (LOSS) PER SHARE FROM DISCONTINUING OPERATIONS







Basic


$

-


$

0.20

Diluted


$

-


$

0.19








NET INCOME (LOSS) PER SHARE







Basic


$

(0.11)


$

0.38

Diluted


$

(0.11)


$

0.37

NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS








Three Months Ended March 31,



2012


2011



(Unaudited)








CASH FLOWS FROM OPERATING ACTIVITIES





Net income (loss)


$

(1,652,302)


$

5,460,555

Adjustments to reconcile net income (loss) to net cash







provided by operating activities:







Depreciation and amortization



529,770



768,370

Changes in deferred taxes



(129,566)



(167,641)

Deferred stock compensation



171,892



168,750

Stock options and warrant expense



5,958



10,071

(Increase) / decrease in current assets:







Accounts receivable



1,124,971



(5,840,687)

Inventory



831,703



(2,341,718)

Prepaid expenses, deposits and other receivables



129,846



790

Increase/(decrease) in current liabilities:







Accounts payable



(997,380)



4,325,793

Accrued expenses and other payables



178,374



61,580

Taxes payable



65,256



1,131,689








NET CASH PROVIDED BY OPERATING ACTIVITIES



258,522



3,577,552








CASH FLOWS FROM INVESTING ACTIVITIES







Cash of disposed subsidiaries



3,739,666



-

Acquisition of property and equipment



-



(12,456)








NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES



3,739,666



(12,456)








CASH FLOWS FROM FINANCING ACTIVITIES







Repayment of acquisition liability for subsidiaries



-



(6,714,060)

Cash proceeds from warrant exercise



-



87,500








NET CASH USED IN FINANCING ACTIVITIES



-



(6,626,560)








EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS



13,349



118,251








NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS



4,011,537



(2,943,213)








CASH AND EQUIVALENTS, BEGINNING OF PERIOD



4,528,731



13,065,008








CASH AND EQUIVALENTS, END OF PERIOD


$

8,540,268


$

10,121,795








SUPPLEMENTAL DISCLOSURES:







Cash paid during the period for:







Income taxes


$

-


$

1,396,883

Interest


$

-


$

-

Source: New Energy Systems Group
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