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NF Energy Saving Corporation Announces Third Quarter 2019 Financial Results

November 15, 2019

NEW YORK, Nov. 15, 2019 (GLOBE NEWSWIRE) -- NF Energy Saving Corporation (NASDAQ: BIMI) (“BIMI” or the “Company”) today reported financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights:

-- Revenues were $208,402 and $1,120,804 for the three and nine months ended September 30, 2019, respectively. -- Total cost of revenues was $281,014 and $1,030,862 for the three and nine months ended September 30, 2019. -- Net loss for the three and nine months ended September 30, 2019 of was $547,689 and $1,973,382.

“The third quarter results only reflected our business ended September 30, 2019. Our new acquisition of Boqi Zhengji Pharmacy was not reflected in the current report.” said Mr. Tiewei Song, Chief Executive Officer and President of NF Energy Saving Corporation. “With our ongoing strategic partnership, we are confident to deliver compelling value to our customers and investment community. Looking ahead, we believe that our strategy of growing membership can unleash the full potential of our consumer-centric health care model and create value for all stakeholders.”

Revenues

Revenues were $208,402 and $1,120,804 for the three and nine months ended September 30, 2019, respectively, as compared to $1,102,693 and $1,814,111 for the corresponding periods in 2018.

Total revenues decreased by $894,291 or 81.10% and $693,307 or 38.22% for the three and nine months ended September 30, 2019, respectively, as compared to the corresponding periods in 2018.

The decrease in total revenues for the three and nine months ended September 30, 2019 is mainly due to the decline in demand for the Company’s products and services resulting from changes in the overall market.

Cost of Revenues

Total cost of revenues was $281,014 and $1,030,862 for the three and nine months ended September 30, 2019, as compared to $956,694 and $1,344,884 for the corresponding periods in 2018.

Total cost of revenues decreased by $675,680 and $314,022, or approximately 70.63% and 23.35%, as compared to the corresponding periods in 2018. The decrease in cost of revenues was primarily due to the decrease in revenues.

As a result, the Company had a gross loss of $72,612, or 34.84%, of total revenues and a gross profit $89,942, or 8.02%, of total revenues for the three and nine months ended September 30, 2019, respectively, as compared to a gross profit of $145,999, or 13.24%, of total revenues and $469,277, or 25.87%, of total revenues, for the corresponding periods in 2018, respectively.

Loss From Operations

As a result of the factors mentioned above, the Company incurred losses from operations of $431,919 and $1,517,821 for the three and nine months ended September 30, 2019, as compared to losses of $224,704 and $2,185,046 for the corresponding period in 2018, an increase of $207,215, or 92.22%, for the three months ended September 30, 2019 as compare to same period of 2018 and a decrease of $667,225, or 30.53%, for the nine months ended September 30, 2019 as compared to the same period of 2018.

Other Expense

Other expense for the three and nine months ended September 30, 2019 were $115,770 and $455,561, respectively, as compared to $90,171 and $286,394 for the corresponding periods in 2018, an increase of $25,599 and $169,167, or 28.39% and 59.07%, respectively. This increase is primarily due to the increase in interest expenses.

As a result, the Company incurred losses before income taxes of $547,689 and $1,973,382 for the three and nine months ended September 30, 2019, respectively, as compared to losses before income taxes of $314,875 and $2,471,440 for the corresponding periods in 2018, an increase in losses before income taxes of $232,814, or 73.94% for the three months ended September 30, 2019 as compare to the same period of 2018, and a decrease in loss before income taxed of $498,058, or 20.15% for the nine months ended September 30, 2019 as compare to the same period of 2018.

Net Loss

As a result of the factors mentioned above, the Company incurred a net loss for the three and nine months ended September 30, 2019 of $547,689 and $1,973,382, as compared to a net loss of $314,891 and $2,471,554 for the corresponding periods in 2018, an increase in net loss of $232,798, or 73.93% for the three months ended September 30, 2019 as compared to the same period of 2018, and a decrease in net loss of $498,172, or 20.16% for the nine months ended September 30, 2019 as compared to the same period of 2018. The fluctuation in net loss reflect changes in the gross profit and operation expenses for the three and nine months ended September 30, 2019 as discussed above.

Liquidity And Capital Resources

As of September 30, 2019, we had $65,354 in cash and cash equivalents and had a working capital deficit of ($9,344,148), compared with $17,860 in cash and cash equivalents and a working capital deficit of ($10,458,105) at December 31, 2018.

Net cash used in operating activities was $935,967 during the nine months ended September 30, 2019 compared to $738,511 provided by operating activities during the comparable period in 2018. Net cash used in investing activities was $571,101 during the nine months ended September 30, 2019 compared to $1,441 provided by investing activities for the comparable period in 2018, mainly related to a related party loan receivable. Net cash provided by financing activities was $1,588,992 during the nine months ended September 30, 2019, mainly related to loans from and advances by our affiliates to support our daily operations, compared to $811,413 used in financing activities during the comparable period in 2018.

About NF Energy Saving CorporationNF Energy Saving Corporation (NASDAQ: BIMI) is a China-based provider of integrated energy conservation solutions utilizing energy-saving equipment, technical services and energy management re-engineering project operations to provide energy saving services to clients. In February 2019, the Board of Directors of the company was reorganized following efforts led by Mr. Yongquan Bi, the company’s new Chairman, with a renewed focus on the health industry.

Safe Harbor StatementThe statements contained herein that are not historical facts are considered “forward-looking statements.” Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, statements regarding the efficacy of investment in research and development are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including, but not limited to, the effect of political, economic, and market conditions and geopolitical events; legislative and regulatory changes that affect our business; the availability of funds and working capital; the actions and initiatives of current and potential competitors; investor sentiment; and our reputation. We do not undertake any responsibility to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by any forward-looking statements. The factors discussed herein are expressed from time to time in our filings with the Securities and Exchange Commission available at http://www.sec.gov.

IR Contact:Dragon Gate Investment Partners LLCTel: +1(646)-801-2803Email: BIMI@dgipl.com

NF ENERGY SAVING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September December 31, 30, 2019 2018 ------------ ------------ (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 65,354 $ 17,860 Restricted cash 180,525 179,496 Accounts receivable, net 348,083 1,274,980 Retention receivable, net 25,590 65,529 Loan to related party 601,951 — Inventories 1,531,728 937,966 Prepayments and other receivables 2,459,845 131,442 - ---------- - ---------- Total current assets 5,213,076 2,607,273 - ---------- - ---------- NON-CURRENT ASSETS Property, plant and equipment, net 16,802,665 17,958,136 Land use right, net 2,348,558 2,460,668 Construction in progress — 24,722 - ---------- - ---------- Total non-current assets 19,151,223 20,443,526 - ---------- - ---------- TOTAL ASSETS $ 24,364,299 $ 23,050,799 - ---------- - ---------- LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term bank borrowings $ 5,652,561 $ 5,816,961 Convertible promissory note, net 3,647 — Derivative liability 142,074 — Accounts payable, trade 2,447,711 2,782,182 Accounts payable, trade-related parties 386,879 416,547 Amount due to related parties 2,464,568 918,033 Taxes payable 1,110,621 1,086,589 Other payables and accrued liabilities 2,349,163 2,045,066 - ---------- - ---------- Total current liabilities 14,557,224 13,065,378 - ---------- - ---------- TOTAL LIABILITIES 14,557,224 13,065,378 - ---------- - ---------- COMMITMENTS AND CONTINGENCIES EQUITY Common stock, $0.001 par value; 50,000,000 shares authorized; 8,073,289 and 7,573,289 shares issued and outstanding as of September 30, 2019 and 8,073 7,573 December 31, 2018, respectively Additional paid-in capital 14,594,825 12,555,325 Statutory reserves 2,227,634 2,227,634 Accumulated deficit (8,417,261 ) (6,443,102 ) Accumulated other comprehensive income 1,547,401 1,788,302 - ---------- - ---------- Total NF Energy Saving Corporation’s equity 9,960,672 10,135,732 - ---------- - ---------- NONCONTROLLING INTERESTS (153,597 ) (150,311 ) - ---------- - ---------- Total equity 9,807,075 9,985,421 - ---------- - ---------- Total liabilities and equity $ 24,364,299 $ 23,050,799 - ---------- - ----------

NF ENERGY SAVING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the Three Months Ended For the Nine Months Ended September 30, September 30, --------------------------- ---------------------------- 2019 2018 2019 2018 ----------- ------------ ------------ ------------ REVENUES Products $ 178,599 $ 1,052,130 $ 950,773 $ 1,550,119 Services 29,803 50,563 170,031 263,992 - --------- - ---------- - ---------- - ---------- Total revenues, net 208,402 1,102,693 1,120,804 1,814,111 COST OF REVENUES Cost of products 204,845 937,586 806,049 1,148,581 Cost of services 76,169 19,108 224,813 196,303 - --------- - ---------- - ---------- - ---------- Total cost of revenues 281,014 956,694 1,030,862 1,344,884 GROSS PROFIT (LOSS) (72,612 ) 145,999 89,942 469,227 - --------- - ---------- - ---------- - ---------- OPERATING EXPENSES: Sales and marketing 33,096 6,153 119,820 22,542 General and administrative 326,211 364,550 1,487,943 2,631,731 - --------- - ---------- - ---------- - ---------- Total operating expenses 359,307 370,703 1,607,763 2,654,273 - --------- - ---------- - ---------- - ---------- LOSS FROM OPERATIONS (431,919 ) (224,704 ) (1,517,821 ) (2,185,046 ) - --------- - ---------- - ---------- - ---------- OTHER INCOME (EXPENSE) Interest expense (174,488 ) (92,769 ) (466,582 ) (290,153 ) Other income 58,718 2,598 11,021 3,759 - --------- - ---------- - ---------- - ---------- Total other expense, net (115,770 ) (90,171 ) (455,561 ) (286,394 ) - --------- - ---------- - ---------- - ---------- LOSS BEFORE INCOME TAXES (547,689 ) (314,875 ) (1,973,382 ) (2,471,440 ) PROVISION FOR INCOME TAXES — 16 — 114 - --------- - ---------- - ---------- - ---------- NET LOSS (547,689 ) (314,891 ) (1,973,382 ) (2,471,554 ) Less: net income (loss) attributable to (3,220 ) (4,776 ) 777 (12,233 ) noncontrolling interest - --------- - ---------- - ---------- - ---------- NET LOSS ATTRIBUTABLE TO NF ENERGY SAVING $ (544,469 ) $ (310,115 ) $ (1,974,159 ) $ (2,459,321 ) CORPORATION - --------- - ---------- - ---------- - ---------- COMPREHENSIVE LOSS NET LOSS $ (547,689 ) $ (314,891 ) $ (1,973,382 ) $ (2,471,554 ) - --------- - ---------- - ---------- - ---------- OTHER COMPREHENSIVE LOSS Foreign currency translation adjustment (271,289 ) (1,049,846 ) (244,964 ) (1,445,691 ) - --------- - ---------- - ---------- - ---------- Total comprehensive loss (818,978 ) (1,364,737 ) (2,218,346 ) (3,917,245 ) Less: comprehensive income (loss) attributable (1,260 ) (7,001 ) 3,286 (6,232 ) to non-controlling interests - --------- - ---------- - ---------- - ---------- COMPREHENSIVE LOSS ATTRIBUTABLE TO NF ENERGY $ (817,718 ) $ (1,357,736 ) $ (2,221,632 ) $ (3,911,013 ) SAVING CORPORATION - --------- - ---------- - ---------- - ---------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES Basic and diluted 8,073,289 7,573,289 7,871,824 7,445,084 - --------- - ---------- - ---------- - ---------- LOSS PER SHARE Basic and diluted $ (0.07 ) $ (0.04 ) $ (0.25 ) $ (0.33 ) - --------- - ---------- - ---------- - ----------

NF ENERGY SAVING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended September 30, ---------------------------- 2019 2018 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,973,382 ) $ (2,471,554 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation and amortization 716,433 695,162 Gain on disposal of property (43,712 ) (730 ) Provision (reversal) of allowance for doubtful accounts (75,203 ) 1,462,898 Change in fair value of derivative liability 2,132 - Amortization of discount on convertible promissory note 1,239 - Impairment loss in construction in progress 24,803 - Change in operating assets and liabilities Accounts and retention receivable 970,444 3,637,343 Inventories (634,860 ) (2,506,962 ) Prepayments and other receivables (67,709 ) (459,222 ) Accounts payable, trade (284,077 ) 218,853 Other payables and accrued liabilities 371,982 162,723 Taxes payable 55,943 - - ---------- - ---------- Net cash provided by (used in) operating activities (935,967 ) 738,511 - ---------- - ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposal of property, plant and equipment 50,063 1,441 Loan to related party (1,161,458 ) - Repayment from the related party loan 540,294 - - ---------- - ---------- Net cash provided by (used in) investing activities (571,101 ) 1,441 - ---------- - ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of share from placement - 500,000 Amount from (to) related parties, net 1,591,910 (282,478 ) Repayment to bank demand notes - (1,028,935 ) Proceeds from short-term bank borrowings 5,835,897 6,614,583 Repayment on short-term bank borrowings (5,838,815 ) (6,614,583 ) - ---------- - ---------- Net cash provided by (used in) financing activities 1,588,992 (811,413 ) - ---------- - ---------- EFFECT OF EXCHANGE RATE ON CASH (33,401 ) (8,944 ) - ---------- - ---------- INCREASE (DECREASE) IN CASH 48,523 (80,405 ) CASH, CASH EQUIVALENTS, RESTRICTED CASH, beginning of period 197,356 282,154 - ---------- - ---------- CASH, CASH EQUIVALENTS, RESTRICTED CASH, end of period $ 245,879 $ 201,749 - ---------- - ---------- SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income tax $ - $ 114 - ---------- - ---------- Cash paid for interest expense $ 434,198 $ 290,477 - ---------- - ---------- NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES Issuance of common share for subscription for potential equity acquisition $ 2,040,000 $ - - ---------- - ---------- Issuance of convertible promissory note that received after the balance sheet $ 153,000 $ - date - ---------- - ----------