New Energy Systems Group Reports Third Quarter 2011 Financial Results

Press Release

DISAPPOINTING !!!!!!!!!!!!!!!!!!!!!

Mr. Yu continued, "We expect to stabilize margins by introducing new, innovative products that carry higher margins. In addition, we have started to identify areas within our selling, general and administrative expenses where we can become more efficient. Finally, we have engaged branding strategy and financial consultants to help evaluate and execute marketing, product development and strategic alternatives. However, we expect sales and margins to remain below our historical averages until our competitive position improves."

For the 3 Months Ended September 30
	Q3 2011	Q3 2010	CHANGE
Net Sales	$15.3 million	$26.4 million	-42%
Gross Margin	($0.5) million	$7.2 million	-107%
Net Income (Loss)	($16.9) million	$4.3 million	-463%
Adjusted Net Income*	($2.4) million	$5.1 million	-147%
GAAP EPS (Diluted)	($1.16)	$0.34	-441%
Adjusted EPS (Diluted)*	($0.17)	$0.41	-141%
*Adjusted net income and adjusted E PS exclude $0.2 million of non-cash stock-based compensation expenses during Q3 2011, $0.7 million of amortization expenses and a $13.6 million impairment of goodwill.

For the 9 Months Ended September 30
	YTD 2011	YTD 2010	CHANGE
Net Sales	$65.4 million	$72.2 million	-9%
Gross Profit	$15.4 million	$19.8 million	-22%
Net Income (Loss)	($8.2) million	$11.6 million	-171%
Adjusted Net Income*	$8.1 million	$14.2 million	-43%
GAAP EPS (Diluted)	($0.57)	$0.92	-162%
Adjusted EPS (Diluted)*	$0.55	$1.13	-51%
*Adjusted net inco me and adjusted EPS exclude $0.5 million of non-cash stock-based compensation expenses during nine months end of September 30, 2011, $2.2 million of amortization expenses and a $13.6 million impairment of goodwill.