New Energy Sys Group (GREY:NEWN)

SHENZHEN, CHINA--(Marketwired - April 22, 2013) -  New Energy Systems Group (NYSE MKT: NEWN) ("New Energy" or the "Company"), an original design manufacturer and distributor of Anytone� and MeePower� branded consumer backup power systems for mobile devices and solar related application products to service municipal power applications, today announced that the Company has received a written notice from NYSE MKT LLC (the "NYSE MKT" or the " "Exchange") on April 17, 2013, indicating that the Company was not incompliance with the Exchange's continued listing criteria set forth in Section 134 and 1101 of the NYSE MKT LLC Company Guide (the "Company Guide") due to the delay in filing the Company's Annual Report on Form 10-K for the year ended December 31, 2012 (the "Annual Report").

Sections 134 and 1101 of the Company Guide require the timely filing of such report with the Securities and Exchange Commission (the "SEC"). The Staff of the Exchange cites the Company's failure to file its Annual Report within the extended due date has violated its listing agreement with the Exchange. In order to maintain its listing, the Company must submit a plan of compliance by May 1, 2013 (the "Plan"), addressing what action in details the Company has taken or will take to regain its compliance with Section 134 and 1101 of the Company Guide no later than July 16, 2013 (the "Plan Period"). If the Company does not submit a Plan, or the Plan is not accepted, the Company will be subject to delisting process. In addition, if the Plan is accepted, but the Company is not compliance with the continued listing standards of the Company Guide by July 16, 2013, or if the Company does not make progress consistent with the Plan during the Plan Period, the Exchange staff will initial delisting proceedings as appropriate.

Because the Company notified the Exchange its intention to voluntarily withdraw its common stock from the Exchange on April 12, 2013, it does not intend to submit a plan of compliance.

Second Quarter ended June 30, 2012

• Revenues declined 68% year-over-year to $3.6 million due to lower demand for batteries in China and increased competition.
• Cost of sales decreased 54% to $3.3 million  from $7.1 million in the second quarter of 2011 due to lower sales and production volumes.
• Gross profit in the second quarter of 2012 was $0.3 million compared to $4 million, a 93% decline compared to the same period last year.
• Net income from continuing operations was a net loss of $9.9 million compared to net income of $1.8 million in the second quarter of 2011.
• GAAP net loss per share was was $0.68 in the second quarter of 2012 compared to earnings per share of $0.12 in 2011. Non-GAAP adjusted net loss and net loss per share were $0.7 million and $0.05, respectively, in the second quarter of 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."

SHENZHEN, China, June 20, 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 Kim Fai solar panels and solar related application products to service municipal power applications, today announced that the Company's senior management team has completed the stock repurchase program as stated. The last transaction was completed on June 15, 2012.

Since May 2011, the Company's senior management team, including Chairman and CEO, Mr. Weihe (Jack) Yu and CFO, Mr. Junfeng Chen, has spent approximately $1 million of their personal funds to purchase 959,795 shares of the Company's common stock in the open market.

SHENZHEN, China, June 18, 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 Kim Fai solar panels and solar related application products to service municipal power applications, today announced that Chairman and CEO Weihe "Jack" Yu has purchased approximately $360,000 of the Company's common stock with his personal funds.

"My decision to purchase our stock with my personal funds reflects my confidence in the Company's outlook," stated Mr. Yu, Chairman and CEO of New Energy Systems Group. "While we have faced several challenges recently, I remain steadfast in my commitment to improve our results."

First Quarter 2012 Results

•  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.
• 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.
•  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.

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."

Full Year 2011 Results

• Total net revenue increased 12.9% in 2011 to $51.5 million from $45.6 million in 2010 
• 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 vs $0.68 in 2010
• Fourth Quarter 2011 adjusted EPS was a loss of $0.07 vs EPS of $0.45

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."

SHENZHEN, China, March 6, 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 Kim Fai solar panels and solar related application products to service municipal power applications, today announced that Anytone has launched two online stores in China. Starting from now on, consumers will be able to purchase all of Anytone's consumer products directly through paipai.com and taobao.com.

Anytone currently sells primarily through wholesale distributors and retail stores in China. With the online launch, consumers nationwide can easily purchase Anytone's mobile power devices and accessories for their laptops, mobile phones and tablets. Taobao.com is one of the most popular online marketplaces in China, with an average of over 10 million visitors per day.

"Selling our products online is an integral part of our sales and marketing strategy," said Mr. Weihe "Jack" Yu, Chairman and CEO of New Energy Systems Group. "With our growing brand and strong lineup of new products, we are well positioned to compete with domestic and foreign brands. We plan to run a series of advertisements over the next few months to let consumers know about our growing online presence."

In addition, the Company launched a separate English language website www.meepower.us/en for its MeePower mobile power products. For the first time in the Company's history, U.S. consumers can purchase MeePower's products online.

New Energy designs, manufactures, and distributes consumer branded backup power systems, lithium ion batteries, and battery parts and solar panels. The investigation concerns whether New Energy and certain of its officers made materially false and misleading statements and omissions regarding the Company's financial statements.

Throughout the Class Period, New Energy touted that it manufactured customized products to the specifications of its "loyal customers" and that it expected to "continually receive orders" because of its reputation for manufacturing "quality" products.

On November 14, 2011, after the markets closed, New Energy filed a Form 10-Q for the quarterly period ended September 30, 2011. This report disclosed a 42% decrease in revenue, a decrease in selling prices, the sale of batteries, battery shells and battery covers below cost, and a $13,654,691 write-off of goodwill due to continued slow-down of the battery industry in China. The Company also stated that it expected continued losses in the battery business for the foreseeable future.

Upon this news, the price of New Energy common stock dropped from more than 50%, from a closing price of $1.81 on November 14, 2011 to a close at $.93 per share on November 15, 2011 in inordinately heavy trading.

More color provided on Product Development Agreement (“Agreement” ) with New Trent Inc (“New Trent”):

SHENZHEN, China, February 22, 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 Kim Fai solar panels and solar related application products to service municipal power applications, today announced that Shenzhen Anytone Technology Co., Ltd. ("Anytone"), a subsidiary of the Company, signed an agreement with New Trent Inc. ("New Trent") to manufacture New Trent's products to be sold in the U.S. and UK in 2012.

New Trent, based in Freemont, California, is a retailer and distributor of mobile power devices for use with leading consumer electronic, smart phone, digital camera and mobile computing devices manufactured by companies such as Apple, RIM, IBM and Dell. New Trent sells products to online and retail locations under its brand name.

New Trent signed an agreement with Anytone to produce two "New Trent" branded recharging devices for sales in the US and UK markets. Anytone models 8800BD and M700 are flexible, back up mobile power devices that can be used to recharge and power phones and tablets manufactured by a variety of manufacturers. Model M700 is an innovated design which allows the users to power their devices without preparing any accessories. Both models can fully recharge depleted power sources in devices faster than those devices' original chargers. As part of the agreement, New Trent undertakes to sell $1.0 million products in its first year of the partner relationship with Anytone. New Energy's "Anytone" or "MeePower" brands are not included in this agreement.

Mr. Weihe "Jack" Yu, Chairman and CEO of New Energy Systems Group said, "Through several steps of discussion and testing after the Consumer Electronics Show 2012 in Las Vegas, we are pleased to sign our agreement to sell Anytone made products in the U.S. With a strong portfolio of products for consumer electronic devices and accessories, we are focused on expanding our sales outside of China, where we hope to realize higher average selling prices and margins."

On November 24, 2011, New Energy Systems Group (the “Company”) entered into an Equity Transfer Agreement (the “Equity Transfer Agreement”) with Xuemei Fang (“Fang”) and Weirong Xu (“Xu”, and together with Fang, the “Buyers”). Under the Equity Transfer Agreement, the Company agrees to transfer 100% of the equity interest of Billion Electronics Limited (BVI) (“Billion Electronics”) to the Buyers for a cash consideration of RMB 85,553,892.75 ($13.4 million) ("Equity Transfer"). The purchase price equals the appraisal value of Billion Electronics, including its wholly owned subsidiaries Shenzhen E’Jenie Technology Development Co., Ltd. (“E’Jenie”) and Shenzhen NewPower Technology Development Co., Ltd. ("NewPower"), less RMB 153,033,107.25 of debt that the Company owes E’Jenie, which shall be cancelled upon completion of the Equity Transfer. Fang will pay RMB 51,320,335.65 for 60% of the equity interest in Billion Electronics and Xu will pay RMB 34,213,557.10 for 40% of the equity interest in Billion Electronics. RMB 17,106,778.55, or 20% of the purchase price, will be paid upon the registration of the Equity Transfer with the relevant PRC authority. Thereafter, the Buyers will pay an aggregate of RMB 5,800,000 every two months, until the purchase price is paid in full. Fang is a Vice President of E’Jenie and Xu is the Director of Marketing of NewPower.

"As discussed on our third quarter conference call, we have continued to witness a decline in our E'Jenie and NewPower business units in an increasingly competitive marketplace in China," began Chairman and CEO, Weihe "Jack" Yu. "A recent product return of approximately $1.7 million of NewPower batteries from a customer and large impairment charges we reported in the third quarter related to those two respective business units further confirmed our decision to exit these declining businesses. We are confident this move will enable us to focus on our more promising Anytone® and Kim Fai solar businesses in the coming year and improve our overall financial results."

FY2011 GUIDANCE

As a result of the sale of E'Jenie and NewPower, the Company has been able to more accurately forecast its sales for the balance of the year and provide investors with updated guidance below.

"We are still working our way through the impact from piracy of and increased competition in the marketplace by 'Feimaotue' (Hong Kong Exchange listed company) and 'Singwongda' (China's A-share market company), whom have recently entered the mobile power marketplace in China with their own product lines," continued Weihe "Jack" Yu. "Our new products launched at MacWorld in Beijing and the Hong Kong Electronics Fair are designed to elevate our position in the market and differentiate our product lines with consumers. To support our new product launches and to educate consumers, we will spend approximately $1.8 million over the next three months on consumer marketing and expanding distribution. We are confident the decision to focus our resources on growing Anytone and Kim Fai will provide us more sustainable returns in the years ahead."

Third Quarter 2011 Results

Rodman and Renshaw on NEWN                      8/19/2011

NEWN: 2Q11 Earnings Update; Lowering PT to $6.00

2Q11 Missed: NEWN reported 2Q11 revenue, Non-GAAP earnings, and Non-GAAP diluted EPS of $23.1 MM, $4.0 MM, and $0.28, lower than our estimates of $31.2 MM, $5.5 MM, and $0.38, respectively.

Revenue Mix: By product segments, battery, battery components, and solar battery products each generated $15.7 MM, $1.3 MM, and $6.2 MM in revenue, accounting for 68%, 5%, and 27% of total sales. The top-line decline was primarily driven by weaker demand in the company’s organic business, which includes battery and battery shell / cover parts, caused by the counterfeiting issues on Anytone, NewPower, and E-Jenie branded products, according to management. But the drop in battery segments was largely offset by solar segment’s contribution of $6.2 MM.

Mixed Margin Picture: Overall gross margin was 28.0%, improving from 2Q10’s 26.3% but declined from 34.9% in 1Q11. By segments, battery, battery shell parts, and solar panel products each generated 30.1%, 21.2%, and 24.1% gross margins. We believe the q-o-q decline in margin was mainly due to the shortfall in production volume and increase in average cost.

Guidance Removed due to Dampened Demand Outlook: Management removed its FY11 guidance of previously announced $130 MM ~ $135 MM for top-line, $24.5 MM ~ $25.5 MM for adjusted earnings, and $1.69 ~ $1.75 for diluted EPS. The company attributes this removal to uncertainties over revenues caused by the counterfeit issues, with no specific details provided.

Revising Estimates: Due to the unclear revenue visibility, we are lowering our 3Q11 estimates to $24.2 MM for revenue, $4.2 MM for adjusted earnings, and $0.29 in diluted EPS. For full year FY11, we expect the company to deliver revenue, earnings, and EPS of $100.1 MM, $19.0 MM, and $1.30 per share, respectively. We are delaying the introduction of our FY12 estimates until we have more clarity on the top-line impact from the counterfeit issue and on the timing of solving the problem.

Valuation: Lowering PT to $6.00

At current levels NEWN is trading at P/E multiples of ~1.5x to our FY11 Non-GAAP earnings estimates. This multiple is well below the peer group. We are lowering our price target on NEWN from $12.00 to $6.00, which translates into P/E multiples of ~4x to our Non-GAAP earnings estimates for FY11, largely in line with its peer group listed in the US. We are maintaining our Market Outperform rating.

Risks: 1. Revenue Concentration. 2. Acquisition Integration Risks. 3. Financial Risk. 4. Highly Fragmented and Competitive Industry. 5. Raw Material Costs. 6. Inflation and Currency Risks. 7. End User Concentration

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

Mr. Jack Yu, Chairman of New Energy stated, "Like many other electronic brands, counterfeiting of our products has been an unwanted distraction to our operations and negatively affected sales volumes and margins during the quarter. We have promptly and aggressively addressed the issue with the authorities, while pinpointing culprits who have subsequently been notified by our attorneys and local authorities. Ultimately, new product development is what stymies counterfeit products and we are confident our continued emphasis on R&D and our ability to launch new Anytone® products with enhanced functionality and designs will reinvigorate consumer and distributor purchases. By acting quickly to address the commercial needs of our distribution base, we have built trust and ensured the integrity of our brand. We were also pleased with Kim Fai's results, which are on track for to exceed our original forecast for 2011."

SHENZHEN, China, July 19, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically-integrated original design manufacturer and distributor of lithium ion batteries and consumer branded backup power systems, today introduced three new remote power Anytone® models for tablets and mobile devices.

New Energy's Anytone® division successfully developed three new mobile power models for leading tablet manufacturers, including Apple, Samsung and Motorola. Anytone®'s Model AT-006 "iPad Smart Power" is a light-weight, portal lithium ion battery charger that allows consumers to charge their iPad, iPod or iPhone wherever they are. The Anytone® AT-006 attaches to the iPad SmartCover. The AT-006 comes with a USB cable for use with an iPod or iPhone.

Anytone® also developed two other mobile power chargers for tablet PCs. The 8800D is designed specifically for Motorola's Xoom® tablet and is the first mobile power device manufactured for the Xoom®. The M700 is a high-capacity lithium-powered recharging device which houses two USB output ports to charge two devices at the same time.  Available in black or white colors, the M700 can be used to charge the iPad, Xoom® and Samsung's Galaxy® tablet The M700 is the first mobile power charger in the market which can recharge different tablet PCs universally through transforming different voltages.

"Developing new products is the lifeblood of our organization," began Weihe "Jack' Yu, Chairman of New Energy Systems Group. "Because consumers have purchased thousands of our Anytone-branded products for their mobile phones and laptops, they will love our new battery packs for tablets as well.  We believe innovative products such as these will help differentiate our brand in a competitive market and drive growth in sales and earnings."

HENZHEN, China, July 19, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically-integrated original design manufacturer and distributor of lithium ion batteries and consumer branded backup power systems, today introduced three new remote power Anytone® models for tablets and mobile devices.

New Energy's Anytone® division successfully developed three new mobile power models for leading tablet manufacturers, including Apple, Samsung and Motorola. Anytone®'s Model AT-006 "iPad Smart Power" is a light-weight, portal lithium ion battery charger that allows consumers to charge their iPad, iPod or iPhone wherever they are. The Anytone® AT-006 attaches to the iPad SmartCover. The AT-006 comes with a USB cable for use with an iPod or iPhone.

Anytone® also developed two other mobile power chargers for tablet PCs. The 8800D is designed specifically for Motorola's Xoom® tablet and is the first mobile power device manufactured for the Xoom®. The M700 is a high-capacity lithium-powered recharging device which houses two USB output ports to charge two devices at the same time.  Available in black or white colors, the M700 can be used to charge the iPad, Xoom® and Samsung's Galaxy® tablet The M700 is the first mobile power charger in the market which can recharge different tablet PCs universally through transforming different voltages.

"Developing new products is the lifeblood of our organization," began Weihe "Jack' Yu, Chairman of New Energy Systems Group. "Because consumers have purchased thousands of our Anytone-branded products for their mobile phones and laptops, they will love our new battery packs for tablets as well.  We believe innovative products such as these will help differentiate our brand in a competitive market and drive growth in sales and earnings."

SHENZHEN, China, July 13, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically-integrated original design manufacturer and distributor of lithium ion batteries and consumer branded backup power systems, today announced that the Company's senior management team has purchased approximately $300,000 of stock of the Company to date with personal funds.

On April 1, 2011, the Company's senior management team (including its Chairman, CEO and CFO) announced their intentions to purchase approximately $1 million of the Company's common stock in the open market. Through July13,2011, Mr. Yu has purchased approximately $200,000 of stock at an average price of $3.45per share. Junfeng Chen, our CFO, has purchased approximately $100,000 of stock at an average price of$3.39 per share. Currently, the purchase of additional shares of stock of the Company by Mr. Yu and other members of the senior management team is subject to the Company's black-out period while the Company prepares its second quarter 2011 financial filings. The Company's black-out period will terminate at the end of the first full trading day after the Company reports its second quarter results in mid-August.

"I remain extremely confident in our future growth prospects," said New Energy Chairman Weihe Yu. "That is why I am using my personal funds, along with other executives on the management team, to purchase our stock at compelling prices. Over time, I believe more investors will realize the significant investment opportunity in our stock. In the meantime, our management team remains focused on executing our growth strategy."

SHENZHEN, China, June 23, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically-integrated original design manufacturer and distributor of lithium ion batteries and consumer branded backup power systems, appointed Paul Li as the Company's Chief Financial Officer effective August 16, 2011. Mr. Li replaces Junfeng Chen, who will remain the Company's CFO until the commencement of Mr. Li's appointment. There were no disagreements between Mr. Chen and the Company or any officer or director of the Company associated with Mr. Chen's departure as CFO.

Mr. Li has extensive experience as an officer and director of several publicly listed and private companies. Prior to joining New Energy, Mr. Li served as the Chief Financial Officer of Sen Yu International Inc. (OTCBB: CSWG) from September 2010. Mr. Li was a manager with Kelmar Associates LLC, a corporate regulatory compliance consulting firm providing auditing services to the U.S. government from April 2007 to January 2010. Mr. Li is a Certified Public Accountant licensed in California and New Jersey.

New Energy Chairman Weihe Yu stated, "We thank Junfeng for his hard work and welcome Paul to New Energy. With 35 years of auditing and financial management experience, Paul will lead our efforts to further improve our financial controls and reporting. He will also work with the other members of the senior management team to expand our margins and cash flows."

Rodman and Renshaw on NEWN                         5/20/2011

NEWN: 1Q11 Earnings Update

1Q11 Results: NEWN reported 1Q11 revenue, Non-GAAP earnings, and Non-GAAP diluted EPS of $27.1 MM, $6.4 MM, and $0.44, compared to our estimates of $31.5 MM, $5.9 MM, and $0.40, respectively. 1Q top-line grew by 20.6% y-o-y from $22.5 MM in 1Q10, driven by the contribution from acquired Kim Fai solar business, which generated ~$5.5 MM in revenue for the quarter.

Revenue Mix: By product segments, battery, battery components, and solar battery products each generated $20.05 MM, $1.52 MM, and $5.51 MM in revenue, accounting for 74%, 6%, and 20% of total sales. The top-line growth was primarily driven by solar segment’s contribution. Finished battery segment only grew by 3.4% while battery components segment declined by 50.3% y-o-y. Management attributed some revenue losses to counterfeiting issues, which they are in the process of now addressing.

Margins: Gross profit reached $9.4 MM for the quarter, representing a 34.9% margin, compared to 28.6% in 1Q10. The higher gross margin was mainly driven by the improved production efficiency and cost saving from the production switch within finished battery assembly segment, according to the company’s 10-Q filing. The battery components segment delivered a lower gross margin of 30.6% compared to 36.0% a year ago due to a higher raw material cost.

Share Repurchase Program: Management indicated during the conference call that it is now set up to execute the share re-purchase program. They expect to act on this in line with the restriction window opening up. We believe management is serious about this effort and should be expected to execute,

Expecting a New CFO Soon: On the call, management conveyed that NEWN is close to hiring a new CFO with the board is expected to make a decision shortly. Meanwhile, management stated that its current auditor, Goldman Kurland & Mohidin, LLP, will continue to be retained for the next few quarters until a new auditor (potentially larger) is finalized.

FY11 Guidance Reiterated: Management reiterated its FY11 guidance of $130 MM ~ $135 MM for top-line, $24.5 MM ~ $25.5 MM (adjusted), and $1.69 ~ $1.75 for diluted EPS (adjusted).

2Q11 Estimates: For 2Q11, we are now projecting $31.2 MM in total revenue, $5.5 MM in adjusted earnings, and $0.38 in diluted EPS. We are expecting 26.4% in gross margin and 20.4% in operating margin due to inflationary environment in China. For full year FY11, our estimates are $130.5 MM, $24.6 MM, and $1.69 per share, respectively.

Valuation: At current levels NEWN is trading at P/E multiples of ~2.3x to our FY11 Non-GAAP earnings estimates. This multiple is well below the peer group. We are comfortable maintaining a $12.00 price target for NEWN, which translates into P/E multiples of 8.2x to our Non-GAAP earnings estimates for FY11.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

As of March 31, 2011, the Company had a $549,082 unsecured, due on demand, and non-interest bearing loans payable to Dongrong Xu and Zaoxian Fang, the original owners of Shenzhen Anytone, of $466,719 and $82,363, respectively, in connection with the acquisition of Shenzhen Anytone by Anytone International. As of May 17, 2011, the Company has $549,082 outstanding.

Investors may want to take notice that the company's capital requirement comments have changed slightly just within the last two months:

March 28, 2011 10K:

Historically, cash from operations, short term financing and the sale of our Company stock have been sufficient to meet our cash needs. We believe we will be able to generate sufficient cash from operations to meet our working capital needs. However, our actual working capital needs for the long and short term will depend upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Future expansion will be limited by economic environment for the industry and opportunities, availability of financing and raising capital by selling stock. We do not have any plans to sell our securities and there is no guarantee that if we do seek to sell securities in the future that we will be successful. We acquired Kim Fai by issuing 1,913,265 shares of common stock paying $13,000,000 by cash. During 2010, the 1,913,265 shares of common stock were issued and $6,529,286 was paid by cash. The remaining $6,470, 714 will be paid by our internally generated cash flow.

May 19, 2011 10Q

Historically, cash from operations, short term financing and the sale of our Company stock have been sufficient to meet our cash needs. We believe we will be able to generate sufficient cash from operations to meet our working capital needs. However, our actual working capital needs for the long and short term will depend upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Future expansion will be limited by economic environment for the industry and opportunities, availability of financing and raising capital by selling stock. We acquired Kim Fai by issuing 1,913,265 shares of common stock and paying $13,303,236 by cash. As of March 31, 2011, the 1,913,265 shares of common stock were issued and $13,303,236 was paid.

Historically, cash from operations, short term financing and the sale of our Company stock have been sufficient to meet our cash needs. We believe we will be able to generate sufficient cash from operations to meet our working capital needs. However, our actual working capital needs for the long and short term will depend upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Future expansion will be limited by economic environment for the industry and opportunities, availability of financing and raising capital by selling stock. We acquired Kim Fai by issuing 1,913,265 shares of common stock and paying $13,303,236 by cash. As of March 31, 2011, the 1,913,265 shares of common stock were issued and $13,303,236 was paid.

Investors should note that the 2010 10K cleary stated that the company would not need to raise equity capital:

Historically, cash from operations, short term financing and the sale of our Company stock have been sufficient to meet our cash needs. We believe we will be able to generate sufficient cash from operations to meet our working capital needs. However, our actual working capital needs for the long and short term will depend upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Future expansion will be limited by economic environment for the industry and opportunities, availability of financing and raising capital by selling stock. We do not have any plans to sell our securities and there is no guarantee that if we do seek to sell securities in the future that we will be successful. We acquired Kim Fai by issuing 1,913,265 shares of common stock paying $13,000,000 by cash. During 2010, the 1,913,265 shares of common stock were issued and $6,529,286 was paid by cash. The remaining $6,470, 714 will be paid by our internally generated cash flow.

SHENZHEN, China, May 13, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group (NYSE Amex: NEWN) ("New Energy" or the "Company"), a vertically-integrated original design manufacturer and distributor of lithium ion batteries and consumer branded backup power systems, today addressed shareholder comments and questions regarding New Energy's acquisition of Kim Fai Solar ("Kim Fai') in November of 2010.

 "We have been receiving numerous e-mails and calls on Kim Fai, its value to our shareholders and our relationship with Kim Fai before our acquisition in November of 2010," began Weihe Yu, Chairman of New Energy Systems Group. "When I was the president of Shenzhen Anytone ("Anytone"), one of the original shareholders in the Anytone business was an investor named Mr. Ruizheng Cheng. In addition to his support of Anytone and mobile power products, it was widely known amongst our investors and our management team that Mr. Cheng was also a strong believer of the solar power business and industry in China. In December of 2009, Mr. Cheng decided to invest in and develop a solar power business which he named Shenzhen Anysolar Co., Ltd. ("Anysolar"). Anysolar was, and is, primarily a sales agent which markets solar panels and equipment to select customers in China. Anysolar is not a manufacturer and thus outsources its Anysolar-branded original equipment and original design solar products to a number of third party manufacturers. Kim Fai Solar was one of such manufacturers.  Seeing the quick development of Mr. Cheng's business and witnessing the continued growth of the Chinese solar power industry, I approached my board of directors in the third quarter of 2010 with a plan to enter the solar market by acquiring Kim Fai and subsequently their customer base.  This customer based included Mr. Cheng's Anysolar company. The acquisition was completed in November 2010. On the date of the acquisition, the business between Anysolar and Kim Fai was very small compared to Kim Fai's largest customers. Such customers include:  Heshan Jianhao Lighting Co., Ltd. and Dongguan SingfoSolar Technology Co., Ltd., which accounted for 13% of Kim Fai's business at the time and still remain the Company's most significant solar panel customers. Neither Mr. Cheng, nor any of Mr. Cheng's employees or advisors of Anysolar were, at any time, shareholders of Kim Fai. We recognize that the companies cooperated and co-marketed together on several occasions however they are two separate businesses. New Energy's acquisition of Kim Fai was at arm's length and did not constitute a related party transaction."

New Energy System Group has further filed an 8-K with the SEC, today which attached as an exhibit a legal opinion on the acquisition of Kim Fai. Guangdong Shendadi Law Firm in has issued a detailed legal opinion on the acquisition which indicates "the acquisition does not constitute a related party transaction under PRC laws."  A copy of the 8-k and the translated legal opinion by the PRC counsel can be obtained on the SEC Website, www.sec.gov or New Energy's website.

SHENZHEN, China, April 27, 2011 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group has established two separate credit lines with China-based asset management firms. The short term loans total 60 million RMB or $9.2 million USD and are earmarked for capital investment and working capital needs of the Company.

New Energy Chairman Weihe Yu explained, "These agreements provide us with additional financial flexibility to fund our future growth. After evaluating several options, we decided that securing this funding at a reasonable cost was in our shareholders' best interest. While we do not anticipate drawing on these lines immediately, having access to this funding in advance of actually needing it is a competitive advantage in the current environment."  

On April 21, 2011 New Energy Systems Group entered into two separate loan agreements with Chuangding Investment Consulting (Shenzhen) Co., Ltd. ("CIC") and Beijing Guojincheng Asset Management Co., Ltd. ("GAM"). Under the agreements, CIC and GAM have each committed to lend up to RMB 30 million with an interest rate of 10% per annum. Each loan is guaranteed by Chairman Yu, is secured by 539,091 shares of the Company's common stock beneficially owned by Chairman Yu, and was not subjected to any processing or management fee. Balances on the loans can be paid down in installments or in its entirety, but mature 730 days from inception. For more details, please refer to the 8-K the Company filed with the SEC on April 26, 2011.

"We understand that New Energy, similar to many China-Based, US-Listed companies are in a situation where accessing the capital markets is not economically viable at this juncture," began Pinggui Zhang of GAM. "The reality is that many small to medium sized companies in China continue to grow rapidly and are in need of capital to achieve their goals. After extensive due diligence on the company and its growth plans, our team agreed that funding companies like New Energy Systems Group provides an excellent risk-adjusted return to our clients," Qin Liu concluded.

Excerpt from New Energy Systems 4th quarter 2010 conference call:

Dan Lavine: Oh, congratulations on a great quarter and year.  I am new to your story and hold a small position, but would like to add at current prices.  So excuse my ignorance here, because like I said, I’m new to NEWN.  Can you please give me some color on the shareholder tenure with respect to New Power and Kim Fai Solar pre-acquisition (inaudible)?  For example, have the shareholders at Kim Fai been the same since inception?

Ken Lin:   I’m sorry, you mentioned the shareholder from original three subsidiary we acquired?

Dan Lavine:  Yes, mm-hmm.  The New Power and Kim Fai Solar, pre-acquisition.

Ken Lin:  Yes, and I’m sorry – what exactly information you want to know about those shareholders?

Dan Lavine: Well, I guess for example, have the shareholders at Kim Fai been the same ever since the beginning?

Ken Lin:   For Kim Fai and for those three companies we acquired, those shareholders, they are still the same shareholders as their original company.

Dan Lavine:  Okay

Ken Lin:  For example, Kim Fai’s shareholders have eight shareholders, and those eight shareholders is Kim Fai’s shareholders.  And Anytone—I’m sorry, Anytone I don’t remember exactly, but Anytone as I remember also have eight shareholders over there, and that eight shareholders is—they are separated.  There is no relationship for those shareholders, but they are—they all remain as the shareholders of each subsidiary.

Dan Lavine:  Okay, thank you.

The GeoTeam has just obtained information indicating that Kim Fai shareholder base changed several times before its acquisition by NEWN.  The last shareholder change before the acquisition by NEWN (Nov. 25, 2010, SAIC date) was only three months (Aug. 25, 2010, SAIC date) before the acquisition.   Furthermore, the age of these eight shareholders, who acquired Kim Fai on Aug. 25, 2010 and sold Kim Fai to NEWN, were fairly very young at the time of the acquisition.  Furthermore, the age of these latest shareholders are fairly young, arousing our suspicions that they could not have been original shareholders:  The age distribution of these eight shareholders are as follows:

Pre acquisition age distribution of  Kim Fai Shareholders: (8 shareholders of Kim Fai are from 19 (1992) to 30 (1981) )

• one 29 year old (Born 1981) (Xiaowei Wang)
• one 27 year old (Born 1983) (Yijie Li)
• two 25 year old (Born 1985) (Qiongqiong Wang & Gong Wei)
• two 22 year old (Born 1988) (Feng Cheng & Chunfeng Zhang)
• one 20 year old (Born 1990) (Qing Xiong)
• one 18 year old (Born 1992) (Di Yuan)

None of the above occupy more than 15% shares (6*14%, 9% and 7%). 

Investors should begin to ask questions, as this new information clearly diverges from public statements made in the 2010 year end conference call. Now we need to ask why

"For Kim Fai and for those three companies we acquired, those shareholders, they are still the same shareholders as their original company."

We also discovered that three of these eight shareholders (Di Yuan, Qiong Xiong & Xiaowei Wang) reside in Decheng District, Dezhou City.  This location coincides with the location of the current legal representative of New Power (Mr. Xiong Guofu) and the current legal representative of E'Jenie (Ms. Fang Xuemei).  Two of these young shareholders (Wei Gong & Feng Cheng) appear to live in Chibi City (county), which is the same city (county) that the current legal representative of Kim Tai (Mr. Liu Qunli) and current legal representative of Anytone (Mr. Weihe Yu, the Chairman of NEWN) also seem to reside.

Meanwhile, even though Kim Tai started its business on December 8, 2005, it only changed its name and business direction to include solar energy operations after September 21, 2009 which is only one year from the acquisition deal with NEWN.  At the time of these changes, the two shareholders of Kim Tai were Wei Gong (one of the eight young shareholders) (70%) and Weihai Yu (30%).  Weihai Yu and Weihe Yu (the chairman of NEWN) have the same last and middle names.  Based on the Chinese name tradition, it is possible that Weihai Yu and Weihe Yu are related (brothers).

Based on the Chinese name tradition, it is possible to assume that Weihai Yu and Weihe Yu are related.  Thus, we would like the company to comment on this:
 
One year later, after these significant changes involving Kim Tai business dealings, NEWN spent USD 24 million (USD 13 million cash and 11 million restricted share) to acquire a company which appears to have commenced its solar energy business for only one year, yet claims to generate significant revenues.

Please Note:

• We are still reviewing further details regarding the NEWN story, including information surrounding past management stock sales.  We are also conducting a deeper review of PRC filings, originally obtained by our team, that reveals a much smaller business for E'Jenie and Anytone than what has been portrayed in SEC documents and SAIC filings recently provided by the company (we would like to know if these filings were sent to the SAT agency). 
• Yesterday's S-3 filing is quite perplexing.

We may from time to time, in one or more offerings at prices and on terms that we will determine at the time of each offering, sell common stock, preferred stock, warrants, or a combination of these securities, or units, for an aggregate initial offering price of up to $20,000,000.

2010 Year End CC

Ken Lin:  We have fielded a few calls and visits from investors over the last month, and we are always willing to schedule visits to our dedicated facilities and our associate partners who produce any (unintelligible) products we do not manufacture in-house.  We also did our own form of diligence on our SAIC reports and (inaudible) investor information at the SAIC office was accurate for 2008 and 2009, and then published a PR on our findings on March 23, 2011.  In the past we, like many companies, use agents to obtain our business registration; however, we now have learned the lesson of taking this data directly from our auditor and tax accountant in China, Shenzhen (unintelligible).  Our tax filing, much like any corporation, public or private, are not published.  Our SEC report, our audit that were signed by our CFO and I, were accurate.

Ken Lin: We will work to address the many questions we have with our prepared comments and hope many of your have already reviewed our 10-K and press release filed yesterday and this morning.

Ken Lin: Our business is growing at a fast rate, as you can see by our guidance issued this morning.  Anytone, where many of our management team has come from, including myself, is a core driver of our sales growth and will account for slightly more than 50% of our (unintelligible) sales in 2011.
 
Ken Lin: Targeting and developing distribution for our Anytone and MeePower products is our top priority.  In the coming year, our goal is to increase our distributor base by 50% to best service the 20 province to which we sell Anytone and MeePower products.  Our international sales are also beginning to deliver some traction and we recognize that this is (unintelligible).  The Chinese market and the demand for power sources, particularly by Smartphones, by China consumers remains our focus in 2011.

Ken Lin: Thank you, Chairman Mr. Yu.  For those joining us on the call today, we want to begin our prepared remarks with an overview of our business segment.  Our business can be broadly categorized into two business segments – our battery application segment includes our branded Anytone and MeePower portable power products designed for leading consumer electronic manufacturers like Apple and RIM products, and a variety of the other consumer electronics including laptops, digital cameras, and MP3 players.  We are one of select companies who can use available iPhone, iPod and iPad on our product package.  As our Chairman indicated earlier, this is our focus segment and will account for 50% of our Li-ION battery (inaudible) segment sales in 2010.

The second battery segment is our production, assembly and sales of Li-ION battery parts, shells and caps, battery sales, finished battery packs.  We now market and sell our battery parts and battery sales through E’Jenie brand via our battery packs sold through New Power.  Each brand and product line are primarily sold to cell phone and handheld mobile device manufacturers, or other battery assembly operations in China.

 Our newest segment is solar, which we entered when we acquired Kim Fai November of 2010.  Solar is one of the fastest growing markets in China, which as many of you know require battery storage to function.  We feel our technology and understanding of ION batteries will be a benefit for the industryand are researching ways to convert solar energy to ION battery storage.  We also have a small line-up of solar power (inaudible) products made for rechargeable phones which we feel is another interesting category of products.

Our first question comes from the line of Steve Winslow with Bank of America.  Go ahead, sir.

Steve Winslow:  Hey, congratulations on the quarter, guys.  Seeing that your company is way undervalued here, would you be willing to entertain any offers for the company, and also will you possibly do a stock buyback?  Thank you.

Ken Lin:  Okay.  According to the management for first question regarding to stock buyback program, basically the Company—for the Company currently have no stock buyback plan.  But the reason is that in the past two years, the Company is grow very fast and also in the next several years, the Company wants to keep this path.  And as you may (inaudible) Company in the past week did several acquire to—acquisition to make the Company keep growing.  And in the future, the Company may look in for other targets.  So for the Company would like to have some capital or cash on hand to have—to keep it growing (unintelligible) looking for the other acquisition targets.  But for the stock buyback, the management personally for each management—like the Chairman, CEO, CFO, personally they will have the plan to go to the open market to buy back the stock by themselves individually.

Ken Lin:    And also for everybody can see through our 10-K and also our press release, this is showing that our growth rate and our EPS is showing our value is going down, and we do believe in the next couple years we will—the management team will keep maintain this growth and this (unintelligible), and so under that situation we believe—but if thorough investor research and also we welcome investors to visit our facilities through their research for our company.  We do believe the market will give our company a fair value of our stock price, and in the future the Company, depending on the situation, the Company may have the plan to do the stock buyback but it will be not currently.  In the future, it will depend on the Company’s (inaudible) situation.

Steve Winslow:  Okay.  What about listening to any offers for the Company?  Would you be willing to—seeing that it’s really undervalued here, would you be willing to listen to any offers from—you know, based on consolidation or possibly buying out the company, seeing as you guys are really cheap right now?  

Ken Lin: You mean, you mentioned a public offering?

Steve Winslow:  No, no, not—no.  Not a public offering.  For actually somebody—you know, another firm to buy your company.  Would you be willing to entertain any offers for that?

Ken Lin:  Okay, let me ask. 

Ken Lin:   Okay.  According to management for example for the question you may have, for the—if other bigger company would like to maybe buy our stock then probably acquire our company.  According to our management, especially our Chairman Jack, he mentioned after he enter in New Energy Systems Group, he have a plan for the Company’s long-term development.  So as it is right now, he feel three to five years plan for the Company keep growing.  So in the short term, as it is three to five years, he will keep leading the Company to keep growing and have no sold to—sold New Energy to the other company.

Steve Winslow: kay, thanks.  I really appreciate it, and congratulations, guys.  Keep up the good work.

Operator: And our next question comes from the line of Chang Liu with Rodman & Renshaw.  Go ahead, please.

Chang Liu: Hi, this is Chang asking questions on behalf of (inaudible).  Firstly, congratulations on the results.  My first question is could you provide any color on the key drivers behind the guidance of 2011?  We saw the guidance for 2011 is pretty strong, so I was wondering what the key drivers are.

Ken Lin: Okay.  According to management, there are four key drivers for 2011 gross.  First of all is related to the solar company which was acquired at the end of 2010.  According to—in China situation, in the next 10 years the solar industry in China will develop very fast, and also recently China’s government has already provided some support for solar industry.  And second is Anytone.  We will keep expand our Anytone distributors.  We just mentioned probably we will try to expand more than 20% during 2011.  And also, we will keep enhance Anytone’s brand name awareness in China, and through brand names enhanced reputation, enhance our product price, but also increase a little bit, which also will benefit our profit margin.  And third point—the fourth point is regarding to the New Power E’Jenie through their business which, and also increase internal resource for New Power E’Jenie finished battery pack could provide to Anytone for internal uses.  And through Anytone’s sales increase the internal needed will become more, which also increase New Power and E’Jenie’s sales.  And also for internal integrate the cost—management cost will keep getting—cost control become more efficient and make the cost going down.  And those four points is—will be the key points for New Energy in 2011 to keep growing.

Chang Liu: Okay, thank you.  So you mentioned solar segment, it’s going to be a big—you know, it’s going to be big for the growth in 2011.  So who are our main customers for this segment?

Ken Lin: Okay.  Currently for our Kim Fai company, the major customers which would include importer, a construction company who help to install—in their construction projects, they will install the solar device and the solar panel integrate to their project, and they will buy solar panels from Kim Fai.  And second, we also will (unintelligible) that when they have infrastructure construction – for example, the (inaudible) light and the traffic light, and also the lights in a public area which they use solar panels to have the solar power – that this also second customer category for Kim Fai.  And third one is also—will sell to the other solar industry company which they may need solar components products.
   
Chang Liu: Thank you.  Regarding to the acquisition, are we planning to do more acquisitions this year in 2011?

Ken Lin: Okay.  Through the Company strategy in 2011, we may consider about another acquisition; but currently there is no exactly target right now.

Chang Liu:  kay.  And my next question is regarding your internal controls.  I was wondering what stats—or how do we improve our internal controls in terms of financial reporting and other aspects?

Ken Lin: Okay, basically according to our CFO response for the internal controls, currently we have internal control consultants to help us to itemize the weakness of our internal control in 2010, and currently there are several items we need to improve.  (Unintelligible), we found several weakness and through 2010 probably around half of them have already been improved, and the other half we will keep improve through 2011, which may include we may hire more internal accountants who may have U.S. GAAP knowledge and to help to increase and enhance our internal control policies and also the process.

Chang Liu: Okay, thank you.  And do we have a breakdown of revenue between domestic sales and export sales for 2010, and also what are our expectations for 2011 in terms of the sales breakdown?

Ken Lin:  Okay.  According to your question, the management answering for 2010 for product—the Company products which sell to internationally is majorly from Anytone, and so for Anytone sales amount in 2010, 5% are sales globally and the other 95% are domestic.  And for 2011, probably the situation will be same for the product will sell to the globally will be Anytone products.  And according to the management, due to we are not very famous with global markets, so we—for 2011 we estimate international sales for Anytone probably will be around 5 to 8%, but this is very rough number.  We have no exactly accurate number for 2011, no.

Chang Liu: Okay.  And then how do we hedge against the currency volatility in the export business in 2011?  Do we have a plan to implement?

Ken Lin: Okay.  Based on management’s response (unintelligible) international markets, our product sales to international markets, we focus on use our own brand name and (inaudible) due to that will be branded products, so the price will be higher than domestic which will give us more profit than the domestic products.  And because, this (inaudible) could kind of reduce that effect of the increase of RMB (inaudible). 

Chang Liu: Okay, thank you.  And my last question – do we see any of the wage pressure going to 2011, a labor cost increase?

Ken Lin:  Okay.  According to management response, this is very good question that especially like in Shenzhen area.  Starting on April 1, labor (unintelligible) will increase 20%.  And the Company is—under institution, the Company will considering where use the restructure of the Company’s structure, which for example the Company will move Anytone—due to Anytone, just some production more in-house for testing.  So this part will combine—move it to get together in the same place with Kim Fai’s facility to come back together, which easier for the Company to integrate and each other’s resource and which will lower the production cost here.  And also for New Power entity as we mentioned, they are business which—and also New Power have already move to E’Jenie’s in (inaudible).  They have already also move together in the same facility, which were easier for the management to probably adjust labor or adjust labor force to switch and also lower the product and major cost for these parts.

Operator:  Zachary Prensky with Coyote Capital.  Go ahead, please.

Zachary Prensky: ank you.  I think a number of people have discussed ways to improve our profile and increase shareholder value in the short, medium term.  One suggestion that I haven’t heard, and I’d like to hear management comment about, would be instituting a small, say $0.05 a quarter dividend.  I don’t see why, given our cash flow and our strong 2011 expected performance, that that shouldn’t be something that management could do.  I think that would be a lot better than trying to spend three to six months putting the Company up for sale, as somebody mentioned earlier.  It would give existing shareholders some cash flow, some comfort that our financials are real, and provide some immediate value to shareholders.  So I’d like to hear management comment on a potential dividend plan.

Ken Lin: Okay.  According to management’s response, there are three points.  This a very good question, and management had three points for response.  First of all as previous we mentioned, management mentioned, the Company director have three to five-year plan, and according to the research and according to China’s current situation, there are still many chance and very—many opportunity for company keep growing as currently—as prepares us currently.  So for this keep growing, for this part and also the second point, the Company as you saw from our 10-K, the Company’s business development is at a fast pace.  And the Company wants, during this three to five years, the Company wants to maintain the same pace to keep growing, and also as mentioned previous, we also are looking for new target for acquisition to expand our company’s size.  And for both of these, the Company will all need some—have some cash or capital on hand for future—for this three to five year direction, the Company will need some cash on hand for using on this parts.  And the third point is which for the dividend part, due to the first, second—the first two points, the Company currently have no (unintelligible) dividends due to, like for example, for the acquisition maybe during Q3.  The Company is doing the research, but no exactly target.  But for the estimate, it probably for the Q3 will have some—may have some acquisition, but cannot guarantee, just have that intention.  And so under this situation, the Company currently don’t have the thought to have a dividend to the shareholder, but probably next year when we prepare—next year when we prepare for 2011’s annual report, at that time, the Company will remember this part and may reconsider again at that time.
  
Zachary Prensky:  Yes, I mean, I’m really sorry to hear that.  I’m extremely disappointed.  The Company’s Board and management should run the Company on behalf of its shareholders, and just because they think an acquisition is in the best interest of the company, I think the share price is telling you that the shareholders would like to see our existing businesses better valued; and currently they are not, and so I think it behooves management and the Board to take this very seriously and not just shelve this to 2012.  I’m really disappointed with what you had to say about this, and I think most shareholders are.

Ken Lin:  Okay.  According to management, for your remark that the management team is very appreciate, and also currently the management team, the Company do have no concern about a dividend.  But after this meeting, the Company will (inaudible) thinking seriously and also we have the Board and also the Company management to internal discussion.  And if they have any decision made, we will announce this as soon as possible.

Operator:  And our next question comes from the line of Dan Lavine, private investor.  Go ahead, sir.

Dan Lavine: Oh, congratulations on a great quarter and year.  I am new to your story and hold a small position, but would like to add at current prices.  So excuse my ignorance here, because like I said, I’m new to NEWN.  Can you please give me some color on the shareholder tenure with respect to New Power and Kim Fai Solar pre-acquisition (inaudible)?  For example, have the shareholders at Kim Fai been the same since inception?

Ken Lin:   I’m sorry, you mentioned the shareholder from original three subsidiary we acquired?

Dan Lavine:  Yes, mm-hmm.  The New Power and Kim Fai Solar, pre-acquisition.

Ken Lin:  Yes, and I’m sorry – what exactly information you want to know about those shareholders?

Dan Lavine: ell, I guess for example, have the shareholders at Kim Fai been the same ever since the beginning?

Ken Lin:   For Kim Fai and for those three companies we acquired, those shareholders, they are still the same shareholders as their original company.

Dan Lavine:  Okay

Ken Lin:  For example, Kim Fai’s shareholders have eight shareholders, and those eight shareholders is Kim Fai’s shareholders.  And Anytone—I’m sorry, Anytone I don’t remember exactly, but Anytone as I remember also have eight shareholders over there, and that eight shareholders is—they are separated.  There is no relationship for those shareholders, but they are—they all remain as the shareholders of each subsidiary.

Dan Lavine:  kay, thank you.

SHENZHEN, China, April 1 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group today announced that the Company's senior management team (including its Chairman, CEO and CFO) has committed to personally buying approximately $1 million stock via open market purchases.

"On our recent earnings call we promised to personally buy additional shares, and I am pleased to announce we are following through on our promise," stated Jack Yu, Chairman of New Energy Systems Group. "As the Company's single largest shareholder, I am highly incentivized to help create shareholder value. I have never sold any of my NEWN shares and I am a firm believer in our Company's ability to execute on our business plans. Given our Company's exciting growth prospects and attractive valuation, I can think of no better place to invest than in New Energy Systems Group. Along with our CEO, CFO, I have initiated the process to open trading accounts with a U.S. based brokerage firm. Once these accounts become active, we will begin buying shares. We are also evaluating other alternatives designed to create shareholder value and will update investors as appropriate."

Rodman and Renshaw on NEWN                     3/30/2011

NEWN: 4Q10 Earnings Update

4Q10 Results: NEWN reported 4Q10 revenue, Non-GAAP earnings, and Non-GAAP diluted EPS of $22.4 MM, $4.5 MM, and $0.35, beating to our estimates of $20.9 MM, $3.8 MM, and $0.29, respectively. 4Q top-line grew by 113.4% y-o-y from $10.5 MM in 4Q09, driven by the contribution from acquired Anytone portable power devices and NewPower Li-ion battery products. The recently added Kim Fai solar business generated ~$3.1 MM in revenue for the quarter.

Key Takeaways: The initial stock reaction, yesterday, to the company’s results and guidance was positive but the intra-day trading momentum may have been overdone and the stock ended down 5% for the day. We believe the company’s continuing efforts to consolidate the business post acquisitions is a positive and should simplify the business for investors to understand. The plethora of electronic devices and gadgets in the market should support the company’s growth efforts. Management has indicated that they are working on improving the company’s internal controls to better reflect its position as a publicly reporting entity. We believe improvements demonstrated on this front will be important to gain investor confidence.

Potential Apple Tailwind in 2011: In domestic Chinese market we expect a higher penetration of Apple (AAPL, Market Outperform)’s products from new iPad and iPhone series in FY11. NEWN’s Anytone subsidiary, which runs Anytone® and MeePower® brands, should be well positioned to capitalize on the accessory market opportunity through its expansion in sales and marketing. The company expects to increase its distributors in 2011 to enhance its brand name and achieve market share gains.

FY11 Guidance: Management issued FY11 guidance of $130 MM~$135 MM in revenue, $24.5 MM~$25.5 MM in Non-GAAP earnings, and $1.69~$1.75 in diluted Non-GAAP EPS.

Revising Estimates: For 1Q11, we are expecting revenue, Non-GAAP earnings, and Non-GAAP diluted EPS of $31.5 MM, $5.9 MM, and $0.40. Our full year projections are now $131.1 MM, $24.6 MM, and $1.70, respectively.

Valuation: At current levels NEWN is trading at P/E multiples of ~3.5x to our FY11 Non-GAAP earnings estimates. This multiple is well below the peer group. We are comfortable maintaining a $12.00 price target for NEWN, which translates into P/E multiples of 8.2x to our Non-GAAP earnings estimates for FY11, still implying a discount compared to ~20.9x multiple for its peer group listed in the US.

Risks: 1.Revenue Concentration. 2. Acquisition Integration Risks. 3. Financial Risk. 4. Highly Fragmented and Competitive Industry. 5. Raw Material Costs. 6. Inflation and Currency Risks. 7. End User Concentration

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Based on the strong demand across each of its businesses, Management has provided the following guidance for 2011:

Mr. Jack Yu, Chairman of New Energy stated, "2010 marked the first year our newly consolidated business with Anytone® portable power devices, NewPower li-ion batteries and our traditional E'Jenie battery components business. I am very pleased with the 2010 results achieved in all of our divisions and future prospects for our newly acquired solar business, KimFai. The focus of our business remains portable battery power devices for leading consumer electronic manufactures like Apple® and li-ion batteries sold primarily to manufactures of consumer electronic devices. We are well positioned to leverage each division's technology to achieve superior economies of scale. We will continue to prudently manage expenses across the Company and have begun plans to consolidate our battery components and battery manufacturing under one division.   We feel this will enable us to better manage resources while directing our R&D and sales teams to develop and market our higher margin Anytone® products for the fast-growing Chinese smartphone and mobile device market."

In order to aid in our due diligence into the NEWN story, we are requesting that the company and or IR respond to the following comments:

Topic 1: We have been informed that the company has been telling investors that we do not have all the subs for NEWN PRC filings we obtained and had sent to management. Please inform us of the subs that we may have missed. According to your most recent power points, 2009 revenues were all derived from E'jenie. The information we obtained and sent to the company, several months ago for 2008 and 2009, was for data pertaining to E'jenie and Anytone (not relevant for 2008 or 2009). What did we miss?

Topic 2: Have you (IR) ever attempted to pull past SAIC filings or are you relying on the filings that the company (Chariman) has/will be providing you?

Topic 3: Are you (IR) aware of or can you confirm if the company made any changes to the original 2009 SAIC filings that has taken almost two years to show up in the SAIC electronic data base. If so, were the SAT agency and related divisions notified of changes?

Topic 4. Have you or the auditor personally visited the office of the SAT to verify numbers on SEC and SAIC documents?

Topic 5: What has been the average daily production output of E'jenie's different lines in 2008, 2009 and 2010?

Topic 6: I understand that production lines of subs are in the process of being combined/moved. Can you please identify who is moving where? When did these moves occur (if completed).

Topic 7: Do any of NEWN's subs outsource manufacturing (In 2008, 2009, and 2010)? If so, how much and what is actually being outsourced.

Topic 8: Your recent power point's revenue distribution pie chart contradicts earlier presentations as well as your 2009 10K. I assume this is just a typo, but you might want to amend the relevant November 2010 and March 2011 8Ks.  Do you plan on doing so?

Topic 9: Do you perform a year end joint inspection review with SAIC and SAT agencies?

SHENZHEN, China, March 23, 2011 /PRNewswire-Asia/ -- New Energy Systems Group announced today that its 2008 filings for each of its subsidiaries; Shenzhen Anytone Technology Co., Ltd., E'Jenie Technology Development Co. Ltd. , Shenzhen NewPower Technology Co. Ltd., and Kim Fai Solar Energy Technology Co., Ltd., are accurate and current with the State Administration of Industry and Commerce ("SAIC").  The Company further confirmed that its 2009 filings have been submitted to the SAIC and are still being processed for public access at SAIC offices. New Energy is further providing summary detail below on its revenue, gross profit, operating income and net profit in RMB submitted to the SAIC for its 2008 and 2009 filings.

Rodman and Renshaw on NEWN                                                2/28/2011

NEWN: 4Q10 Preview; Maintain Estimates  

Businesses On Track: Based upon our discussion with management, we believe NEWN’s major business areas, including finished battery packs, battery cells, battery shell/covers, and the newly acquired solar battery products are progressing in line with expectations. The company’s “made for iPod / iPhone / iPad” products under MeePower brand are gaining traction thanks to the recent relationship with China Unicom (CHU, Not Rated), who have been selling MeePower products through a total of 39 retail branches in 8 major cities in China since October. Going into 2011, we expect to see more of China Unicom’s retail outlets to potentially distribute MeePower products given a high level of popularity of iPhone 4 in China bundled with China Unicom’s service package. 

Stock Performance: On an YTD basis, NEWN shares have been under pressure, down by ~27.3%, given the scrutiny toward small cap Chinese companies especially ones that (1) have gone through M&A transactions over the past year and (2) currently engage smaller sized auditors. Though the fundamental story has not changed for NEWN we believe investors are looking for indications of improvement on corporate governance and auditing fronts (i.e. move to a bigger auditor). 

Maintain 4Q10 Projections: We believe NEWN is on track to meet its revised guidance for FY10 of $95 MM in revenue $18 MM in Non-GAAP earnings, and $1.40 in diluted EPS. We are maintaining our 4Q10 projections of $20.9 MM in revenue, $3.8 MM in Non-GAAP net income, and $0.29 in Non-GAAP EPS. For full year numbers, our projections are $93.1 MM, $18.1 MM, and $1.40, respectively. 

Valuation: At current levels NEWN is trading at P/E multiples of ~4.1x and ~3.7x to our FY10 and FY11 Non-GAAP earnings estimates. These multiples are below the peer group. We are comfortable assigning NEWN a $12.00 price target, which translates into P/E multiples of ~8.4x and ~7.6x to our Non-GAAP earnings estimates for FY10 and FY11. We believe these are the reasonable multiples for an emerging company that has substantial growth opportunities ahead, a strong market position and a healthy balance sheet.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman & Renshaw on NEWN                                           12/13/2010

NEWN: Design Driven Consumer Battery Play; Initiating Coverage, Market Outperform 

We are initiating coverage on New Energy Systems Group (NYSE Amex: NEWN) with a Market Outperform / Speculative Risk rating and 12-month price target of $12.00. NEWN is positioned as a vertically integrated lithium-ion battery play that is leveraging its design capabilities to facilitate extended usage of portable electronic gadgets such as mobile phones. The company has come into its current state through a series of transformative acquisitions allowing it to span across the entire li-ion battery value chain to include capabilities in design, manufacturing and distribution. We view NEWN as a consumer electronics driven play that is trying to establish a brand presence in China associated with providing extended battery life to mobile phones and other electronic devices. We estimate NEWN’s revenues to reach $94.0 MM in FY10 from $26.4 MM in FY09, implying a 256.3% Y-o-Y growth.

NEWN should benefit from the growing portable electronics market in China. The increased focus on international expansion with the recent launch of MeePower mobile power sources in the U.S. and solar mobile chargers in Europe is expected to further stimulate growth in revenues and margins. The addressable market for li-ion batteries is expanding. Market research firm Frost estimated the global market for li-ion batteries at $18 billion in 2009, with China accounting for 37%. By 2015, the market is expected to grow at a CAGR of 13% to reach $38 billion. We believe that NEWN can leverage its low-cost production capabilities and its branded products to capture a slice of this vast market. The Chinese li-ion battery market is highly competitive and fragmented, with numerous players targeting the OEM, domestic, and export markets. NEWN generated only about 5% of its total revenues in FY09 from exports.

NEWN has the capacity to meet the growing demand for li-ion batteries, given its daily output of 700,000 units of battery shells. NewPower, its battery manufacturing division, has an annual capacity of 45 MM cells, which the company expects to triple with minimal capital expenditure. NewPower currently operates at 50% of its capacity.

Compelling Valuation: NEWN is poised to deliver strong top-line and bottom-line performance over the next few years. We anticipate NEWN to generate cash from operations, which would be utilized for further expansion. We estimate NEWN to report an adjusted Non-GAAP EPS of $1.40 in FY10 and $1.57 in FY11. In terms of relative valuation, NEWN appears attractive compared to peers. The company’s current P/E is 5.3x and 4.7x to our FY10 and FY11 Non-GAAP EPS estimates, compared to 15.6x and 18.0x for the peer group. NEWN also has a relatively low estimated Enterprise Value/EBIDTA of 3.7x for FY10 and 2.8x for FY11, while comparable companies have an average EV/EBITDA ratios of 6.3x and 4.8x to FY10 and FY11 estimates.

Risks: (1) End User Concentration (2) Inflation and Currency Risks (3) Raw Material Costs (4) Highly Fragmented and Competitive Industry (5) Financial Risk (6) Acquisition Integration Risks (7) Revenue Concentration

Notice Regarding Privacy and Confidentiality:
This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

SHENZHEN, China, Dec. 8, 2010 /PRNewswire-Asia-FirstCall/ -- New Energy Systems Group  today raised its full year 2010 guidance as illustrated below:  

We have informed NEWN management that its SAIC filings and information we obtained regarding numbers we believe may have been filed with SAT do not match SEC documents.  Thus far, the company and its IR firm are cooperating with GeoTeam® inquiries into this matter.

On November 17 and 18, 2010, the Company made a presentation to investors at the Brean Murray, Carret & Co. 2010 China Growth Conference and the Maxim Group Growth Conference held in New York on November 17-18, 2010.

New Energy Systems Group today announced it has acquired Shenzhen-based Kim Fai Solar Energy Technology, Co. Ltd. ("Kim Fai") for $24.0 million, to be paid in stock and a seller note.  Kim Fai was established in 2005 and is a rapidly growing manufacturer of consumer, commercial and residential solar energy and battery systems including remote battery products for hand held communication and computing devices.  

The $24.0 million purchase price includes:

• approximately 1.9 million newly issued New Energy common shares (valued at $11.0 million, which is based on a value of $5.75 per share, which reflects the approximate price of the Company's stock when the two parties began negotiating)
• $13.0 million interest-free seller note due in one year.  

The acquisition of Kim Fai is expected to generate approximately

• $24.0 million of revenue
• $5.0 million of net income in 2011.

Kim Fai is being acquired from parties that, prior to this announcement, are unrelated and unaffiliated with the Company in anyway.

Mr. Jack Yu, Chairman of New Energy stated, "We are very excited about this acquisition, which we believe will make New Energy a larger, stronger, and more profitable company.  The solar industry in China is one of the fastest growing markets in the world, and we believe Kim Fai's revenue will grow over 30% in 2011 and will experience similar growth in the years to come.  As a result, we are very pleased with our ability to acquire such a highly regarded and fast growing company at only 4.8 times the projected 2011 net income. Furthermore, we believe there will be meaningful synergies derived by combining Kim Fai into our existing operations, including our ability to sell Kim Fai's products through our existing distribution channels, by leveraging our combined research and development efforts and further reducing certain redundant manufacturing and SG&A costs. One of our first priorities will be to expand our Anytone® solar-powered product offering with new technologies and consumer products using Kim Fai's solar power sources.  Importantly, all of Kim Fai senior management, including its President, Mr. Gong Wei, will continue to manage the company's day to day operations.  Kim Fai's management team is very well respected in the industry and we expect the acquisition integration to be seamless. Finally, we believe that the fact that the sellers request to be paid in large part in stock reflects their confidence in value creation which will occur from the new combined entity."

The approximately 1.9 million shares issued as part of this acquisition are restricted, unregistered shares sold pursuant to Reg S or Section 4(2) of the Securities Act of 1933 and are subject to the resale restriction of Rule 144 promulgated thereunder. New Energy currently has a significant cash balance, minimal debt and generates strong cash flow.  As a result, the Company expects to repay the seller note with cash flow from operations and will not need additional financing to meet this obligation.

On November 4, 2010, we added to our short-term trading position in NEWN shares. Our original alert was issued on October 21, 2010 @ $6.55 .  The stock is currently trading at $8.82.  Four factors motivated our decision:

• Stock is a Tier one choice  that has lagged CCME and DEER moves.
• Stock has lagged the recent surge in the ChinaHybrid space.
• Technical- We felt that the stock was about to break-out above $7.00
• Just retained HC International for its investor relations initiatives.

Fundamental View point:

NEWN trailing tax adjusted  EPS, applying management’s definition on non-GAAP is about 1.23, giving it a P/E of 5.3 at the time of the initial alert.

NEWN has logged in EPS of $0.72 for the first six months of 2010.  That leaves about $0.50 to spread across the remaining two quarters of 2010. In the last six months of 2009 NEWN reported tax adjusted EPS of:

• $0.31 for its second quarter
• $0.20 for its fourth quarter.

The key to the NEWN trade continuing to pan out over the short-term will be for it to exceed its guidance or issue impressive 2011 EPS guidance. We interviewed the company a few weeks ago, but were unable to attain insight into these matters, although we believe there is a chance that third quarter revenues could be sequentially higher than second quarter revenues. We are not totally convinced that the international expansion has totally taken hold yet.  As for margins:

"Gross margins were 31% in QI 2010, 29% in QII and the IR representative said product mix will drive margins down to around 25% going forward as Anytone products take a greater share of revenues.  Longer term international distribution will support higher margins because products command higher prices internationally." 

We are also currently analyzing SAIC filings. Since we bought shares at a nice entry point, our current plan is to take some trading shares off the table and hold some for earnings.  If NEWN is on the way to exceeding guidance significant P/E expansion could occur in the current market environment. Our portfolio is well balanced if the company disappoints.

Internal Controls:

"Based upon their evaluation, the Company’s CEO and CFO concluded that, in spite of the significant deficiencies in internal control over financial reporting described below, the Company’s disclosure controls and procedures are effective as of June 30, 2010."

New Energy Systems Group reaffirmed:

• Revenue guidance of at least $88 million
• Adjusted net income guidance of at least $15.6 million, or $1.23 per share, for 2010.

Adjusted net income excludes acquisition related amortization and non-cash stock compensation expense. The company believes adjusted net income is an important measure of its current and future operating performance.

Mr. Nian Chen, New Energy's Chief Executive Officer, commented, "We continue to generate very strong organic growth within all four of our businesses, including Anytone, NewPower, our battery distribution business, and our battery shells and caps segment. In particular, our Anytone business is rapidly gaining market share within China due to strong demand for our back-up battery chargers. As a result, we are extremely confident in achieving or exceeding our previously issued guidance for 2010, and anticipate very strong top and bottom-line growth in 2011."

"We are particularly excited about our foray into the U.S. market scheduled for later this year through the launch of our new MeePower(TM) brand of advanced battery backup systems and accessories. We anticipate that MeePower's sales in the U.S. market will have higher gross margins than similar product sales in China."
."

GeoTeam® Note: We are not in total agreement with the company that non-GAAP net income should exclude acquisition related amortization expense.

 Second Quarter 2010 Highlights:

• Revenue increased 335.2% to approximately $23.4 million.
  
• Gross profit increased 280.1% to approximately $6.1 million.
  
• GAAP EPS increased 31.0% to $0.28 per diluted share.
  
• Adjusted EPS increased 59.1% to $0.35 per diluted share.
  Generated approximately $6.5 million of cash flow from operations year-
  to-date.
  
• Made final payment of $4.0 million related to Anytone acquisition, resulting in a reduction of 'accounts payable and accrued expenses'.

Mr. Nian Chen, New Energy's Chief Executive Officer, commented, "We are pleased to report another strong quarter with solid revenue and earnings growth. We experienced organic growth in all four of our business lines and continued to benefit from the accretive acquisitions of Anytone, completed in December 2009, and NewPower, completed in January 2010. The past six months have been a very active time for us. We completed and integrated two major acquisitions, repaid almost all of our debt, significantly increased our profitability, and listed our stock on NYSE Amex. We have transformed the company into a fully integrated manufacturer that is now well-positioned to benefit from the increasing world-wide demand for our products. As a result, we are excited about our accomplishments to date, and we are even more excited about our New Energy's future. Now that we have finished integrating our acquisitions, we can focus more on growing our business in China and in large markets where we currently have very limited presence, such as North America, Europe and Japan. With our healthy balance sheet, excess manufacturing capacity, and a reputation for frequent and innovative new product introductions, we are well-positioned to capitalize on our industry's favorable outlook. World-wide demand for our products is projected to increase significantly in the coming years as a result of the growing popularity of portable electronic devices including iPhones, iPads, Blackberries, Androids and other smart phones. Finally, management is committed to generating shareholder value, which we intend to achieve not only by increasing earnings, but also by maintaining high corporate governance standards and by actively increasing our awareness among the U.S. investment community."

Mr. Chen continued, "We are comfortable with our previously announced guidance, and we expect our 2010 adjusted net income will be at least $15.6 million, or $1.23 per diluted share, based on approximately 12.6 million fully diluted shares. This represents an increase of approximately 38% in adjusted diluted EPS despite the fact that our effective tax rate is expected to be approximately 22% for 2010 compared to only about 12% for 2009."

Catalyst: Appeared to be on the cusp of strong EPS growth fueled by acquisitions; Shareholder friendly management as evidenced by the company providing both net income and EPS guidance.

¹Peak performance: Reached a high of $10.00 on November 14, 2009

²Peak performance: Never eclipsed initiation price

Current Price: $6.00

Current road block: Internal control issues; Investors may proceed with caution due to China’s recent pledge to allow its currency to appreciate against the dollar and the Euro. This could lead some investors to insinuate that such a move could hurt international revenues.

NEWN believes it finally meets the corporate governance requirements to list on a senior U.S., something investors had been eagerly anticipating. Unfortunately, this news came at a time of market turmoil. By taking its time, the company had missed a golden opportunity to see its shares rise when the market was "hot". Regardless, this news combined with strong EPS guidance makes NEWN a strong story. Furthermore, management has stated that it does not foresee a need for outside capital in the near term.

As for currency risk:

• We have yet to know how aggressive China will enforce its policy.
• NEWN guidance does not assume a large contribution from international efforts.
• Most of their sales are currently in China, so shouldn’t have a major impact.

Liquidity appears intact:

The company’s cash flow from operations is tracking at an annual run rate of $26.4 million, while its cash position currently stands at $8.5 million.

Press release comments:

"We are well positioned to capitalize on this demand due to our reputation for producing high quality and innovative products. We continue to generate strong free cash flow, have a solid balance sheet, and have unused manufacturing capacity, which will allow us to continue growing without incurring significant capital expenditures."

Our intent over the short-term is to build a check list to assess the risk position of firms in the ChinaHybrid space. For the time being this will consist of the following: (this list is likely to grow substantially)

- Is the company's auditor ranked in the top 100?
- Is the auditor located in the U.S.A? If located in China the PCAOB (Public Company Oversight Board) may be denied access to investigate the practices of the auditing firm. Short sellers have been using this information as a tool to validate their opinions.
- Are the company's internal controls satisfactory?
- Are their any outstanding legal issues?
- Do the company's top ten customers represent less than 10% of revenues?
- Operating cash flow divided by current liabilities is greater than one. The higher the better. Annualized Operating cash flow divided by current liabilities is greater than one. The higher the better. (We will adjust current liabilities for non-cash items).
- Cash divided by current liabilities is greater than one. This is the most conservative liquidity ratio. The higher the better.
- Is the company buying back stock?

Investors may want to inquire what accounted for NEWN's lack of internal controls findings highlighted in its March 31, 2010 quarter after claiming no such problems in its 2009 year end 10K:

"Our management has determined that as of December 31, 2009, the Company’s internal control over financial reporting was effective for the purposes for which it is intended."

Mr. Nian Chen, New Energy's new Chief Executive Officer, commented, "We are extremely pleased with our first quarter 2010 results, which is the first quarter that includes the full impact of the recent Anytone and NewPower acquisitions. Our strong results this quarter reflect not only rapid organic growth within each of our businesses, but also the successful integration and benefits of these accretive acquisitions which significantly transformed our company. Specifically, Anytone brings significant R&D capabilities and expands our offering to include higher margin end-user branded products. NewPower provides us a captive source for battery components that enables us to keep costs below our competitors' and improve margins in our direct-to-consumer and finished battery distribution businesses. Given the positive trends in the consumer electronics market, we continue to see increasing demand for our products. We are well positioned to capitalize on this demand due to our reputation for producing high quality and innovative products. We continue to generate strong free cash flow, have a solid balance sheet, and have unused manufacturing capacity, which will allow us to continue growing without incurring significant capital expenditures."

Mr. Chen continued, "We remain confident that our adjusted 2010 net income will be at least $15.6 million, or $1.23 per diluted share, based on approximately 12.6 million fully diluted shares. This would represent approximately 38% growth in adjusted diluted EPS, despite the fact that our 2010 effective tax rate will be approximately 22% for 2010 versus approximately 12% for 2009. We are very excited about the outlook for the company and look forward to keeping our shareholders updated on our progress."

Excerpt from GeoWire article.

New Energy Systems Group (OTC BB:NEWN). New Energy Systems Group operates in the lithium battery industry.  On September 15, 2009, Richard Pearson highlighted the stock  when the symbol was CMTP, prompting me to take a closer look at its growth story and add to my share position. The move paid off, but I am expecting more returns from my investment.

I recently interviewed management to determine if shares would follow a similar pattern achieved by shares of Hong Kong Highpower Tech (NASDAQ:HPJ) which attained a January high of $9.82 from its October low of $2.87 and sported a forward P/E of 24.  After interviewing management, I am more confident that New Energy may have the vigor to lift shares to new heights. 

Prior to mid 2008, NEWN primarily manufactured just battery shells. While not a horrible strategy to target a battery market growing 20% annually, the company felt it needed to modify its business plan to gain a long-term competitive advantage. To that end, it embarked on an acquisition strategy to vertically integrate its business, add new product lines and enter international markets.  In fact, New Energy recently announced a $3 million deal in Europe, the company’s first big deal outside of China.

This new focus has resulted in the ability to manufacture, assemble and distribute end products as well as beef up its R&D capabilities.  New Energy claims to be the only vertically integrated player of its type in China and is experiencing cost savings that are passed on to the retailer.  In fact, the company claims that it is actually being approached by some major and well known retailers in the U.S. The new model has increased its customer base and also opens up an additional revenue source as a private label manufacturer to original equipment manufacturers, or OEM’s.

The company has issued EPS guidance of $1.23 for 2010, which assumes a tax rate of approximately 22%, giving it a forward P/E of 5.3x for a company that grew nearly 80% for the first nine months of 2010. More exciting is the fact that its guidance does not include international business, where margins are 4 times higher than domestically.

I was also glad to hear that the company sees no current need to raise money in the form of equity.  The stock has gone relatively unnoticed which could change once its shares graduate from the bulletin board, hopefully in the near future.

Also encouraging are the company’s efforts going forward to increase visibility through investor relations and the fact that they plan to participate in an upcoming Rodman conference in March.  These are sure fire ways to let investors know that they care about shareholder value.