WEB NEWS Comments & Business Outlook
AMERICAN NANO SILICON TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
June 30,
June 30
2015
2014
2015
2014
Revenues
$ 62,456 $ 201,734 $ 998,566 $ 792,258
Cost of Goods Sold
360,306 546,407 2,080,038 1,940,110
Gross Loss
(297,850 ) (344,673 ) (1,081,472 ) (1,147,852 )
Operating Expenses
Research and development expense
- - - 97,907
Selling, general and administrative
224,794 276,898 769,141 835,747
Total operating expense
224,794 276,898 769,141 933,654
Loss from operations
(522,644 ) (621,571 ) (1,850,613 ) (2,081,506 )
Other Income( Expense)
Interest expense - related party
(76,182 ) (105,282 ) (240,848 ) (374,058 )
Interest expense, net
(922,003 ) (805,999 ) (2,841,316 ) (1,991,213 )
Other income
67 2,932 54,468 6,464
Total other income(expense)
(998,118 ) (908,349 ) (3,027,696 ) (2,358,807 )
Loss Before Income Taxes
(1,520,762 ) (1,529,920 ) (4,878,309 ) (4,440,313 )
Provision for Income Taxes
- - - 141
Net Loss
(1,520,762 ) (1,529,920 ) (4,878,309 ) (4,440,454 )
Other Comprehensive Income (Loss)
Foreign currency translation adjustment
553 2,127 (582 ) 515
Comprehensive Loss
$ (1,520,209 ) $ (1,527,793 ) $ (4,878,891 ) $ (4,439,939 )
Loss per common share
Basic and diluted
$ (0.03 ) $ (0.03 ) $ (0.10 ) $ (0.09 )
Weighted average number of common shares
Basic and diluted
46,917,445 46,917,445 46,917,445 46,917,445
Management Discussion and Analysis
We generated revenue of $62,456 and $998,566 during the three and nine months ended June 30, 2015 compared to $201,734 and $792,258 in the three and nine months ended June 30, 2014, a decrease of 69% for the three month period and an increase of 26% for the nine month period. Revenue significantly decreased in the three months ended June 30, 2015 because the Company was short of cash and the cost of raw materials was high during the three months ended June 30, 2015, which had negative impact on the Company’s sales. Revenue increased in the nine months ended June 30, 2015 because the Company had only started partial operations in 2013 and gradually resumed commercial-scale production of Micro SiliconTM during 2014.
Due, primarily, to our gross loss and interest expense, we incurred a net loss of $1,520,762 and $4,878,309 for the three and nine months ended June 30, 2015, compared to net loss of $1,529,920 and $4,440,454 for the three and nine months ended June 30, 2014. Our ability to return to profitable operations will depend on our success in rebuilding our working capital and market acceptance of our products.
Comments & Business Outlook
AMERICAN NANO SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
For the Three Months Ended
For the Six Months Ended
March 31,
March 31
2015
2014
2015
2014
Revenues
$ 145,971 $ 244,654 $ 936,110 $ 590,524
Cost of Goods Sold
590,899 643,743 1,719,732 1,393,703
Gross Loss
(444,928 ) (399,089 ) (783,622 ) (803,179 )
Operating Expenses
Research and development expense
- 81,664 - 98,147
Selling, general and administrative
279,864 313,941 544,347 558,609
Total operating expense
279,864 395,605 544,347 656,756
Loss from operations
(724,792 ) (794,694 ) (1,327,969 ) (1,459,935 )
Other Income( Expense)
Interest expense - related party
(101,250 ) (53,887 ) (164,666 ) (268,776 )
Interest expense, net
(1,159,287 ) (819,879 ) (1,919,313 ) (1,185,214 )
Other income
47,474 1,555 54,401 3,532
Total other income(expense)
(1,213,063 ) (872,211 ) (2,029,578 ) (1,450,458 )
Loss Before Income Taxes
(1,937,855 ) (1,666,905 ) (3,357,547 ) (2,910,393 )
Provision for Income Taxes
- 43 - 141
Net Loss
(1,937,855 ) (1,666,948 ) (3,357,547 ) (2,910,534 )
Other Comprehensive Loss
Foreign currency translation adjustment
(6,398 ) (49,480 ) (1,135 ) (1,612 )
Comprehensive Loss
$ (1,944,253 ) $ (1,716,428 ) $ (3,358,682 ) $ (2,912,146 )
Loss per common share
Basic and diluted
$ (0.04 ) $ (0.04 ) $ (0.07 ) $ (0.06 )
Weighted average number of common shares
Basic and diluted
46,917,445 46,917,445 46,917,445 46,917,445
Management Discussion and Analysis
We generated revenue of $145,971 and $936,110 during the three and six months ended March 31, 2015 compared to $244,654 and $590,524 in the three and six months ended March 31, 2014, a decrease of 40% for the three month period and an increase of 58.5% for the six month period. Revenue decreased in the three months ended March 31, 2015 because the Company was short of cash flow and the cost of raw materials was high during the three months ended March 31, 2015, which had negative impact on the Company’s sales. Revenue significantly increased in the six months ended March 31, 2015 because the Company had only started partial operations in 2013 and gradually resumed commercial-scale production of Micro SiliconTM during 2014.
Due, primarily, to our gross loss and interest expense, we incurred a net loss of $1,937,855 and $3,357,547 for the three and six months ended March 31, 2015, compared to net loss of $1,666,948 and $2,910,534 for the three and six months ended March 31, 2014. Once we start to market our high-end flame retardant additive, we believe that the top line benefits will more than compensate for the increased expenses, and we will realize income from operations in future periods.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
For the Three Months Ended
December 31,
2014
2013
Revenues
$ 790,139 $ 345,870
Cost of Goods Sold
1,128,833 749,960
Gross Loss
(338,694 ) (404,090 )
Operating Expenses
Research and development expense
- 16,483
Selling, general and administrative expenses
264,483 244,668
Total operating expenses
264,483 261,151
Loss from operations
(603,177 ) (665,241 )
Other Income( Expense)
Interest expense - related party
(63,416 ) (214,889 )
Interest expense, net
(760,026 ) (365,335 )
Other income
6,927 1,977
Total other income(expense)
(816,515 ) (578,247 )
Loss Before Income Taxes
(1,419,692 ) (1,243,488 )
Provision(Credit) for Income Taxes
- 98
Net Loss
(1,419,692 ) (1,243,586 )
Other Comprehensive Income (Loss)
Foreign currency translation adjustment
5,263 47,868
Comprehensive Loss
$ (1,414,429 ) $ (1,195,718 )
Loss per common share
Basic and diluted
$ (0.03 ) $ (0.03 )
Weighted average number of common shares
Basic and diluted
46,917,445 46,917,445
Management Discussion and Analysis
We generated revenue of $790,139 during the three months ended December 31, 2014, compared to $345,870 in the three months ended December 30, 2013, a increase of 128% for the three month period. Revenue significantly increased in the three months ended December 31, 2014 because the Company had only started partial operations in 2013 and gradually to resume commercial-scale production of Micro SiliconTM during 2014. The Company expects to have significant revenue during the next three quarters of fiscal year 2015.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Years Ended
September 30,
2014
2013
Revenues
$ 1,763,076 $ 798,390
Cost of Goods Sold
3,187,251 2,108,917
Gross Loss
(1,424,175 ) (1,310,527 )
Operating Expenses
Research and development expense
97,887 55,698
Selling, general and administrative
1,175,504 1,368,670
Impairment of property, plant and equipment
- 3,422,352
Total operating expense
1,273,391 4,846,720
Loss from operations
(2,697,566 ) (6,157,247 )
Other Income( Expense)
Interest expense - related party
(433,820 ) (473,194 )
Interest expense, net
(3,281,848 ) (1,249,983 )
Change in fair value of derivative liabilities
- 363,958
Other income
46,011 229,346
Total other income(expense)
(3,669,657 ) (1,129,873 )
Loss Before Income Taxes
(6,367,223 ) (7,287,120 )
Provision(Credit) for Income Taxes
141 (115,026 )
Net Loss
(6,367,364 ) (7,172,094 )
Other Comprehensive Loss
Foreign currency translation adjustment
6,466 236,504
Comprehensive Loss
$ (6,360,898 ) $ (6,935,590 )
Loss per common share
Basic and diluted
$ (0.14 ) $ (0.18 )
Weighted average number of common shares
Basic and diluted
46,917,445 39,407,719
Management Discussion and Analysis
Our revenues increased by 121% or $964,686 from $798,390 for the year ended September 30, 2013 to $1,763,076 for the year ended September 30, 2014. The significant increase in revenue is primarily because the Company started partial operations in January 2013 and gradually to resume the full operation of Micro Nano Silicon™ during 2014. The Company expects to have significant revenue during the fiscal year 2015.
During the year ended September 30, 2014 and 2013, the Company recorded $177,949 and $200,273 revenue from flame retardant additive; $1,496,389 and $538,588 revenue from the sale of Micro Nano Silicon™; $88,738 and $59,529 revenue from the sale of detergent, respectively.
Primarily due to our gross loss, interest expenses and the impairment charge, we incurred a net loss of $6,367,364 and $7,172,094 for the years ended September 30, 2014 and 2013, respectively. Once we start to market our high-end flame retardant additive, , we believe that the top line benefits will more than compensate for the increased expenses, and we will realize more income from operations in future periods.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
June 30,
June 30,
2014
2013
2014
2013
Revenues
$ 201,734 $ 376,337 $ 792,258 $ 510,825
Cost of Goods Sold
546,407 418,325 1,940,110 588,817
Gross Loss
(344,673 ) (41,988 ) (1,147,852 ) (77,992 )
Operating Expenses
Research and development expense
- 8,372 97,907 24,289
Selling, general and administrative
276,898 551,799 835,747 1,731,724
Total operating expense
276,898 560,171 933,654 1,756,013
Loss from operations
(621,571 ) (602,159 ) (2,081,506 ) (1,834,005 )
Other Income( Expense)
Interest expense - related party
(105,282 ) (29,559 ) (374,058 ) (88,676 )
Interest expense, net
(805,999 ) (398,270 ) (1,991,213 ) (1,035,224 )
Change in fair value of derivative liabilities
- 249 - 363,958
Other income
2,932 538 6,464 224,426
Total other income(expense)
(908,349 ) (427,042 ) (2,358,807 ) (535,516 )
Loss Before Income Taxes
(1,529,920 ) (1,029,201 ) (4,440,313 ) (2,369,521 )
Provision for Income Taxes
- 82 141 165
Net Loss
(1,529,920 ) (1,029,283 ) (4,440,454 ) (2,369,686 )
Other Comprehensive Income (Loss)
Foreign currency translation adjustment
2,127
191,913 515 241,444
Comprehensive Loss
$ (1,527,793 ) $ (837,370 ) $ (4,439,939 ) $ (2,128,242 )
Loss per common share
Basic and diluted
$ (0.03 ) $ (0.03 ) $ (0.09 ) $ (0.06 )
Weighted average number of common shares
Basic and diluted
46,917,445 39,061,840 46,917,445 39,061,840
Management Discussion and Analysis
Revenues
We generated revenue of $201,734 during the three months ended June 30, 2014, compared to $376,337 in the three months ended June 30, 2013, a decrease of 46% for the three month period. Revenue significantly decreased in the three months ended June 30, 2014 because a key piece of equipment was broken, which prevented us from manufacturing for a portion of this period.
Despite the third quarter production problem, revenue of $792,258 during the nine months ended June 30, 2014 was significantly greater than the $510,825 in revenue recorded in nine months ended June 30, 2013. The increase occurred because the Company started partial operations only in January 2013. During the nine months ended June 30, 2013, the equipment and production line in the new facility was undergoing adjustments, and we recorded revenue on sale of sample quantities only.
we incurred a net loss of $1,529,920 and $4,440,454 for the three and nine months ended June 30, 2014, compared to net loss of $1,029,283 and $2,369,686 for the three and nine months ended June 30, 2013. Once we fully launch our flame retardant additive product line, we believe that the top line benefits will more than compensate for the increased expenses, and we will realize income from operations in future periods.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the Three Months Ended
December 31
2013
2012
Revenues
$ 345,870 $ 33,396
Cost of Goods Sold
749,960 31,676
Gross Profit(Loss)
(404,090 ) 1,720
Operating Expenses
Research and development expense
16,483 -
Selling, general and administrative
244,668 760,220
Total operating expenses
261,151 760,220
Loss from operations
(665,241 ) (758,500 )
Other Income( Expense)
Interest expense - related party
(155,716 ) (29,490 )
Interest expense, net
(424,508 ) (238,427 )
Change in fair value of derivative liabilities
- 358,400
Other income
1,977 222,416
Total other income(expense)
(578,247 ) 312,899
Loss Before Income Taxes
(1,243,488 ) (445,601 )
Provision for Income Taxes
98 83
Net Loss
(1,243,586 ) (445,684 )
Other Comprehensive Income (Loss)
Foreign currency translation adjustment
47,868 (61,834 )
Comprehensive Loss
$ (1,195,718 ) $ (507,518 )
Loss per common share
Basic and diluted
$ (0.03 ) $ (0.01 )
Weighted average number of common shares
Basic and diluted
46,917,445 39,061,840
Management Discussion and Analysis
Restructuring of our Operations
During 2012, we signed a contract with a customer to provide 2,000 tons of products a year at a price of $868 per ton. As of December 31, 2013, we had delivered some products to the customer that signed the contract with us, but at a quantity short of that specified in the contract due to shortage of working capital. Because of the inefficiency of operating at a low production level and because of high costs of raw materials, the sales were recorded at a loss. During the three months ended December 31, 2013, the Company recorded $86,245 of revenue from flame retardant additive; the remainder of our revenue was related to our detergent additive.
Comments & Business Outlook
For the Years Ended
September 30,
2013
2012
Revenues
$ 798,390 $ 89,378
Cost of Goods Sold
2,108,917 136,051
Gross Loss
(1,310,527 ) (46,673 )
Operating Expenses
Research and development expense
55,698 464,898
Selling, general and administrative
1,368,670 2,034,728
Impairment of properly, plant and equipment
3,422,352 -
Total operating expense
4,846,720 2,499,626
Loss from operations
(6,157,247 ) (2,546,299 )
Other Income( Expense)
Interest expense - related party
(473,194 ) (85,818 )
Interest expense, net
(1,249,983 ) (694,692 )
Change in fair value of derivative liabilities
363,958 1,181,141
Other income
229,346 59,689
Total other income(expense)
(1,129,873 ) 460,320
Net Loss Before Income Taxes
(7,287,120 ) (2,085,979 )
Provision for (benefit from) Income Taxes
(115,026 ) 414
Net Loss
(7,172,094 ) (2,086,393 )
Comments & Business Outlook
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
For the Three Months Ended
June 30,
For the Nine Months Ended
June 30,
2013
2012
2013
2012
Sales $ 376,337 $ 77,352 $ 510,825 $ 93,857
Cost of sales
418,325 180,923 588,817 195,478
Gross profit
(41,988 ) (103,571 ) (77,992 ) (101,621 )
Operating expenses
8,372 320,000 24,289 416,183
551,799 228,673 1,731,724 1,012,480
560,171 548,673 1,756,013 1,428,663
Loss from operations
(602,159 ) (652,244 ) (1,834,005 ) (1,530,284 )
Other income (expense)
(427,829 ) (365,845 ) (1,123,900 ) (635,904 )
249 1,005,626 363,958 1,010,776
538 - 224,426 -
(427,042 ) 639,781 (535,516 ) 374,872
Loss before income taxes
(1,029,201 ) (12,463 ) (2,369,521 ) (1,155,412 )
Provision for income taxes
82 - 165 -
Net loss
(1,029,283 ) (12,463 ) (2,369,686 ) (1,155,412 )
Other comprehensive income
191,913 (133,792 ) 241,444 75,906
Total comprehensive loss
$ (837,370 ) $ (146,255 ) $ (2,128,242 ) $ (1,079,506 )
Loss per common share:
$ (0.03 ) $ (0.00 ) $ (0.06 ) $ (0.03 )
Weighted average number of common shares outstanding:
39,061,840 38,247,188 39,061,840 35,860,647
Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant
April 19, 2013 American Nano Silicon Technologies, Inc. (the “Company”) dismissed Friedman, LLP from its position as the Company’s independent registered public accounting firm. The Audit Committee of the Company’s Board of Directors approved the dismissal.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the Three Months Ended
For the Six Months Ended
March 31,
March 31,
2012
2011
2012
2011
Revenues
$ 16,505 $ 6,265,556 $ 16,505 12,194,992
Cost of Goods Sold
14,555 4,749,509 14,555 9,208,068
Gross Profit
1,950 1,516,047 1,950 2,986,924
Operating Expenses
Research and development expense
17,508 - 96,182 -
Selling, general and administrative
370,426 159,149 783,718 330,132
Income (loss) from operations
(385,984 ) 1,356,898 (877,950 ) 2,656,792
Other Income and Expense
Interest expense, net
(187,907 ) (8,215 ) (270,059 ) (16,380 )
Change of fair value of derivative liabilities
(352,959 ) (623,963 ) 5,150 860,433
Total other income (expense)
(540,866 ) (632,178 ) (264,909 ) 844,053
Income (Loss) Before Income Taxes
(926,850 ) 724,720 (1,142,859 ) 3,500,845
Provision for Income Taxes
- 202,900 - 396,060
Net Income (Loss)
(926,850 ) 521,820 (1,142,859 ) 3,104,785
Net income attributable to the noncontrolling interest
111,822 - 215,337
Net Income (Loss) attributable to American Nano Silicon Technologies, Inc
(926,850 )
409,998
(1,142,859 ) 2,889,448
Other comprehensive income
Foreign currency translation adjustment
16,608 139,520 226,306 337,845
Comprehensive income (loss)
(910,242 ) 661,340 (916,553 ) 3,442,630
Comprehensive Income attributable to the
noncontrolling interest
- 111,822 - 215,337
Comprehensive income (loss) attributable to American Nano Silicon Technologies, Inc
$ (910,242 )
$
549,518
$ (916,553 ) $ 3,227,293
Income (Loss) per common share
Basic
$ (0.03 ) $ 0.01 $ (0.03 ) $ 0.09
Diluted
$ (0.03 ) $ 0.01 $ (0.03 ) $ 0.09
Weighted average number of common shares
Basic
36,210,558 31,032,289 34,673,898 31,010,413
Diluted
36,210,558 31,105,588 34,673,898 31,010,413
Notable Share Transactions
On April 16, 2012 the Registrant’s Board of Directors awarded 2,000,000 shares of common stock to Qiwei Zhang, the Registrant’s Chief Engineer and a member of the Board of Directors. The shares were awarded as compensation for Mr. Zhang’s role in the development of a flame retardant agent, which is expected to make a major contribution to the Registrant’s revenues in the future.
Investor Alert
To date, the Company has not commenced full-scale manufacture at its new facilities , although limited production began on January 2, 2012. The primary reason is a lack of working capital to purchase raw materials for its products. In the past, the Company received seller financing for its raw material purchases from its single largest supplier and customer. However, in an effort to minimize this concentration risk, the Company is actively negotiating with other raw materials suppliers to secure beneficial terms and long-term cooperation agreements to facilitate production at its new site. The Company has a working capital deficiency, has
suspended manufacturing operations in May 2011 as part of an effort to relocate the production facilities and needs additional cash resources to maintain its operations.
These factors raise substantial doubt about our ability to continue as a going concern . Our auditors have expressed substantial doubt about the Company’s ability to continue as a going concern in the audit report on our consolidated financial statements included with the Annual report on Form 10K for the year ended September 30, 2011. In December 2011, the Company fully completed its relocation to the new manufacturing facility and began limited production on January 2, 2012.The Company will need additional funds to meet its operating and financing obligations until sufficient cash flows are generated from anticipated production to sustain operations and to fund future development and financing obligations. The Company’s largest shareholder and President, Mr. Pu Fachun has the intention to continue providing necessary funding for the Company’s normal operations.
Liquidity Requirements
To date, the Company has not commenced full-scale manufacture at its new facilities . The primary reason is a lack of working capital to purchase raw materials for its products. In the past, the Company received seller financing for its raw material purchases from its single largest supplier and customer, Chongqing Trading Company which supplied the Company with 99% and 98% of its raw materials and also accounted for 44% and 35% of revenues in the past two fiscal years. However, in an effort to minimize this concentration risk, the Company is actively negotiating with other raw materials suppliers to secure beneficial terms and long-term cooperation agreements to facilitate production at its new site.
As a result of our negative cash flow and our inability to commence full-scale manufacture as of the date of this report, our auditors have issued a going concern opinion to us. If the Company is not able to reach favorable trade terms, it will seek additional capital resources, such as bank loans, an equity raise, or rely on our management to further loan capital to the Company, in order to fund these work capital needs.
Comments & Business Outlook
Fiscal 2011 Results
Sales of $16.1 million compared to sales of $23.4 million in FY 2010, a decrease of $7.3 million
Net income was $3.4 million as compared to a net loss of $4.3 million in FY 2010, an increase of $7.7 million or 179 percent.
EPS for fiscal 2011 were $0.11 vs a loss of ($0.16) in 2010
Business Outlook
"We are very excited about our prospects in 2012," remarked Mr. Pu. "Our new flame retardant additive will be a welcome addition to our product line, and our new facilities and increased product diversification capacities will help us better meet the demands of our customers. Our goal is to establish our patented technology, Micro Nano Silicon, in a broad range of industries as many of our products based on this unique technology have shown to be more cost effective and environmentally friendly than competitors. While we look to provide additional industries with more effective, cleaner additives, we will also strive to build upon our understanding of nano technology and develop other practical, cost effective and eco friendly products."
Acquisitions
On September 6, 2011 American Nano Silicon Technologies, Inc. (the “Registrant”)
acquired the minority interest in its subsidiary corporations from Pu Fachun, who is the Registrant’s Chief Executive Officer. In exchange for those interests, the Registrant issued to Mr. Pu 1,650,636 shares of the Registrant’s common stock. The issued shares represented five percent of the outstanding shares after the issuance. That number of shares were issued because the equity interests acquired represented five percent of the equity in the Registrant’s subsidiaries.
Comments & Business Outlook
Second Quarter 2011 Financial Highlights :
Revenue increased 29%, from $4.9 million in Q2 2010 to $6.3 million in Q2 2011
Gross profit improved 27%, from $1.1 million in Q2 2010 to $1.5 million in Q2 2011
Operating income rose 43%, from $0.95 million in Q2 2010 to $1.36 million in Q2 2011
Net income increased from ($4.4 million) in Q2 2010 to $0.5 million in Q2 2011
EPS was $0.01 vs. $(0.17).
"I am very pleased that ANNO had a strong second quarter," said Fachun Pu, ANNO's Chief Executive Officer. "Solid growth in our core business, our phosphate-free detergent additive, along with excellent progress in our emerging business, our accelerator and enforcement additive for concrete, drove 29 percent revenue growth from the first quarter of 2010 to the first quarter of 2011. We are especially delighted that our accelerator and enforcement additive for concrete has been embraced by China's rapidly developing construction industry. We are very confident about our future and we intend to continue to invest aggressively in our core areas of business."
Business Outlook
In the future, ANNO looks to produce approximately 30,000 tons per year of its Micro Nano Silicon based flame retardant additive for rubber and plastic materials. The Company considers its flame retardant a technologically and economically viable alternative to halogenated flame retardant products. Compared to its halogenated-based competitors, ANNO's research indicates that its flame retardant additive is more cost effective due to its superior flame retardancy, lower specific gravity, low loading level, and non-blooming characteristic. The Company's studies also show that when its flame retardant is exposed to flame, it is less toxic with lower smoke density and less invasive odor than competitive products.
"Since our sales already exceed our production capacity, we plan to further expand our current capacity for our finished Micro Nano Silicon products from 30,000 tons to 120,000 tons per year. Additionally, we intend to strengthen our sales force so that we are better able to market our products beyond our regional base of customers. Our goal is to establish Micro Nano Silicon in a broad range of industries as our current products based on this unique technology have shown to be more cost effective and environmentally friendly than competitors. We will strive to develop additional uses for Micro Nano Silicon as we look to provide other industries with more effective, cleaner additives," stated Mr. Fachun Pu.
Comments & Business Outlook
For the Three months Ended
December 31
2010
2009
Revenues
$ 5,929,436 $ 4,154,011
Cost of Goods Sold
4,458,559 3,198,663
Gross Profit
1,470,877 955,348
Operating Expenses
Research and development expense
- 4,732
Selling, general and administrative
170,983 52,238
Income from operations
1,299,894 898,378
Other Income and Expense
Interest expense
(8,165 ) (32,692 )
Change in fair value of warrant liabilities
1,484,396 -
Total other expense
1,476,231 (32,692 )
Income Before Income Taxes
2,776,125 865,686
Provision for Income Taxes
193,160 146,918
Net Income
2,582,965 718,768
Less: net income attributable to the noncontrolling interest
103,515 46,665
Net Income attributable to American Nano silicon Technologies, Inc
2,479,450 672,103
Other comprehensive income (loss)
Foreign currency translation adjustment
198,325 (665 )
Comprehensive Income
$ 2,677,775 $ 671,438
Income per common share
Basic
$ 0.08 $ 0.03
Diluted
$ 0.08 $ 0.03
Weighted average number of common shares
Basic
30,989,306 26,578,767
Diluted
31,607,119 26,578,767
GeoTeam ® Note : Adjusted EPS for the 2010 December quarter was $0.04 , after subtracting warrant gain.
During the quarter ended December 31, 2010, our revenue from the operation of accelerator additive for cement was $870,289, presenting for approximately 15% of the total revenue for the quarter. During the quarter ended December 31, 2009, we did not have this business section with gross margin rate as compare to our detergent and detergent additive section. This is another reason for our increased revenue. As of right now, in China, the increasing number of infrastructure projects drives the demand for cement and other construction materials. In 2010, approximately two billion square meters of cement were produced in China, approximately half of worldwide production. Our management believes that e will be able to market Micro Nano Silicon to the cement industry to lower production costs and assist cement manufacturers' compliance with energy saving regulations. Going forward, we plan to increase our sales force to market our products beyond our regional base of customers. Since our sales already exceed the production capacity of our plant, we are investing aggressively in an expansion of our production capacity.
Within the next several quarters, the Company expects to develop applications for Micro-Nano Silicon in industries other than the non-phosphate detergent market. Beginning from the third quarter of fiscal 2010, the Company commenced to distribute micro nano silicon as an accelerator for cement, thereby entering into construction material industry. Other potential applications for Micro-Nano Silicon include use by the paint industry as a pigment agent and use by the plastics industry for structural reinforcement. These and other applications would affect our cost of goods sold, as the products that we would offer to the paint and plastics industries would involve greater manufacturing cost than our current detergent product. In the meantime, as we expand production of our detergent product, we are looking to manage our cost of goods sold more efficiently. In particular, the expansion of our annual production capacity for Micro-Nano Silicon from 30,000 to 120,000 tons should enable us to manage our cost ratio more efficiently, which could increase our gross profit accordingly.
The increase in SG&A expense was primarily related to the expenses arising from consulting expenses, investor relation fee and legal fee, and compensation for directors. We expect that the recent financing will represent only the first step of a more intensive relationship with the U.S. capital markets. If that is the case, then SG&A expense in the future are likely to include increased legal, accounting and other expenses relating to our obligations as a U.S. public company.
Although our plans to expand our facilities and increase research and development activities will increase our operating expenses in the future, we believe that the top line benefits will more than compensate for the increased expenses, and that we will realize increased income from operations in future periods.
Comments & Business Outlook
AMERICAN NANO SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND 2009
(Expressed in US dollars)
September 30,
2010
2009
Revenues
$ 23,403,930
$ 15,916,813
Cost of Goods Sold
17,764,941
12,294,361
Gross Profit
5,638,989
3,622,452
Operating Expenses
Research and development expense
82,934
19,074
Selling, general and administrative
1,062,726
367,901
Income from operations
4,493,329
3,235,478
Other Income and Expense
Interest expense
(32,766 )
(32,658 )
Loss on private placement
(4,527,138 )
-
Change of fair value of derivative liabilities
(3,102,455 )
-
Impairment loss from property and equipment
(366,642 )
-
Other income (expense)
1,754
(97 )
Total other expense
(8,027,247 )
(32,756 )
Income Before Income Taxes
(3,533,918 )
3,202,722
Provision for Income Taxes
747,214
653,610
Net Income (Loss)
(4,281,132 )
2,549,112
Less: net income attributable to the noncontrolling interest
301,851
187,230
Net Income (Loss) attributable to American Nano Silicon Technologies, Inc.
(4,582,983 )
2,361,882
Other comprehensive income (loss)
Foreign currency translation adjustment
319,756
(22,298 )
Comprehensive Income (Loss)
$ (4,263,227 )
$ 2,339,584
Income (loss) per common share
Basic
$ (0.16 )
$ 0.09
Diluted
$ (0.16 )
$ 0.09
Weighted average number of common shares
Basic
28,373,412
26,568,520
Diluted
28,373,412
26,568,520
GeoTeam ® Note : Non-GAAP EPS for
Full year 2010 was $0.13.
2010 Fourth quarter was $0.04 vs. $0.03 in 2009.
Liquidity Requirements
Going forward, if we are able to raise additional capital, we expect to add more sales force to market our products beyond our regional base of customers.
The Company’s capital resources and cash flow are adequate to sustain operations as currently constituted. However, the Company expects to incur substantial additional costs, including costs related to ongoing research and development activities. The Company's future cash requirements will depend on many factors, including continued scientific progress in our research and development programs, the time and costs involved in obtaining regulatory approvals, the costs involved in filing, prosecuting and enforcing patents, competing technological and market development and the cost of product commercialization. We will require external financing to sustain our operations, perhaps for a significant period of time . We intend to seek additional funding through grants and through public or private financing transactions. At the present time, however, we have no commitment for financing from any source
Comments & Business Outlook
First quarter December 2009 excerpts:
Cost of goods sold, which consists of labor, overhead and product cost, was $3,198,663 for the quarter ended December 31, 2009, representing an increase of $274,598 or 9% as compared to $2,924,065 for the quarter ended December 31, 2008. This increase in cost of goods sold was close to the increase in revenue. However, since we commenced full scale production of Micro-Nano Silicon in October, 2009, our per unit cost of goods sold began to decline. We are looking to manage our cost of goods sold more efficiently in fiscal 2010.
In line with our increased revenue, our net income increased to $672,103 for the quarter ended December 31, 2009 as compared to $502,678 for the quarter ended December 31, 2008. Our net income ratio is increasing from quarter to quarter. As our core product segment is gaining more market awareness, we expect to experience steady growth.
