XI'AN, China, Aug. 14, 2020 (GLOBE NEWSWIRE) -- China Recycling Energy Corporation (NASDAQ: CREG) ("CREG" or "the Company"), an industrial waste-to-energy solution provider in China, today reported certain highlights of its operating results for the quarter ended June 30, 2020.
“As of June 30, 2020, we maintained a healthy cash and cash equivalents balance of approximately $62.7 million,” stated Mr. Guohua Ku, Chairman and CEO of the Company. "In addition, our company successfully collected approximately $2.8 million from overdue accounts receivable in the quarterly period ended June 30, 2020. Coupled with our continuing cost cutting efforts throughout our entire organization, our company has recognized net income of $993,940 in this quarter, or $0.43 per basic and diluted share. We are executing what we believe is a clear plan to manage our business efficiently and effectively through the coronavirus pandemic, prioritizing the health and safety of our customers and teams. We believe our financial position and contingency plans will allow us to retain the financial flexibility to pursue the fast-growing smart power sector. We feel we are back on track to continue evaluating several exciting strategic opportunities to reinvest in innovative growth initiatives. We expect to reposition our energy sustainability business in direct relation to smart power integrated solutions to vastly improve climate change efficiency in China in order to better serve our clients, employees and shareholders. As such, we will maintain our focus on expense and working capital discipline, so that we can move forward with a strengthened platform to attempt to capitalize on the significant opportunities we see for growth.”
Financial Summary for the Quarter Ended June 30, 2020
Cash and cash equivalents were approximately $62.7 million as of June 30, 2020, an increase of approximately $46.5 million as compared to approximately $16.2 million as of December 31, 2019.
Net sales were nil as compared to $80,924 for the same period of 2019, due to the shutdown of our business during the COVID-19 pandemic.
Income from operations was approximately $1.4 million, due to the reversal of bad debts allowance compared to approximately loss from operations of approximately $3.3 million.
Net income for three months ended June 30, 2020 was $993,940 or $0.43 per fully diluted share compared to a net loss of approximately $5.3 million or $(0.33) per fully diluted share for the three months ended June 30, 2019, a decrease of net loss of approximately $6.5 million. This decrease in net loss was mainly due to the decrease in operating expenses resulting from a reversal of bad debts expense as described above.
About China Recycling Energy Corp.
China Recycling Energy Corporation (Nasdaq: CREG) ("CREG" or "the Company") is based in Xi'an, China and provides environmentally friendly waste-to-energy technologies to recycle industrial byproducts for steel mills, cement factories and coke plants in China. Byproducts include heat, steam, pressure, and exhaust to generate large amounts of lower-cost electricity and reduce the need for outside electrical sources. The Chinese government has adopted policies to encourage the use of recycling technologies to optimize resource allocation and reduce pollution. Currently, recycled energy represents only an estimated 1% of total energy consumption and this renewable energy resource is viewed as a growth market due to intensified environmental concerns and rising energy costs as the Chinese economy continues to expand. The Company’s management and engineering teams have over 20 years of experience in industrial energy recovery in China. For more information about CREG, please visit http://creg-cn.investorroom.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of CREG and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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, but not limited to, the risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions relating to the registered direct offering and those discussed in the Company's annual and periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. All forward-looking statements attributable to the Company or 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.
CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JUNE 30, 2020 (UNAUDITED)
DECEMBER 31, 2019
ASSETS
CURRENT ASSETS
Cash
$
62,666,385
$
16,221,297
Accounts receivable, net
31,793,218
42,068,760
Interest receivable on sales type leases
-
5,245,244
Prepaid expenses
51,078
52,760
Other receivables
44,653
1,031,143
Total current assets
94,555,334
64,619,204
NON-CURRENT ASSETS
Investment in sales-type leases, net
-
8,287,560
Long term deposit
-
15,712
Operating lease right-of-use assets, net
21,655
54,078
Property and equipment, net
26,649,769
27,044,385
Construction in progress
-
23,824,202
Total non-current assets
26,671,424
59,225,937
TOTAL ASSETS
$
121,226,758
$
123,845,141
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
2,168,116
$
2,200,220
Taxes payable
2,483,681
4,087,642
Accrued interest on notes
3,935
-
Notes payable, net of unamortized OID
913,410
-
Accrued liabilities and other payables
1,165,256
1,184,751
Operating lease liability
25,611
56,755
Due to related parties
28,720
41,174
Interest payable on entrusted loans
8,711,500
8,200,044
Entrusted loan payable
20,181,378
20,480,214
Total current liabilities
35,681,607
36,250,800
NONCURRENT LIABILITIES
Accrued interest on notes
-
368,362
Income tax payable
5,782,625
5,782,625
Notes payable, net of unamortized OID
-
1,552,376
Long term payable
423,759
430,034
Entrusted loan payable
282,506
286,689
Refundable deposit from customers for systems leasing
-
544,709
Total noncurrent liabilities
6,488,890
8,964,795
Total liabilities
42,170,497
45,215,595
CONTINGENCIES AND COMMITMENTS (NOTE 17 & 18)
STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value; 10,000,000 shares authorized, 2,493,197 shares and 2,032,721 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
2,493
2,033
Additional paid in capital
117,995,829
116,682,374
Statutory reserve
14,666,206
14,525,712
Accumulated other comprehensive loss
(7,415,203
)
(6,132,614
)
Accumulated deficit
(46,193,064
)
(46,447,959
)
Total Company stockholders’ equity
79,056,262
78,629,546
TOTAL LIABILITIES AND EQUITY
$
121,226,758
$
123,845,141
CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
THREE MONTHS ENDED JUNE 30,
2020
2019
2020
2019
Revenue
Contingent rental income
$
-
$
702,973
$
-
$
80,924
Interest income on sales-type leases
-
173,360
-
-
Total operating income
-
876,333
-
80,924
Operating expenses
Bad debts (reversal)
(1,649,622
)
2,824,903
(1,649,622
)
2,716,507
Loss on disposal of systems
-
1,264,256
-
-
General and administrative
390,864
2,017,336
236,686
682,912
Total operating (income) expenses
(1,258,758
)
6,106,495
(1,412,936
)
3,399,419
Income (loss) from operations
1,258,758
(5,230,162
)
1,412,936
(3,318,495
)
Non-operating income (expenses)
Loss on note redemption / conversion
(198,330
)
(893,958
)
(95,163
)
-
Interest income
72,617
82,610
45,611
41,498
Interest expense
(697,028
)
(3,793,920
)
(341,784
)
(1,861,815
)
Other income (expenses), net
(40,628
)
344,003
(27,660
)
(19,450
)
Total non-operating expenses, net
(863,369
)
(4,261,265
)
(418,996
)
(1,839,767
)
Income (loss) before income tax
395,389
(9,491,427
)
993,940
(5,158,262
)
Income tax (benefit) expense
-
(2,286,044
)
-
104,827
Net income (loss) attributable to China Recycling Energy Corporation
395,389
(7,205,383
)
993,940
(5,263,089
)
Other comprehensive items
Foreign currency translation gain (loss)
(1,282,589
)
(96,559
)
58,688
(1,907,185
)
Comprehensive income (loss) attributable to China Recycling Energy Corporation
$
(887,200
)
$
(7,301,942
)
$
1,052,628
$
(7,170,274
)
Basic and diluted weighted average shares outstanding
2,226,282
13,914,784
2,317,223
15,743,533
Basic and diluted loss per share
$
0.18
$
(0.52
)
$
0.43
$
(0.33
)
CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
395,389
$
(7,205,383
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Amortization of OID and debt issuing costs of notes
39,583
72,161
Stock compensation expense
10,999
-
Operating lease expenses
32,502
-
Bad debts expense (reversal)
(1,649,622
)
2,824,901
Loss on disposal of 40% ownership of Fund Management Co
-
47,267
Loss on transfer of Chengli Boxing system
-
634,963
Loss on transfer of Xuzhou Huayu system
-
403,922
Loss on transfer of Shenqiu Phase I & II systems
-
211,975
Loss on disposal of fixed assets
-
293
Loss on notes redemption / conversion
198,330
893,958
Changes in deferred tax
-
(2,364,088
)
Changes in assets and liabilities:
Interest receivable on sales type leases
-
(173,360
)
Collection of principal on sales type leases
13,879,575
-
Accounts receivable
35,552,191
65,001
Prepaid expenses
919
-
Other receivables
(3,589
)
(1,074,031
)
Accounts payable
-
(2,888,301
)
Taxes payable
(2,121,622
)
(1,283,246
)
Payment of lease liability
(31,174
)
-
Interest payable on entrusted loan
635,375
3,720,566
Accrued liabilities and other payables
57,740
(371,026
)
Refundable deposit for systems leasing
-
(486,668
)
Net cash provided by (used in) operating activities
46,996,596
(6,971,096
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property & equipment
-
5,162
Net cash provided by investing activities
-
5,162
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes payable
-
2,000,000
Issuance of common stock
-
3,309,475
Net cash provided by financing activities
-
5,309,475
EFFECT OF EXCHANGE RATE CHANGE ON CASH
(551,508
)
(80,341
)
NET INCREASE (DECREASE) IN CASH
46,445,088
(1,736,800
)
CASH, BEGINNING OF PERIOD
16,221,297
53,223,142
CASH, END OF PERIOD
$
62,666,385
$
51,486,342
Supplemental cash flow data:
Income tax paid
$
-
$
225,784
Interest paid
$
-
$
-
Supplemental disclosure of non-cash operating activities
Transfer of Tian’an project from construction in progress to accounts receivable
$
23,635,489
$
-
Supplemental disclosure of non-cash financing activities
Transfer of Xuzhou Huayu Project and Shenqiu Phase I & II projects to Mr. Bai
