WUXI, China, Nov. 14, 2017
/PRNewswire/ -- Cleantech Solutions International, Inc. ("Cleantech
Solutions" or "the Company") (NASDAQ: CLNT) today announced its
financial results for three months ended September 30, 2017.
"Cleantech Solutions had another active quarter, as we move
forward with the development of our sharing economy platforms and
related rental businesses," said Mr. Parkson Yip, COO of Cleantech Solutions. "Our
portable mobile phone charger rental business is off to a solid
start. We began generating revenue during the quarter and now have
more than 20,000 chargers available for rent in major convenience
store outlets in Hong Kong and
Macau. We are preparing to expand this business into other
retail outlets along with new regions, such as India and Singapore.
"We are also excited about opportunities in the peer-to-peer
courier market afforded by our recent acquisition of a 51% interest
in Inspirit Studio. Inter-city, last mile logistics is one of
the latest sectors to be transformed by the sharing economy. We see
strong potential for the Anyway app, which offers individuals and
businesses a reliable network of on-demand couriers who will
deliver packages within two hours throughout Hong Kong. We currently have over 2,000
couriers on the platform and aim to increase that to 12,000 over
the next twelve months. We believe a true peer-to-peer,
rental-based sharing economy will continue to disrupt traditional
business and consumer markets over the next few years and are
currently exploring additional merger and acquisition opportunities
to position Cleantech Solutions for success in the future."
Cleantech Solutions' CEO, Mr. Jianhu
Wu added "While our legacy dyeing and finishing business in
China is facing headwinds, I am
pleased with our progress in executing our growth strategies.
Collaborative consumption holds enormous promise, and I am
optimistic that our new business units will quickly gain traction
in the
market."
Third Quarter 2017 Results
Revenue for the third quarter of 2017 declined by 33.4% to
$2,629,000 compared to $3,946,000 for the same period in 2016.
Currently, the Company's primary source of revenue is from the
dyeing and finishing business since the forged rolled rings and
related products and petroleum and chemical equipment businesses
are discontinued and its new business units are in an early stage
of development.
Gross loss for the third quarter of 2017 was $446,000, compared to gross profit of
$494,000 for the same period in 2016.
Gross margin was negative 17.0% during the third quarter of
2017 compared to 12.5% for the same period in 2016. The decline in
gross margin was primarily attributable to reduced scale of
operations related to reduced revenues and higher raw material
costs.
Operating expenses increased to $3,664,000 compared to $547,000 for the same period in 2016. The
increase was primarily due to a $2.4
million bad debt expense, and an increase in professional
fees, including stock-based consulting fees, and payroll and
related benefits.
Loss from operations was $4,110,000, compared to a loss from operations of
53,000 for the same period in 2016.
Loss from continuing operations was $4,179,000, or $(2.10) per basic and diluted share, compared to
a loss from continuing operations of $86,000, or $(0.07)
per basic and diluted share for the same period in 2016.
Loss from discontinued operations (Refer to "Discontinued
Operations" discussion below) was $71,000, or $(0.04)
per basic and diluted share, for the third quarter of 2017.
This compares to a loss from discontinued operations of
$273,000, or $(0.21) per basic and diluted share, for the
third quarter of 2016.
Net loss for the third quarter of 2017 was $4,250,000, or $(2.14) per basic and diluted share, compared to
net loss of $360,000, or $(0.28) per basic and diluted share, for the same
period in 2016.
Basic and diluted earnings per share were based on 1,988,794 and
1,297,111 weighted average shares outstanding, respectively, for
the three months ended September 30,
2017, and 2016. All share and per share information has
been adjusted to reflect a 1-for-4 reverse stock split effective
March 20, 2017.
Financial Condition
As of September 30, 2017,
Cleantech Solutions held cash and cash equivalents of $4,775,000 compared to $1,481,000 at December
31, 2016. Accounts receivable were $13,023,000 compared to $13,922,000 at December
31, 2016. Inventories were $4,033,000 compared to $2,394,000 at December
31, 2016. The Company had $2,029,000 and $376,000 in short-term bank loans and bank
acceptance notes payable, respectively, at September 30, 2017, down from $2,160,000 and $547,000, respectively, at December 31, 2016. Working capital was
$23,206,000 at September 30, 2017 compared to $21,539,000 at December
31, 2016. Stockholders' equity was $65,656,000 at September
30, 2017 compared to $65,312,000 at December
31, 2016.
In the first nine months of 2017, the Company used $17,000 in operating cash flow, primarily due to
the loss for the period and increases in inventory and advances to
suppliers, which were offset by an increase in accounts payable and
a decrease in prepaid and other current assets as a result of an
increase in stock based compensation. The Company generated
$2,029,000 in cash flow from
investing activities, primarily related to a payment from the sale
of Wuxi Fulland Wind Energy Equipment Co., Ltd. ("Fulland Wind") in
the second quarter of 2017. The Company generated $1,138,000 in cash flow from financing
activities, primarily due to $860,000
in net proceeds from a private placement transaction in
June 2017, which was partially offset
by a reduction in short term debt.
Recent Events
On October 9, 2017, the Company
entered into an agreement with an investor who purchased a note for
$670,000, bearing two percent (2%)
interest per annum. The note automatically converts into shares of
common stock of the Company at a conversion price equal to
$3.35 per share on January 8, 2018. The Company shall have the
option, in its sole and absolute discretion, to repay the
outstanding amount in full on or before the Conversion Date.
On October 27, 2017, the Company's
wholly-owned subsidiary, EC Technology & Innovations Limited,
acquired a 51% interest in Inspirit Studio, which develops and runs
a sharing economy mobile platform called Anyway that allows people
to provide courier delivery services during their commuting times.
Total consideration was HK$3.0
million, which shall be satisfied by the allotment and
issuance of 85,473 shares of the Company.
On October 12, 2017, the Company's
wholly-owned subsidiary, Sharing Economy Investment Limited,
entered into exclusive discussions regarding the potential
acquisition of a 51% interest in 3D Discovery Co. Limited ("3D
Discovery"), a digital marketing services provider which provides
various solution such as 3D scanning and modeling, website and
mobile app development, video production, graphic design, etc. to
its clients. Apart from existing business, 3D Discovery is going to
develop a mobile app which allows users to create an interactive
virtual tour of a physical space by using a mobile phone
camera.
Discontinued Operations
On December 30, 2016, the Company
sold 100% of the stock of Fulland Wind to an unrelated party and
discontinued the Company's forged rolled rings and related
components business. Additionally, the Company's management decided
to discontinue its petroleum and chemical equipment segment due to
significant declines in revenues and the loss of its major
customer. As such, the assets and liabilities of these two segments
were classified on the unaudited condensed consolidated balance
sheets as assets and liabilities of discontinued operations and the
operating results were classified as discontinued operations in the
unaudited condensed consolidated statements of operations for all
periods presented.
About Cleantech Solutions International
Cleantech Solutions, through its affiliated companies, designs,
manufactures and distributes a line of proprietary high and low
temperature dyeing and finishing machinery to the textile
industry. The Company's latest business initiatives are
focused on targeting the technology and global sharing economy
markets, by developing online platforms and rental business
partnerships that will drive the global development of sharing
through economical rental business models.
Safe Harbor Statement
This release contains certain "forward-looking statements"
relating to the business of the Company and its subsidiary and
affiliated companies. These forward looking statements are often
identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions. Such forward looking
statements involve known and unknown risks and uncertainties that
may cause actual results to be materially different from those
described herein referred to in this press release as anticipated,
believed, estimated or expected. The Company's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of a variety of factors, including those
discussed in the Company's periodic reports that are filed with the
Securities and Exchange Commission and available on its website,
including factors described in "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in our Form 10-K for the year ended December 31, 2016 and in our Form 10-Q for the
quarter ended September 30, 2017. All
forward-looking statements attributable to the Company or to
persons acting on its behalf are expressly qualified in their
entirety by these factors other than as required under the
securities laws. The Company does not assume a duty to update these
forward-looking statements.
Company Contacts:
Cleantech Solutions International, Inc.
Parkson Yip, Chief Operating
Officer
E-mail: parkson.yip@cleantechsolutionsinternational.com
+852-31060372
Web: www.cleantechsolutionsinternational.com
Compass Investor Relations
Elaine Ketchmere, CFA
Email: eketchmere@compass-ir.com
+1-310-528-3031
Web: www.compassinvestorrelations.com
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE GAIN
(LOSS)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
2,629,217
|
|
$
3,946,480
|
|
$
10,998,438
|
|
$
12,390,980
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
3,075,290
|
|
3,452,614
|
|
10,415,813
|
|
10,484,928
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
(LOSS)
|
|
(446,073)
|
|
493,866
|
|
582,625
|
|
1,906,052
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
276,940
|
|
112,472
|
|
814,654
|
|
388,326
|
|
Selling, general and
administrative
|
|
3,279,792
|
|
322,426
|
|
4,147,652
|
|
1,189,460
|
|
Research and
development
|
|
107,568
|
|
111,840
|
|
324,698
|
|
196,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
3,664,300
|
|
546,738
|
|
5,287,004
|
|
1,774,264
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
OPERATIONS
|
|
(4,110,373)
|
|
(52,872)
|
|
(4,704,379)
|
|
131,788
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
3,205
|
|
5,460
|
|
10,925
|
|
20,272
|
|
Interest
expense
|
|
(33,125)
|
|
(31,676)
|
|
(107,991)
|
|
(96,630)
|
|
Loss on equity method
investment
|
|
(39,060)
|
|
-
|
|
(81,871)
|
|
-
|
|
Foreign currency
transaction gain
|
|
-
|
|
(1)
|
|
-
|
|
168
|
|
Other
income
|
|
478
|
|
(2)
|
|
47,618
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense,
net
|
|
(68,502)
|
|
(26,219)
|
|
(131,319)
|
|
(75,799)
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES
|
|
(4,178,875)
|
|
(79,091)
|
|
(4,835,698)
|
|
55,989
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
provision
|
|
113
|
|
7,103
|
|
11,196
|
|
176,518
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
CONTINUING OPERATIONS
|
|
(4,178,988)
|
|
(86,194)
|
|
(4,846,894)
|
|
(120,529)
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED
OPERATIONS, NET OF
INCOME TAXES
|
|
(71,339)
|
|
(273,342)
|
|
(71,339)
|
|
(1,763,282)
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
(4,250,327)
|
|
$
(359,536)
|
|
$
(4,918,233)
|
|
$
(1,883,811)
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
(4,250,327)
|
|
$
(359,536)
|
|
$
(4,918,233)
|
|
$
(1,883,811)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
gain (loss):
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign
currency translation gain (loss)
|
|
1,224,249
|
|
(315,181)
|
|
2,807,841
|
|
(2,157,652)
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
(3,026,078)
|
|
$
(674,717)
|
|
$
(2,110,392)
|
|
$
(4,041,463)
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON
SHARE:
|
|
|
|
|
|
|
|
|
|
Continuing operations
- Basic and diluted
|
|
$
(2.10)
|
|
$
(0.07)
|
|
$
(2.96)
|
|
$
(0.10)
|
|
Discontinued
operations - basic and diluted
|
|
(0.04)
|
|
(0.21)
|
|
(0.04)
|
|
(1.54)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share - basic and diluted
|
|
$
(2.14)
|
|
$
(0.28)
|
|
$
(3.00)
|
|
$
(1.64)
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
1,988,794
|
|
1,297,111
|
|
1,635,223
|
|
1,148,390
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4,774,697
|
|
$
1,481,498
|
|
Restricted
cash
|
|
229,499
|
|
551,047
|
|
Notes
receivable
|
|
254,059
|
|
133,913
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
13,023,448
|
|
13,922,371
|
|
Inventories, net of
reserve for obsolete inventories
|
|
4,033,372
|
|
2,394,179
|
|
Advances to
suppliers
|
|
2,560,713
|
|
1,116,525
|
|
Deferred tax
assets
|
|
403,389
|
|
386,381
|
|
Receivable from sale
of subsidiary
|
|
2,886,350
|
|
4,838,152
|
|
Prepaid expenses and
other
|
|
1,475,104
|
|
9,074
|
|
Assets of
discontinued operations
|
|
380,779
|
|
1,758,986
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
30,021,410
|
|
26,592,126
|
|
|
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
|
|
Equity method
investment
|
|
8,906,014
|
|
8,610,759
|
|
Property and
equipment, net
|
|
28,274,949
|
|
29,878,675
|
|
Intangible assets,
net
|
|
5,269,221
|
|
5,283,695
|
|
|
|
|
|
|
|
|
|
Total other
assets
|
|
42,450,184
|
|
43,773,129
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
72,471,594
|
|
$
70,365,255
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Short-term bank
loans
|
|
$
2,029,465
|
|
$
2,159,889
|
|
Bank acceptance notes
payable
|
|
375,827
|
|
547,172
|
|
Accounts
payable
|
|
2,414,145
|
|
864,870
|
|
Accrued
expenses
|
|
207,303
|
|
368,395
|
|
Advances from
customers
|
|
1,011,384
|
|
427,446
|
|
Due to related
party
|
|
351,430
|
|
-
|
|
VAT and service taxes
payable
|
|
7,298
|
|
47,319
|
|
Income taxes
payable
|
|
62,104
|
|
79,467
|
|
Liabilities of
discontinued operations
|
|
356,384
|
|
558,661
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
6,815,340
|
|
5,053,219
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
6,815,340
|
|
5,053,219
|
|
|
|
|
|
|
|
Commitments and
contingencies (see Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
Preferred stock
($0.001 par value; 10,000,000 shares authorized;
|
|
|
|
|
|
|
No shares issued and
outstanding at September 30, 2017 and December 31, 2016)
|
|
-
|
|
-
|
|
Common stock ($0.001
par value; 12,500,000 shares authorized; 2,111,871 and
1,415,441
|
|
|
|
|
|
|
shares issued and
outstanding at September 30, 2017 and December 31, 2016,
respectively)
|
|
2,112
|
|
1,415
|
|
Additional paid-in
capital
|
|
38,003,455
|
|
35,549,542
|
|
Retained
earnings
|
|
21,613,265
|
|
26,531,498
|
|
Statutory
reserve
|
|
2,352,592
|
|
2,352,592
|
|
Accumulated other
comprehensive income - foreign currency translation
adjustment
|
|
3,684,830
|
|
876,989
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
65,656,254
|
|
65,312,036
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
72,471,594
|
|
$
70,365,255
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
For the Nine Months
Ended
|
|
|
|
|
September
30,
|
|
|
|
|
2017
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net loss
|
$
|
(4,918,233)
|
$
|
(1,883,811)
|
|
Adjustments to
reconcile net loss from operations to net cash
|
|
|
|
|
|
|
used in operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
2,937,696
|
|
2,895,246
|
|
|
Depreciation -
discontinued operations
|
|
-
|
|
1,563,725
|
|
|
Amortization of
intangible assets
|
|
241,464
|
|
107,918
|
|
|
Loss on equity method
investment
|
|
81,871
|
|
-
|
|
|
Stock-based
compensation and fees
|
|
482,243
|
|
582,740
|
|
|
Bad debt
expense
|
|
1,892,821
|
|
-
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Notes
receivable
|
|
(111,669)
|
|
13,679
|
|
|
Restricted
cash
|
|
-
|
|
(4,038)
|
|
|
Accounts
receivable
|
|
(415,467)
|
|
(1,032,188)
|
|
|
Inventories
|
|
(1,499,147)
|
|
(1,167,953)
|
|
|
Prepaid and other
current assets
|
|
929,997
|
|
(675,868)
|
|
|
Advances to
suppliers
|
|
(1,363,517)
|
|
(68,597)
|
|
|
Assets of
discontinued operations
|
|
116,061
|
|
1,575,256
|
|
|
Accounts
payable
|
|
1,506,286
|
|
201,300
|
|
|
Accrued
expenses
|
|
(166,965)
|
|
(317,968)
|
|
|
VAT and service taxes
payable
|
|
(41,153)
|
|
(73,542)
|
|
|
Income taxes
payable
|
|
(20,390)
|
|
(319,637)
|
|
|
Advances from
customers
|
|
552,352
|
|
158,070
|
|
|
Liabilities of
discontinued operations
|
|
(221,741)
|
|
(6,163,598)
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
|
(17,491)
|
|
(4,609,266)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchase of
patent
|
|
-
|
|
(2,431,892)
|
|
Purchase of property
and equipment
|
|
(86,402)
|
|
(14,290)
|
|
Proceed received from
sale of subsidiary in cash
|
|
2,115,842
|
|
-
|
|
|
|
|
|
|
|
Net cash provided by
(used in) investing activities
|
|
2,029,440
|
|
(2,446,182)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from bank
loans
|
|
1,248,932
|
|
2,963,868
|
|
Repayments of bank
loans
|
|
(1,469,332)
|
|
(3,039,865)
|
|
Decrease in
restricted cash
|
|
337,947
|
|
443,857
|
|
Increase in
restricted cash - discontinued operations
|
|
-
|
|
(71,473)
|
|
Decrease in bank
acceptance notes payable
|
|
(191,014)
|
|
(440,780)
|
|
Advance from related
party
|
|
351,430
|
|
-
|
|
Proceeds from sale of
common stock, net
|
|
860,000
|
|
753,400
|
|
|
|
|
|
|
|
Net cash provided by
financing activities
|
|
1,137,963
|
|
609,007
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
143,287
|
|
(430,689)
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
3,293,199
|
|
(6,877,130)
|
|
|
|
|
|
|
|
Cash and cash
equivalents - beginning of period
|
|
1,481,498
|
|
18,790,370
|
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
|
4,774,697
|
$
|
11,913,240
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid in
continuing operations for:
|
|
|
|
|
|
|
Interest
|
$
|
107,991
|
$
|
165,515
|
|
|
Income
taxes
|
$
|
12,808
|
$
|
164,182
|
|
|
|
|
|
|
|
|
Cash paid in
discontinued operations for:
|
|
|
|
|
|
|
Interest
|
$
|
-
|
$
|
-
|
|
|
Income
taxes
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
Stock issued for
future services
|
$
|
1,083,967
|
$
|
76,340
|
|
Stock issued for
accrued liabilities
|
$
|
28,400
|
$
|
54,000
|
|
Increase in prepaid
expenses and other from sale of equipment
|
$
|
1,306,677
|
$
|
-
|
View original
content:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-third-quarter-2017-results-300555335.html
SOURCE Cleantech Solutions International, Inc.