WEB NEWS Corporate Governance
On June 30, 2012,
Haoru Tao resigned as the director and a member and
chairman of the Audit Committee of the Board of China Green Energy Industries, Inc. (the “Company”), effective immediately. The resignation of Ms. Tao is not in connection with any known disagreement with the Company on any matter.
Comments & Business Outlook
China Green Energy Industries, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) For the Years ended December 31, 2011 and 2010
Years ended December 31,
2011
2010
Revenues
$
24,905,073
$
28,589,395
Cost of revenues
(21,074,523
)
(20,398,286
)
Gross profit
3,830,550
8,191,109
Operating expenses:
General and administrative expenses
(4,115,014
)
(2,031,956
)
Selling expenses
(1,218,754
)
(649,198
)
(5,333,768
)
(2,681,154
)
Income/(loss) from operations
(1,503,218
)
5,509,955
Interest income
33,446
345,745
Interest expenses
(765,452
)
(472,307
)
Other income (loss), net
(75,597
)
183,722
Income/(loss) before income taxes
(2,310,821
)
5,567,115
Income taxes-Note 16
-
(1,430,640
)
Net income/(loss)
(2,310,821
)
4,136,475
Other comprehensive income
Foreign currency translation adjustments
170,119
160,484
Total comprehensive income/(loss)
$
(2,140,702
)
$
4,296,959
Earnings (loss) per share
- Basic
$
(0.10
)
$
0.19
- Diluted
$
(0.10
)
$
0.19
Weighted average number of shares outstanding
- Basic
23,582,552
22,311,915
- Diluted
23,582,552
22,311,915
See the accompanying Notes to Consolidated Financial Statements
Liquidity Requirements
To date, the Company has financed its operations primarily through cash flows from operations, augmented by short-term bank loans and equity contributions by our stockholders. Management believes that cash on hand and cash flow from operations will meet a portion of the Company’s present cash needs and
will require additional cash resources , including equity investment, to
meet expected capital expenditures and working capital requirements for the next 12 months
Comments & Business Outlook
China Green Energy Industries, Inc. (Formerly TradeOn, Inc.) Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) For the three and nine months ended September 30, 2011 and 2010
Three months ended September 30,
Nine months ended September 30,
(Unaudited)
(Unaudited)
2011
2010
2011
2010
Revenues
$
7,086,769
$
6,143,672
$
18,279,917
$
23,850,636
Cost of revenues
(6,197,067
)
(3,228,879
)
(15,303,810
)
(15,663,809
)
Gross profit
889,702
2,914,793
2,976,107
8,186,827
Operating expenses:
General and administrative expenses
(1,670,325
)
(628,654
)
(3,497,015
)
(1,261,790
)
Selling expenses
(211,190
)
(127,834
)
(812,659
)
(416,035
)
(1,881,515
)
(756,488
)
(4,309,674
)
(1,677,825
)
Income/(loss) from operations
(991,813
)
2,158,305
(1,333,567
)
6,509,002
Interest income
120,091
118,782
359,188
235,020
Other income, net
12,850
14,149
66,198
73,382
Finance costs
(209,698
)
(129,734
)
(539,051
)
(339,730
)
Income/(loss) before income taxes
(1,068,570
)
2,161,502
(1,447,232
)
6,477,674
Income taxes - Note 16
194,140
(576,447
)
232,727
(1,630,542
)
Net income/(loss)
(874,430
)
1,585,055
(1,214,505
)
4,847,132
Other comprehensive income
Foreign currency translation adjustments
64,855
96,290
170,865
114,452
Total comprehensive income/(loss)
$
(809,575
)
$
1,681,345
$
(1,043,640
)
$
4,961,584
Earnings per share
- Basic
$
(0.04
)
$
0.07
$
(0.05
)
$
0.22
- Diluted
$
(0.04
)
$
0.07
$
(0.05
)
$
0.22
Weighted average number of shares outstanding
- Basic
23,625,911
23,529,411
23,567,940
21,895,639
- Diluted
23,625,911
23,529,411
23,567,940
21,895,639
Comments & Business Outlook
China Green Energy Industries, Inc Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)
Three months ended June 30,
Six months ended June 30,
(Unaudited)
(Unaudited)
2011
2010
2011
2010
Revenues
$
7,918,897
$
12,545,466
$
11,193,148
$
17,706,964
Cost of revenues
(6,399,693
)
(8,764,716
)
(9,106,743
)
(12,434,930
)
Gross profit
1,519,204
3,780,750
2,086,405
5,272,034
Operating expenses:
General and administrative expenses
1,152,785
326,944
1,826,690
633,136
Selling expenses
381,401
114,560
601,469
288,201
1,534,186
441,504
2,428,159
921,337
Income/(loss) from operations
(14,982
)
3,339,246
(341,754
)
4,350,697
Interest income
127,822
66,983
239,097
116,238
Other income
5,035
26,138
53,348
59,233
Finance costs
(174,909
)
(115,448
)
(329,353
)
(209,996
)
Income/(loss) before income taxes
(57,034
)
3,316,919
(378,662
)
4,316,172
Income taxes - Note 16
38,587
(813,516
)
38,587
(1,054,095
)
Net income/(loss)
(18,447
)
2,503,403
(340,075
)
3,262,077
Other comprehensive income
Foreign currency translation adjustments
92,804
18,091
118,429
18,163
Total comprehensive income/(loss)
$
74,357
$
2,521,494
$
(221,646
)
$
3,280,240
Earnings per share
- Basic
$
(0.001
)
$
0.12
$
(0.01
)
$
0.15
- Diluted
$
(0.001
)
$
0.12
$
(0.01
)
$
0.15
Weighted average number of shares outstanding
- Basic
23,547,438
21,386,670
23,538,475
21,060,600
- Diluted
23,547,438
21,386,670
23,538,475
21,060,600
Comments & Business Outlook
China Green Energy Industries, Inc. (Formerly TradeOn, Inc.) Condensed Consolidated Statements of Operations and Comprehensive Income For the three months ended March 31, 2011 and 2010
Three months ended March 31,
(Unaudited)
2011
2010
Revenues
$
3,274,251
$
5,161,498
Cost of revenues
(2,707,050
)
(3,670,214
)
Gross profit
567,201
1,491,284
Operating expenses:
General and administrative expenses
(673,905
)
(306,192
)
Selling expenses
(220,068
)
(173,641
)
(893,973
)
(479,833
)
Income/(loss) from operations
(326,772
)
1,011,451
Interest income
111,275
49,255
Other income
48,313
33,095
Finance costs
(154,444
)
(94,548
)
Income/(loss) before income taxes
(321,628
)
999,253
Income taxes - Note 16
-
(240,579
)
Net income/(loss)
$
(321,628
)
$
758,674
Other comprehensive income
Foreign currency translation adjustments
25,625
72
Total comprehensive income/(loss)
$
(296,003
)
$
758,746
Earnings/(loss) per share
- Basic
$
(0.01
)
$
0.04
- Diluted
$
(0.01
)
$
0.04
Weighted average number of shares outstanding
- Basic
23,529,411
20,734,531
- Diluted
23,529,411
20,734,531
Mr. Jianliang Shi, Chairman and Chief Executive Officer commented, “Our revenue and net income for the first quarter of 2011 were impacted by several factors. Foremost among these, we reallocated workers from our cable and refrigerator businesses to our LEV factory in anticipation of increased production requirements associated with our acquisition of the NICONIA LEV brand and its retail sales network. The acquisition has progressed seamlessly and we have experienced a sharp increase in LEV sales beginning in the second quarter. Moreover, we have since resolved the worker shortage within our cable and refrigerator business lines and expect both of these businesses to resume normal sales levels in the second quarter. As a result, we remain confident in achieving our prior guidance of $14 million net income, or $.60 per diluted share , which would represent more than a 240% increase in net income from $4.1 million in 2010. ”
Comments & Business Outlook
2010 Year End Results :
Revenue for the year ended December 31, 2010 increased 136.4% to $28.6 million from $12.1 million for the same period the previous year.
Gross profit for the twelve months ended December 31, 2010 increased 131.3% to $8.2 million compared to $3.5 million for the same period in 2009.
Operating income for the twelve months ended December 31, 2010 increased 135.9% to $5.5 million compared to $2.3 million for the same period the previous year.
Net income for the twelve months ended December 31, 2010 increased 155.5%, to $4.1 million, or $0.19 per diluted share, compared to $1.6 million, or $0.08 per diluted share, for the same period the previous year.
GeoTeam Note: Fourth quarter 2010 vs. 2009 EPS was $(0.03) vs $0.01
The company reiterates its net income guidance of $14 million, or $0.60 per diluted share for 2011 .
Mr. Jianliang Shi, Chairman and Chief Executive Officer commented, "We are pleased to report that sales were strong across all of our product lines in 2010. Cable products showed strong growth at 148.1% reaching a revenue level of $18.4 million for the year. Cryogen-free refrigerator sales increased by 106.3% to $9.5 million with orders stemming from both existing customers and new ones .
Liquidity Requirements
We believe that we maintain good relationships with the various banks we deal with and our current available working capital, and bank loans referenced above, should be adequate to sustain our operations at our current level through at least the next twelve months.
We believe that our current cash, cash flow from operations will be sufficient to meet our present and reasonably anticipated cash needs.
Comments & Business Outlook
New York and Jiangsu, China – February 8, 2011 – China Green Energy Industries, Inc.,
This would represent a 144% increase over the Company’s current guidance of $5.7 million of net income, or $0.24 per diluted share , for 2010.
Mr. Jianliang Shi, Chairman and Chief Executive Officer, commented, “We are extremely encouraged by the near and long-term outlook for the business. Our network cable and Cryogen-free refrigerator businesses continue to grow rapidly and generate strong cash flow. These businesses provide us with a solid foundation upon which to expand our light-weight electric vehicle (LEV) business. We are particularly excited about our recent acquisition of the NICONIA brand of LEVs and its sales network of 350 retail stores. We project that our combined LEV business unit will achieve sales in excess of $45 million in 2011 and we believe we can maintain organic growth in excess of 50% annually. Specifically, worldwide demand for LEVs continues to accelerate as a result of advances in battery technology, coupled with low-cost manufacturing. We believe we are ideally positioned to benefit from this trend, as evidenced by our strong sales pipeline. As a result, we anticipate net income of $14 million for 2011 due to growing brand awareness for our products, combined with innovation and our reputation for quality .”
Auditor trail
On
January 7, 2011 , China Green Energy Industries, Inc. engaged PKF California as its new independent registered public accounting firm, and dismissed PKF HK from that role. The change in accountants was approved by the Company’s Audit Committee and did not result from any dissatisfaction with the quality of professional services rendered by PKF HK. Neither the Company, nor anyone on its behalf, consulted PKF California during the Company’s two most recent fiscal years and any subsequent interim period prior to the Company’s engagement of PKF California regarding any of the matters set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Acquisitions
New York, New York and Jiangsu, China--(January 25, 2011 ) - China Green Energy Industries, Inc., today announced it has acquired the NICONIA LEV brand and retail sales network. The NICONIA brand is owned by Changzhou Benshen Bicycle Co., Ltd. ("Benshen", http://www.benshen.cn). Benshen is a leading manufacturer of light-weight electric vehicles with a sales network of approximately 350 retail stores in China . The total purchase price for the NICONIA brand and retail sales network was approximately $3.0 million .
Mr. Jianliang Shi, Chairman and Chief Executive Officer commented, "We are very excited about the purchase of NICONIA, a quality brand in China with over 200,000 LEV sold annually, and projected sales of more than $45 million in 2011 . We entered the LEV market in 2008 and have experienced strong demand in this product category. LEV sales in China have grown at a 29% compound annual growth rate from 2005 - 2009 and our acquisition of NICONIA is a key milestone in enabling us to accelerate growth in this segment. We expect to generate attractive gross margins from the NICONIA branded LEVs of approximately 25% , while at the same time leveraging
Mr. Shi concluded, "This acquisition significantly alters our product mix, with revenue from LEV sales expected to comprise 54% of our overall revenue in 2011 versus 1% of our revenue in 2009. China is one of the largest consumers of LEVs in the world and we look forward to becoming a recognized leader in this highly fragmented industry."
Comments & Business Outlook
Q3 2010 financial highlights (year-over-year) :
Revenue increased 58.0% to $6.1 million Gross profit increased 126.5% to $2.9 million Operating income increased 116.4% to $2.2 million Net income increased 93.8% to $1.6 million, or $0.07 per share vs. $0.04 $2.1 million of cash and no long-term debt as of September 30, 2010
Jianliang Shi, Chairman and Chief Executive Officer, commented, "We are pleased to announce very strong year-over-year growth in revenue and net income. China Green Energy Industries is extremely well-positioned both within the high tech and environmentally friendly product markets, as evidenced by our strong historic revenue growth, our premier customer base, and long-term relationships with major OEMs and global Fortune 500 companies."
"Our three main business lines consist of light-weight electric vehicles (LEV), cryogen-free refrigerators, and also network and HDMI cables. Our legacy network and HDMI cable business continues to grow rapidly and generate solid cash flow to fuel our growth. At the same time, we have increased our focus on environmentally friendly products, which are in great demand both in China and abroad. Specifically, we now private label our cryogen-free refrigerators for such global brands as Ford, Pepsi, Coca-Cola, Disney, etc. Our cryogen-free refrigerators use less electricity and cost less than conventional refrigerators. Moreover, our products do not contain Freon or cause pollution during the manufacturing process. As a result, we have seen strong consumer demand for this product line."
"Most importantly, we are extremely excited about the outlook for the LEV business. Although still a relatively small percentage of our overall revenue, we expect the LEV business to grow dramatically in the coming months and years. We initially launched this business in 2008 with a single large OEM customer in the Netherlands. We believe our success with this European customer is a direct result of our superior product and low-cost manufacturing. We are preparing to launch LEVs domestically in China and anticipate this business will grow rapidly based on our current sales pipeline. "
Mr. Shi concluded, "Overall, we believe we have built a highly scalable operation and expect to gain significant operating leverage as we continue to grow revenue and increase utilization of our existing capacity, which in turn, will drive meaningful value for shareholders."
Reverse Merger Activity
On June 9, 2010 Best Green Energy became a public entity via a reverse merger transaction .
Company Snapshot:
Manufactures and distributes clean technology-based consumer products.
Industry Snapshot:
Compared to motorbikes, LEVs enjoy the following advantages: less fossil fuel consumption, cheaper in price, more convenient to park inside cities, and less air and noise pollution. We believe many consumers are increasingly willing to consider purchasing LEVs due to environmental, economic, and convenience reasons. As a result, we believe the market for LEVs is poised for significant growth as consumers continue to shift their preferences strongly toward more energy efficient and lower emission vehicles.
The Chinese market for LEVs is huge and has been growing rapidly. According to the China Electronic Components Association, 21.5 million LEVs were sold in China in 2008, representing growth of 26.5% over 2007. And in 2009, 24.5 million LEVs were sold in China. The following chart shows the historical and expected growth of LEV sales in China:
We currently produce and sell cryogen-free refrigerators, which are classified as small home appliances. According to CCDI Consulting, compound aggregate growth rate, or CAGR of small home appliance sales in China was 15% during 2003 to 2008. The following chart shows the growth of small home appliance sales in China:
China’s cable and wire industry has surpassed the United States to become the largest cable and wire producer in the world. According to the Shanghai Cable & Wire Research Institute, the sale of cable and wire in China was $59 billion in 2006. (Source: Zhongli Sci-Tech Group IPO Prospectus, August 13, 2009.) In China, the cable & wire industry is expected to grow at a level comparable to that of the national economy, which is projected to be 7% to 8%. (Source: http://www.chinawirecable.com)
Post Merger Share Calculation :
6,794,880: Pre reverse merger outstanding shares
4,000,000: Shares cancelled as part of the Share Exchange
20,734,531: Newly issued shares of Common Stock
GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 23,529,411
Financial Snapshot:
For the 2010 first quarter sales increased 116.7 % to $5.2 million . Note, that for all of 2009 sales were $12.1 million . For the 2010 first quarter net income increased 261.4 % to $759 thousand . Note, that for all of 2009 net income was $1.6 million .
Financials
Year ended December 31
2009
2008
Net sales - Note 20
$
12,092,837
$
12,547,357
Cost of sales
(8,550,998
)
(10,445,356
)
Gross profit
3,541,839
2,102,001
Operating expenses
General and administrative expenses
902,136
911,912
Selling expenses
303,965
551,989
1,206,101
1,463,901
Income from operations
2,335,738
638,100
Interest income
65,506
57,912
Other income - Note 14
88,980
87,527
Finance costs - Note 15
(331,785
)
(337,775
)
Income before income taxes
2,158,439
445,764
Income taxes - Note 16
(539,610
)
(111,441
)
Net income
$
1,618,829
$
334,323
Other comprehensive loss
Foreign currency translation adjustments
(2,784
)
(28,735
)
Total comprehensive income
$
1,616,045
$
305,588
___________________________________________________________________________
Three Months ended March 31,
2010
2009
Net sales - Note 18
$
5,161,498
$
2,400,196
Cost of sales
(3,670,214
)
(1,843,709
)
Gross profit
1,491,284
556,487
Operating expenses
General and administrative expenses
306,192
202,528
Selling expenses
173,641
66,987
479,833
269,515
Income from operations
1,011,451
286,972
Interest income
49,255
13,410
Other income - Note 13
33,095
82,964
Finance costs - Note 14
(94,548
)
(103,478
)
Income before income taxes
999,253
279,868
Income taxes - Note 15
(240,579
)
(69,967
)
Net income
$
758,674
$
209,901
Other comprehensive income (loss)
Foreign currency translation adjustments
72
(289
)
Total comprehensive income
$
758,746
$
209,612
