NEW ENERGY SYSTEMS GROUP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 17, 2012

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8-K - NEW ENERGY SYSTEMS GROUP FORM 8-K - NEW ENERGY SYSTEMS GROUPform8k.htm
Exhibit 99.1
 
 





New Energy Systems Group Reports First Quarter 2012 Financial Results

Conference Call Scheduled for 9:00 am ET on Friday, May 18th

·  
Anytone consumer products revenues of $3.0 million
·  
Generated $0.3 million in cash from operations

SHENZHEN, China, May 16, 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.
 
 
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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.
 
 
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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.
 
 
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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



 
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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
  
 
 
 
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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
  


 
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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
  
$
-
    
$
-
  

 
 
 
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NEW ENERGY SYSTEMS GROUP Reports