SHENZHEN, China, April 2, 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® branded 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 full year ended December 31, 2011.
Mr. Jack Yu, Chairman of New
Energy stated, "We had a challenging year in several subsidiaries,
including E'Jenie and NewPower which was one of the reasons we
decided to divest of those business lines by selling them off last
year. The weak of entire market forced other companies in 3C
related products industry to seek more profitable products such as
mobile power devices. This resulted in a significant increase in
the number of competitors for Anytone® products, including a few
large competitors with greater scale than Anytone® and several
opportunists who counterfeited some of our faster moving products.
We have lost some orders as a result of these conditions,
resulting in reduced sales starting near the end of second quarter.
We also made a strategic decision to selectively reduce prices of
several Anytone® products in order combat some of the counterfeit
products."
Mr. Yu continued, "We expect to stabilize margins by introducing
new, innovative products that carry higher margins and designed to
service the fast-growing smart phone and tablet market in
China. In addition, we have
started to identify areas within our selling, general and
administrative expenses where we can become more efficient.
We are, and will be committed to growing our distribution
base by attending international trade shows and the many domestic,
electronic trade shows in Hong
Kong and China."
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For the 12 Months Ended December
31
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FY
2011
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FY
2010
|
CHANGE
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|
|
Net Sales
|
$51.5
million
|
$45.6
million
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+12.9%
|
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|
Gross Profit
|
$11.7
million
|
$12.9
million
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-8.7%
|
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|
Net Income (Loss) from
Continuing Ops
|
($3.8)
million
|
$5.2
million
|
-172.5%
|
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|
Adjusted Net Income from
Continuing Ops *
|
$
6.5 million
|
$
8.8
million
|
-26.8%
|
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|
EPS from Continuing Ops
(Diluted)
|
($0.26)
|
$0.40
|
-164.9%
|
|
|
Adjusted EPS from Continuing Ops
(Diluted)*
|
$0.45
|
$0.68
|
-34.4%
|
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|
*Adjusted net income and
adjusted EPS from continuing operations exclude
$0.8 million of
non-cash stock-based compensation expenses during twelve months end
of December 31, 2011, $2.0 million of amortization expenses and a
$7.4 million impairment of goodwill.
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Total net revenue increased 12.9% in 2011 to $51.5 million. Battery sales decreased 26.4%
year-over-year to $31.3 million. The
Kim Fai acquisition, which closed on November 10, 2010, added approximately
$20.2 million of net revenue for 2011
compared to $3.1 million in 2010.
Gross profit decreased 8.7% to $11.7
million, with gross margin of 22.8% compared to 28.2% in the
comparable period.
Selling, general and administrative expenses were $6.8 million compared to $5.4 million a year ago. Operating loss for the
twelve months ending December 31,
2011 was $2.5 million compared
to operating income of $7.4 million
during 2010 due to a $7.4 million
non-cash goodwill impairment charge incurred in 2011.
Reported net loss and earnings per diluted share from continuing
operations were $3.8 million and
$0.26, respectively. Non-GAAP
adjusted net income from continuing operations, excluding non-cash
expenses and impairment of goodwill and losses related to
businesses sold in the fourth quarter of 2011, was $6.5 million and adjusted EPS were $0.45 in 2011.
Balance Sheet and Cash Flow Summary
As of December 31, 2011, cash and
equivalents of the Company stood at $4.5
million, compared to $13.1
million as of December 31,
2010. Working capital was approximately $19.4 million as of December 31, 2011. Accounts receivable was
$6.6 million, compared to
$11.2 million as of December 31, 2010. The Company had $0.6 million of loans outstanding at December 31, 2011.
New Energy generated $1.8 million
of cash flow from operations ended December
31, 2011 versus $21.5 million
in the same period a year ago. The Company completed the sale of
its E'Jenie and NewPower businesses in the fourth quarter of 2011
for approximately $13.5 million in
cash and forgiveness of $24.2 million
of debt the Company owed to E'Jenie. As of February 28, 2012, the Company received
$3.6 million of the proceeds.
Conference Call
Date:
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Monday, April 2, 2012
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Time:
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9:00 a.m. Eastern Time,
US.
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Conference Line Dial-In
(U.S.):
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1-877-317-6776
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International
Dial-In:
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1-412-317-6776
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Conference ID:
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"New Energy Systems
Group"
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Webcast link:
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http://webcast.mz-ir.com/publico.aspx?codplataforma=3684
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Please dial in at least 10 minutes before the call to ensure
timely participation. A playback will be available through
April 9, 2012. To listen, please call
1-877-344-7529 within the United
States or 1-412-317-0088 if calling internationally.
Utilize the pass code 4385382 for the replay.
This call is being webcast by ViaVid Broadcasting and can be
accessed by clicking on this link,
http://webcast.mz-ir.com/publico.aspx?codplataforma=3684, where the
webcast can be accessed through November April 2, 2013.
Capital Market Update
In February 2012,
two separate securities class action complaints were
filed in the U.S. District Court for the Southern District of
New York against the Company
and certain of its current and former officers and
directors. The complaints allege that the Company issued
materially false and misleading statements and omitted to state
material facts that rendered its affirmative statements misleading
as they related to the Company's financial performance, business
prospects, and financial condition, and that the defendants failed
to prevent such statements from being issued or corrected, during a
putative class period between April 15,
2010 and November 14, 2011.
The complaints seek, among other relief, compensatory damages and
attorneys' fees. The Company believes it is likely that a
consolidated amended complaint will be filed after the Court
determines the Lead Plaintiff and lead counsel for the
litigation. The Company has not yet responded to the
complaint, but the Company believes that the complaints have
no merit and intends to vigorously defend against them. While
certain legal defense costs may be later reimbursed by the
Company's insurance carrier, no reasonable estimate of any impact
of the outcome of the litigation or related legal fees on the
financial statements can be made as of the date of this
statement.
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 consumer products sold for back-up power needs, New
Energy Systems Group also manufactures and sells Kim Fai solar
panels for a wide variety of applications for the municipality
markets in China and for export.
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.
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For more information, please
contact:
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COMPANY
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New Energy Systems
Group
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Ken Lin, VP of Investor
Relations
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Tel:
+1-917-573-0302
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Email: klin1330@hotmail.com
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INVESTOR
RELATIONS
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John Mattio, SVP
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MZ Group
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Tel: US
+1-212-301-7130
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Email: john.mattio@mzgroup.us
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Web: http://www.mz-ir.com
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NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
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|
December 31,
2011
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December 31,
2010 (Restated)
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|
Current assets
|
|
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|
Cash and equivalents
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|
$
|
4,528,731
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$
|
13,065,008
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Accounts receivable
|
|
|
6,614,814
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|
|
11,192,150
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|
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Inventory
|
|
|
1,661,515
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|
|
|
2,420,009
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Prepayments
|
|
|
554,375
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|
|
-
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Other receivables
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|
|
14,121,556
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|
|
|
47,249
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Tax receivable
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|
217,106
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-
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|
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Due from shareholders
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|
|
284,337
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|
270,522
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Deferred compensation
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|
|
686,979
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|
|
675,000
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Total
current assets
|
|
|
28,669,413
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|
|
|
27,669,938
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|
|
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Noncurrent assets
|
|
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Plant, property & equipment,
net
|
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208,271
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|
1,134,029
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Deferred compensation -
noncurrent
|
|
|
423,493
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1,098,493
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Goodwill
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39,888,807
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|
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60,555,607
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Intangible assets,
net
|
|
|
11,051,910
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|
|
19,969,021
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Total
noncurrent assets
|
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|
51,572,481
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|
82,757,150
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|
Total assets
|
|
$
|
80,241,894
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|
|
$
|
110,427,088
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Current
liabilities
|
|
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|
|
|
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|
Accounts payable
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|
$
|
2,837,889
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|
|
$
|
6,655,592
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|
|
Accrued expenses and other
payables
|
|
|
818,452
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|
|
|
1,127,133
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|
|
Payable for Kimfai
acquisition
|
|
|
-
|
|
|
|
6,325,985
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|
|
Taxes payable
|
|
|
21,103
|
|
|
|
1,553,206
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|
|
Loan payable to related
party
|
|
|
571,347
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|
|
|
543,585
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|
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
4,248,791
|
|
|
|
16,205,501
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
liability
|
|
|
2,764,571
|
|
|
|
4,798,822
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
7,013,362
|
|
|
|
21,004,323
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|
|
|
|
|
|
|
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|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.001 par
value, 60,000,000 shares authorized, 0 and 2,553,030 shares issued
and outstanding as of December 31, 2011 and 2010,
respectively
|
|
|
-
|
|
|
|
2,553
|
|
|
Common stock, $.001 par value,
140,000,000 shares authorized, 14,571,731 and 14,278,928 shares
issued and outstanding as of December 31, 2011 and 2010,
respectively
|
|
|
14,571
|
|
|
|
14,279
|
|
|
Additional paid in
capital
|
|
|
74,255,585
|
|
|
|
74,040,307
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|
|
Statutory reserves
|
|
|
2,410,573
|
|
|
|
2,323,603
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|
|
Other comprehensive
income
|
|
|
3,292,074
|
|
|
|
1,834,341
|
|
|
Retained earnings (Accumulated
deficit)
|
|
|
(6,744,271)
|
|
|
|
11,207,682
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|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
73,228,532
|
|
|
|
89,422,765
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|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
80,241,894
|
|
|
$
|
110,427,088
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|
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|
|
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The accompanying notes are an integral part of these
consolidated financial statements.
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
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|
Year Ended
December 31,
|
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|
|
2011
|
|
|
2010
|
|
|
NET SALES
|
|
|
|
|
|
|
|
Battery
|
|
$
|
31,287,667
|
|
|
$
|
42,521,276
|
|
|
Solar panel
|
|
|
20,226,157
|
|
|
|
3,089,012
|
|
|
Total
revenue
|
|
|
51,513,824
|
|
|
|
45,610,288
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
|
|
|
|
|
|
|
|
Battery
|
|
|
23,192,329
|
|
|
|
30,655,533
|
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|
Solar panel
|
|
|
16,585,630
|
|
|
|
2,104,528
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|
|
Total cost of
sales
|
|
|
39,777,959
|
|
|
|
32,760,061
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
11,735,865
|
|
|
|
12,850,227
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSE
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
1,284,063
|
|
|
|
217,707
|
|
|
General and
administrative
|
|
|
5,549,007
|
|
|
|
5,243,203
|
|
|
Goodwill
impairment
|
|
|
7,405,344
|
|
|
|
-
|
|
|
Total
operating expenses
|
|
|
14,238,414
|
|
|
|
5,460,910
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM
OPERATIONS
|
|
|
(2,502,549)
|
|
|
|
7,389,317
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES)
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
(21,259)
|
|
|
|
(862)
|
|
|
Interest income
|
|
|
17,689
|
|
|
|
11,206
|
|
|
Total other
income (expenses), net
|
|
|
(3,570)
|
|
|
|
10,344
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME
TAXES
|
|
|
(2,506,119)
|
|
|
|
7,399,661
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
(1,267,087)
|
|
|
|
(2,195,807)
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM CONTINUED
OPERATIONS
|
|
|
(3,773,206)
|
|
|
|
5,203,854
|
|
|
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS (INCLUDING GAIN ON DISPOSAL OF DISCONTINUED ENTITIES OF
$292,067, NET OF TAX
|
|
|
(14,091,777)
|
|
|
|
9,116,659
|
|
|
NET INCOME (LOSS)
|
|
|
(17,864,983)
|
|
|
|
14,320,513
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
|
1,457,733
|
|
|
|
608,355
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
(LOSS)
|
|
$
|
(16,407,250)
|
|
|
$
|
14,928,868
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING
|
|
|
|
|
|
|
Basic
|
|
|
14,425,069
|
|
|
|
12,191,008
|
|
|
Diluted
|
|
|
14,425,069
|
|
|
|
12,933,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE FROM
CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.26)
|
|
|
|
0.43
|
|
|
Diluted
|
|
|
(0.26)
|
|
|
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE FROM
DISCONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.98)
|
|
|
|
0.75
|
|
|
Diluted
|
|
|
(0.98)
|
|
|
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS (LOSS) PER
SHARE
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.24)
|
|
|
$
|
1.17
|
|
|
Diluted
|
|
$
|
(1.24)
|
|
|
$
|
1.11
|
|
|
|
|
|
|
|
|
|
|
|
|
The company held 125,203 anti
dilutive preferred shares during 2011
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
The accompanying notes are an integral part of these
consolidated financial statements.
|
|
NEW ENERGY
SYSTEMS GROUP AND SUBSIDIARIES
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
2011
|
|
|
2010
(Restated)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(17,864,983)
|
|
|
$
|
14,320,513
|
|
|
Adjustments to reconcile
net income (loss) to net cash
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,978,993
|
|
|
|
3,043,808
|
|
|
Changes in
deferred taxes
|
|
|
(671,317)
|
|
|
|
(597,768)
|
|
|
Deferred stock
compensation
|
|
|
675,621
|
|
|
|
675,000
|
|
|
Loss on
disposal of fixed assets
|
|
|
-
|
|
|
|
1,534
|
|
|
Gain from
disposal of subsidiaries
|
|
|
(292,067)
|
|
|
|
-
|
|
|
Stock and
warrants expense
|
|
|
112,917
|
|
|
|
1,003,504
|
|
|
Impairment of goodwill of
NewPower and Anytone
|
|
|
21,711,882
|
|
|
|
-
|
|
|
(Increase) / decrease in current
assets:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
2,540,164
|
|
|
|
3,505,551
|
|
|
Inventory
|
|
|
351,473
|
|
|
|
(1,321,906)
|
|
|
Prepaid
expenses, deposits and other receivables
|
|
|
(1,097,396)
|
|
|
|
613,733
|
|
|
Increase/(decrease) in current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(3,304,019)
|
|
|
|
(812,732)
|
|
|
Accrued
expenses and other payables
|
|
|
(247,897)
|
|
|
|
479,787
|
|
|
Taxes
payable
|
|
|
(3,052,482)
|
|
|
|
609,513
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING
ACTIVITIES
|
|
|
1,840,889
|
|
|
|
21,520,537
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Cash of
disposed subsidiaries
|
|
|
(4,033,445)
|
|
|
|
-
|
|
|
Cash acquired
in acquisition
|
|
|
-
|
|
|
|
705,514
|
|
|
Proceeds from
sale of property and equipment
|
|
|
-
|
|
|
|
2,370
|
|
|
Investment
into subsidiary
|
|
|
-
|
|
|
|
(6,529,286)
|
|
|
Acquisition of
property and equipment
|
|
|
(97,883)
|
|
|
|
(154,936)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING
ACTIVITIES
|
|
|
(4,131,328)
|
|
|
|
(5,976,338)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Repayment of
acquisition liability for subsidiaries
|
|
|
(6,843,376)
|
|
|
|
(5,000,000)
|
|
|
Cash proceeds
from warrant exercise
|
|
|
87,500
|
|
|
|
-
|
|
|
Repayment to
related party
|
|
|
-
|
|
|
|
(1,373,809)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN FINANCING
ACTIVITIES
|
|
|
(6,755,876)
|
|
|
|
(6,373,809)
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGE
ON CASH & EQUIVALENTS
|
|
|
510,038
|
|
|
|
242,628
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
& EQUIVALENTS
|
|
|
(8,536,277)
|
|
|
|
9,413,018
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH & EQUIVALENTS,
BEGINNING OF YEAR
|
|
|
13,065,008
|
|
|
|
3,651,990
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH & EQUIVALENTS, END OF
YEAR
|
|
$
|
4,528,731
|
|
|
$
|
13,065,008
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$
|
4,798,558
|
|
|
$
|
4,534,300
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
SOURCE New Energy Systems Group