Net income during the three-month period was inclusive of CAD113,489 costs associated with stock-based compensation, and CAD227,497 in interest income generated on the company’s strong cash balance. The first quarter represents the seasonally weak quarter due to the effect of the Chinese New Year and consumer purchasing patterns.
At March 31, 2009, Zongshen was debt free with cash and cash equivalents amounting to CAD41.6 million, compared to CAD33.3 million at December 31, 2008. The company’s strong balance sheet enables Zongshen to weather the current economic downturn while having the ability to explore and complete select partnerships and acquisitions.
Zongshen continues to expect 2009 to be a challenging year for the organic growth of its e-bike and small gas bike businesses. However, Zongshen is well positioned to advance its growth strategy with a solid foundation in e-bikes and small gas bikes, a strong balance sheet, a large market for its products and a major shareholder and partner with assets and resources that can be leveraged to gain competitive advantages. The company is reviewing strategic growth opportunities through partnerships and acquisitions, which would complement its existing business.
As anticipated, we continued to see overall weakness, particularly in export markets, due to the global economic environment during the first quarter, noted Zongshen Zuo, chairman and chief executive officer of Zongshen. We are seeing demand beginning to stabilize and could see a return in consumer spending habits in the second half of 2009. The management team and board of directors are assessing a number of investment opportunities with a focus on accretive, complementary business in the two wheel and three wheel gas and electric vehicle business.
