WEB NEWS Comments & Business Outlook
For the Six Months Ended December 31,
2011
2010
2011
2010
(Restated)
(Restated)
Revenues
$
3,719,851
$
4,268,090
$
7,491,083
$
7,972,767
Cost of Goods Sold
2,230,426
2,766,523
4,436,683
5,167,177
Gross Profit
1,489,425
1,501,567
3,054,400
2,805,590
Operating Expenses:
Manufacturing Expenses
106,533
54,350
214,735
116,835
R & D Expenses
100,053
19,675
239,812
39,995
Sales Expenses
159,391
134,882
294,155
384,736
General and Administrative Expenses
525,975
203,226
948,283
1,048,605
Total Operating Expenses
891,952
412,133
1,696,985
1,590,171
Income from Operations
597,473
1,089,434
1,357,415
1,215,419
Other Income (Expenses):
Interest Income (Expense), net
4,182
8,127
9,366
11,631
Other Income (Expense)
-
771
62
590
Total Other Income (Expenses)
4,182
8,898
9,428
12,220
Income before Income Taxes
601.655
1,098,332
1,366,843
1,227,639
Provision for Income Taxes
178,488
333,028
404,854
549,076
Net Income
423,167
765,304
961,989
678,563
Other Comprehensive Income:
Unrealized Gain (Loss) on Foreign Currency Translation
125,854
103,284
197,728
201,969
Comprehensive Income
$
549,021
$
868,588
$
1,159,716
$
880,532
Earnings Per Common Share:
Basic
$
0.03
$
0.04
$
0.06
$
0.03
Diluted
$
0.03
$
0.04
$
0.06
$
0.03
Weighted Average Common Share:
Basic
15,609,811
21,012,270
16,026,478
21,012,270
Diluted
15,885,462
21,012,270
16,063,949
21,012,270
Total revenues for the quarter ended December 31,2011were $3,719,851 as compared to total revenues of $4,268,090 for the quarter ended December 31, 2010, a decrease of $548,239 or approximately 12.85%. Our total revenues for the six months ended December 31, 2011 were $7,491,083, as compared to total revenues of $7,972,767 for the six months ended December 31, 2010, a decrease of $481,684 or approximately 6.04%. The decrease in the revenues during the periods under review was primarily due to the reduction of the sales, which typically occurs one month prior to the Chinese spring festival. Since the spring festival in 2012 started as early as January 23, 2012, it caused the slow sales in December 2011; while it was not the case in December 2010 because spring festival for the year of 2011 did not start until Mid-February 2011.
Moreover, during the three and six months ended December 31, 2011, we also adjusted slightly our product composition by shifting our efforts to market more profitable products such as battery module, power and chargers,. As a result, we reduced our sales of electric vehicle battery from $570,229 during the three months ended December 31, 2010 to $56,019 during the same quarter of 2011, a decrease of $514,210 . We also discontinued our sales of battery pack since July 1, 2011, which produced 0 revenues during the three months ended December 2011 as compared to $ 40,106 during the same quarter ended December 2010.
Comments & Business Outlook
2011
2010
Revenues
$
3,771,232
$
3,704,678
Cost of Goods Sold
2,206,258
2,400,654
Gross Profit
1,564,975
1,304,024
Operating Expenses:
Manufacturing Expenses
108,202
62,485
R & D Expenses
139,760
20,320
Sales Expenses
134,764
249,855
General and Administrative Expenses
422,308
845,380
Total Operating Expenses
805,033
1,178,038
Income from Operations
759,941
125,985
Other Income (Expenses):
Interest Income (Expense), net
5,184
3,504
Other Income (Expense)
62
(182
)
Total Other Income (Expenses)
5,247
3,323
Income before Income Taxes
765,188
129,308
Provision for Income Taxes
226,366
216,048
Net Income
538,822
(86,740
)
Other Comprehensive Income:
Unrealized Gain (Loss) on Foreign Currency Translation
71,874
98,685
Comprehensive Income
$
610,696
$
11,945
Earnings Per Common Share:
Basic
$
0.03
$
(0.004
)
Diluted
$
0.03
$
(0.004
)
Weighted Average Common Share:
Basic
16,443,144
20,159,811
Diluted
16,671,628
20,159,811
Comments & Business Outlook
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
2011
2010
(Restated)
Revenues
$
15,767,978
$
14,089,484
Cost of Goods Sold
10,011,593
9,568,363
Gross Profit
5,756,385
4,521,121
Operating Expenses:
Manufacturing Expenses
243,650
250,037
R & D Expenses
329,059
114,995
Sales Expenses
692,792
419,547
General and Administrative Expenses
2,263,776
471,414
Total Operating Expenses
3,529,276
1,255,993
Income from Operations before Other Expenses (Income)
2,227,109
3,265,128
Other Expenses (Income):
Interest Expense (Income), net
(25,328
)
-
Other Expenses (Income)
(2,692
)
(1,324
)
Total Other Expenses (Income)
(28,020
)
(1,324
)
Income before Income Taxes
2,255,129
3,266,452
Provision for Income Taxes
961,217
837,486
Net Income
1,293,912
2,428,966
Other Comprehensive Income:
Unrealized Gain (Loss) on Foreign Currency Translation
489,067
27,207
Comprehensive Income
$
1,782,980
$
2,456,173
Earnings Per Common Share:
Basic
$
0.06
$
0.12
Diluted
$
0.06
$
0.12
Weighted Average Common Share:
Basic
20,609,811
19,436,314
Diluted
21,560,847
19,436,314
GeoTeam ® Note : Full Year 2011 vs. 2010 Adjusted EPS was $0.12 vs. $0.12
Comments & Business Outlook
NEW YORK and BEIJING, May 17, 2011 (GLOBE NEWSWIRE ) -- China Lithium Technologies Inc. (OTCBB: CLTT),a leading lithium-ion battery module, lithium-ion battery charger and lithium-ion battery management system manufacturer and distributor, today announced financial results for the third quarter ended March 31, 2011.
CHINA LITHIUM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended March 31
Nine Months Ended March 31
2011
2010
2011
2010
Revenues
$
3,361,885
$
2,631,041
$
11,334,652
$
10,059,560
Cost of Goods Sold
2,070,107
1,640,307
7,237,284
6,854,846
Gross Profit
1,291,778
990,734
4,097,368
3,204,715
Operating Expenses:
Manufacturing Expenses
64,525
51,667
181,359
144,925
R & D Expenses
28,326
48,930
68,321
80,260
Sales Expenses
278,342
154,639
663,079
289,182
General and Administrative Expenses
610,516
195,907
1,659,122
476,311
Total Operating Expenses
981,709
451,143
2,571,880
990,677
Income from Operations before Other Income and (Expenses)
310,069
539,592
1,525,488
2,214,037
Other Expenses and (Income):
Financial Expenses (Income)
(7,722
)
-
(19,352
)
229
Other Expenses (Income)
(5,942
)
15
(6,531
)
(1,237
)
Total Other Expenses and (Income)
(13,663
)
15
(25,884
)
(1,008
)
Income Before Income Taxes
323,732
539,577
1,551,371
2,215,046
Provision For Income Taxes
153,538
134,894
702,613
554,400
Net Income
170,194
404,683
848,758
1,660,646
Other Comprehensvie Income:
Unrealized Gain (loss) on
Foreign Currency Translation
25,640
142
227,609
35,704
Comprehensive Income
$
195,834
$
404,825
$
1,076,367
$
1,696,350
Earnings Per Common Share - Basic and Diluted
$
0.01
$
0.02
$
0.05
$
0.08
Weighted Average Common Share - Basic and Diluted
20,159,811
20,159,811
20,159,811
20,159,811
Mr. Kun Liu, chief executive officer of China Lithium Technologies, commented, "We are pleased to report another strong quarter with revenue increasing 27.8% to $3.4 million and gross margins increasing 77 basis points to 38.4%. The improvement in both revenue and gross margin reflects our shift in focus to higher margin product categories, including our battery chargers and battery modules. This increase in higher margin sales was partially offset by stock-based compensation expense to attract and retain key employees, as well as an increase in our administrative expenses as a newly public company. We have established a very solid foundation and anticipate benefitting from significant operating leverage as we continue to grow."
Mr. Kun Liu continued, "Looking ahead, we are well positioned to benefit from the trend toward electric vehicles. Our battery management technology is at the forefront of the industry and seamlessly allows the replacement of lead-acid battery with lithium-ion batteries, without further modification to the vehicle. This is just one of many important differentiators for our technology, and we continue to enhance our capabilities to address rapid changes in the technology arena."
Liquidity Requirements
Despite net income of $905,410 for the six months ended December 31, 2010 (which was reduced by a non-cash stock-based compensation expense of $717,000), our operations provided us only $69,882 in cash . The primary reasons for the discrepancy were the increases in accounts receivable and inventory discussed above. In addition, we used $513,125 in cash to reduce our accounts and taxes payable. In other words, this low cash yield from operations was a result of management allocation of resources, and is not indicative of the liquidity of our operations. During the year ended June 30, 2010, our operations provided us $2,728,015 in cash , including $891,097 in the first half of that year. We expect that for the forseeable future, our operations will provide us significant cash yield. Our working capital is nearly double our annual operating expenses, and our operations are cash-positive. With these resources, we expect that we will be able to fund the implementation of our business plan for the forseeable future .
Investors should take note of the following statement in the company's fiscal 2010 10K :
Our business plan contemplates that we intend to increase our production capacity of lithium-ion battery module to 3,000 per day , charger to 10,000 per day , and BMS to 4,000 per day . Implementation of this plan will require significant funds. The funds are needed in order to:
• Improve and upgrade our R&D center including purchase of more advanced research equipments and hiring of key technical talents in lithium-ion industry; • Improve and expand our manufacture facilities including purchase of new machinery and equipment and construction of new workshops; • Develop regional distributors for the development of our own branded products; and • Implement an advertising and marketing program adequate to assure us of substantial market presence.
Our plan is to sell a portion of our equity in order to obtain the necessary funds, which will dilute the equity share of our existing shareholders. To date, however, we have received no commitment from any source for funds.
We did not notice any major financing transactions since this statement, leaving us to ponder if we can really believe the company's comments that it "will be able to fund the implementation of our business plan for the forseeable future ."
Comments & Business Outlook
On January 20, 2011 the Registrant's Chief Financial Officer, pursuant to authority from the Board of Directors, concluded that the financial statements included by the Registrant in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 should not be relied upon. The determination was based on his conclusion that the Registrant had failed to properly record as an expense the fair value of the 358,500 shares of common stock that the Registrant's chief executive officer transferred on September 2, 2010 to employees of the Registrant, a member of the Registrant's board of directors, and two members of the Registrant's U.S securities law firm. The Chief Financial Officer has discussed this determination with the Registrant's independent accountant.
The Registrant will amend its Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 to correct the error. The following are Management's current estimates of the changes that will result.
Reported
Amended
Additional Paid-in Capital
$
252,771
$
969,771
Retained Earnings
5,282,530
4,565,530
General & Administrative Expense
$
128,380
$
845,380
Income from Operations
842,985
125,985
Income/(Loss) after Provision for Income Taxes
630,026
(86,740
)
Earnings Per Common Share
0.03
(0.00
)
Comments & Business Outlook
Three Months Ended December 31,
Six Months Ended December 31,
2010
2009
2010
2009
Revenues
$
4,268,090
$
3,505,473
$
7,972,767
$
7,428,519
Cost of Goods Sold
2,766,523
2,294,508
5,167,177
5,214,539
Gross Profit
1,501,566
1,210,965
2,805,590
2,213,980
Operating Expenses:
Manufacturing Expenses
$
54,350
$
66,356
$
116,835
$
93,257
R & D Expenses
19,675
20,615
39,995
31,330
Sales Expenses
134,882
68,843
384,736
134,543
General and Administrative Expenses
203,226
150,887
1,048,605
280,404
Total Operating Expenses
412,133
306,701
1,590,171
539,535
Income from Operations before other Income and (expenses)
1,089,434
904,264
1,215,419
1,674,446
Other (Expense) and Income:
Financial Expenses
(8,127
)
-
(11,631
)
229
Other (Expenses) Income
(771
)
(53
)
(590
)
(1,252
)
Total Other Income and (Expense)
(8,898
)
(53
)
(12,220
)
(1,023
)
Income Before Income Taxes
1,098,332
904,317
1,227,639
1,675,469
Provision For Income Taxes
285,431
226,718
322,230
419,506
Net Income
812,900
677,599
905,410
1,255,963
Other Comprehensive Income:
Unrealized Gain (loss) on Foreign Currency Translation
103,284
139
201,969
35,562
Comprehensive Income
$
916,184
$
677,739
$
1,107,378
$
1,291,525
Earnings Per Common Share:
Basic
0.04
0.03
0.08
0.06
Diluted
0.04
0.03
0.04
0.06
Weighted Average Common Shares:
Basic
20,159,811
20,159,811
20,159,811
20,159,811
Diluted
21,359,811
20,159,811
20,759,811
20,159,811
GeoTeam ® Note : Adjusted EPS for the December 2010 second quarter was $0.08 .
Liquidity Requirements
Our business plan contemplates that we intend to increase our production capacity of lithium-ion battery module to 3,000 per day, charger to 10,000 per day, and BMS to 4,000 per day. Implementation of this plan will require significant funds.
Reverse Merger Activity
On March 19, 2010 , PI Services Inc. acquired all of the outstanding capital stock of Sky Achieve Holdings, Inc., a British Virgin Islands limited liability corporation, pursuant to a Share Exchange Agreement dated March 4, 2010. Sky Achieve has exclusive control over the business of Beijing GuoQiang Global Science & Technology Development Co., Ltd . Under the relationship, Sky Achieve has the right to receive all revenues obtained by Beijing Guoqiang, but also bears the responsibility for all of the expenses incurred by Beijing Guoqiang.
Business Snapshot:
Beijing Guoqiang designs, manufactures and markets Polymer lithium-ion battery modules, lithium-ion battery chargers, lithium-ion battery management systems as well as other lithium-ion battery management devices essential to proper power utilization.
Industry Snapshot:
According to a leader in global research and market analysis, by 2011 the market demand for power lithium-ion battery in China is projected to reach $15.740 billion. The combination of electric automobiles, including electric passenger car and electric highway passenger car, accounts for over 96% of the total market, with the electric bicycle market accounting for 2.4% of the total.
This is a cutting-edge industry with no dominant players yet. We believe our technology and low cost of research and technology will enable us to become a leading company in this industry. Also, the Company is based in China and is a leading provider of power systems for in Hybrid and Electric cars and vehicles in China.
Financial Snapshot: (Year ends in June)
2009 Sales: $10.9 vs. $6.8 million
2009 Net Income: $1.7 million vs. $1.2 million
Post Merger Share Calculation :
2,217,480: Pre reverse merger outstanding shares
42,134,020: Newly issued shares of Common Stock
GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions: 20,159,772 (Adjusted for a 1 for 2.2 reverse split)