NEW YORK, NY--(Marketwire - 05/23/11) - Orsus Xelent Technologies, Inc. ("Orsus" or the "Company") (AMEX:ORS - News) a designer and manufacturer of award-winning mobile phones for the Asian market, today reported results for its first quarter ended March 31, 2011.
-- Sales in the quarter declined to $3.91 million, compared with
$7.6 million a year earlier.
-- The Company achieved income from operations in the period of $342,000.
However, mainly due to a non-cash reversal of allowance for bad debt
generating other income of $32,022,000 in the quarter, the Company
reported net income of $32.03 million or $12.73 per share, compared
with a loss of $(446,000) or $(0.18) per share a year earlier.
-- Per share figures in each period are based on 2.52 million and
2.48 million weighted average shares outstanding respectively, which
are a reflection of the 1:12 reverse share split effected by the
Company in April, 2011.
-- Stockholders' equity at the end of the first quarter was $27.54 million
compared with an accumulated stockholders' deficit of $(4.5 million)
at the same time last year.
Third Party Guarantee of Accounts Receivable Renewed on March 30, 2011The reversal of the allowance for bad debt is a consequence of the fact that following a year-end write down of those doubtful accounts (accounts receivable) in 2010 which were not covered by an expired third party guarantee agreement, on March 30, 2011 the Company entered into a Credit Guarantee Contract with Beijing Xingwang Shidai Tech and Trading Co. Ltd. ("Xingwang") and Zhong Hui Guarantee Corporation ("Zhonghui"), by which Zhonghui renewed its guarantee for any sales to Xingwang. Under this new agreement, coverage was increased from RMB 300 million (U.S. $44.2 million) to not more than RMB 500 million (U.S. $73.6 million) up to the period ending December 31, 2011.The Company noted the reversal in the quarter of the previously expensed bad debt did not generate cash. The Company's most pressing concerns -- and the continuing primary focus of management attention -- are cash flow and related going concern issues.Mr. Guoji Liu, CEO of the Company, stated, "We are pressing ahead with our previously described plans for a strategic merger and/or a capital raise and/or a loan to resolve our cash flow problem. We believe we have made progress in this regard, but have not yet succeeded and cannot predict the final outcome of our various discussions. It is only with success in securing additional cash that we will be able to move forward with plans to strengthen operations. These plans include a focus on product sales in developing regions such as Africa and the introduction of new products that conform to consumer demand and the needs of China's telecom operators.""While we are in a difficult struggle," Mr. Liu said, "we remain confident of a positive outcome and will keep shareholders informed of progress we may achieve."About Orsus Xelent Technologies, Inc.Incorporated in the State of Delaware and headquartered in Beijing, China, Orsus Xelent Technologies, Inc. is an emerging designer and manufacturer of award-winning mobile phones for the Asian market, primarily the People's Republic of China ("PRC"). The Company's business encompasses the design of mobile phones, related digital circuits, and software development, and it is a recognized pioneer in mobile phone integration technology. It introduced the region's first wristwatch-style cellular phone, and it continues to break new ground with state-of-the-art phones that include advanced features such as fingerprint recognition and touch-screen displays. The Company also is focused on developing and marketing, under its Proxlink trademark, special application mobile phones for specialized users in a wide variety of professions in business and government. Since the Company's launch in 2004, it has established "Orsus" as a popular brand and achieved a significant share of the world's largest mobile phone market. It maintains more than 179 service call centers across the PRC, with additional offices in Shanghai, Hong Kong, Shenzhen, and Tianjin. For more information, please visit the Company's web site: www.orsus-xelent.com.Information Regarding Forward-Looking StatementsExcept for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the Securities and Exchange Commission.
Orsus Xelent Technologies, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(In thousands, except number of shares and per share data)
Three months ended
Net sales $ 3,914 $ 7,591
Cost of sales 3,537 6,995
Gross profit 377 596
Selling expenses 6 41
General and administrative expenses 24 27
Research and development expenses - 5
Depreciation and amortization 5 8
Allowance for doubtful accounts - (251)
Income from operations 342 766
Interest expense (333) (213)
Reversal of allowance for bad debt/other income 32,022 (1,252)
Income before income tax expense 32,031 (699)
Income tax expense - -
Deferred tax benefit - 245
Net (loss)/income 32,031 (454)
Other comprehensive income
Foreign currency translation adjustment 63 8
Comprehensive (loss)/income $ 32,094 $ (446)
Basic and diluted $ 12.73 $ (0.18)
Weighted average number of common shares outstanding
- basic and diluted 3,521,341 2,479,667