Net loss for the three months ended
An increase in operating expenses from
Net loss for the nine months ended
The company drew down all of a
"Revenues decreased slightly this quarter but, with the recovery of the Chinese economy and the government's emphasis on energy efficiency and pollution reduction, we see the rate of new orders returning to normal and we anticipate growth in new orders going forward," said Mr. Qinqhuan Wu, China Energy Recovery's Chief Executive Officer."
"CER is among very few companies in
"A grant from the Chinese government in connection with the planned new
production facility acknowledges the important role waste heat recovery
systems play in improving energy efficiency and reducing pollution in
What is Waste Heat Energy Recovery?
Industrial facilities release significant amounts of excess heat into the atmosphere in the form of hot exhaust gases or high-pressure steam. Energy recovery is the process of recovering wasted energy and converting it into usable heat energy, including electricity. Energy recovery systems also are capable of capturing harmful pollutants that would otherwise be released into the environment. It is estimated that if energy currently wasted by all the U.S. industrial facilities could be recovered, it could produce power equivalent to 20% of U.S. electricity generation capacity without burning any additional fossil fuel, and could help many industries to meet stringent environmental regulations.
About China Energy Recovery Inc.
CER is an international leader in designing, manufacturing and installing
waste heat energy recovery systems which provide facilities with greater
energy efficiency. CER's technology captures industrial waste energy to
produce low-cost electrical power enabling industrial manufacturers to reduce
their energy costs, to shrink their emissions footprint, and to generate
sellable emissions credits. CER has deployed its systems throughout
Safe Harbor - This Quarterly Report on Form 10-Q contains disclosures
which are forward-looking statements. Forward-looking statements include all
statements that do not relate solely to historical or current facts, such as,
but not limited to, the discussion of economic conditions in market areas and
their effect on revenue growth, the discussion of our growth strategy, the
potential for and effect of future governmental regulation, fluctuation in
global energy costs, the effectiveness of our management information systems,
and the availability of financing and working capital to meet funding
requirements, and can generally be identified by the use of words such as
"may," "believe," "will," "expect," "project," "estimate," "anticipate,"
"plan" or "continue." These forward-looking statements are based on the
current plans and expectations of our management and are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or those anticipated. These factors include, but are
not limited to: the general economic conditions that may affect our customers
desire or ability to invest in energy recovery systems; the cost of raw
materials; the availability of environmental credits; the positive and adverse
effect of governmental regulation affecting energy recovery systems; our
reliance on customers in heavy industry, such as chemicals, paper, refining
and steel production, and state owned or controlled enterprises; competition
in the industry of heat and energy recovery systems; the availability of and
costs associated with potential sources of financing; difficulties associated
with managing future growth; our ability to increase manufacturing capacity to
meet demand; fluctuations in currency exchange rates; restrictions on foreign
investments in
CHINA ENERGY RECOVERY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008 ASSETS September 30, December 31, 2009 2008 (Unaudited) CURRENT ASSETS: Cash $1,203,041 $6,136,403 Restricted cash 5,491,663 597,949 Notes receivable 541,509 120,749 Accounts receivable, net of allowance for doubtful accounts of $646,233 and $151,094 as of September 30, 2009 and December 31, 2008, respectively 4,209,612 5,941,202 Other receivables 507,714 98,271 Deferred expense 221,061 -- Inventories 5,729,334 7,774,775 Advances on inventory purchases 4,058,264 1,044,807 Deferred tax asset 221,757 -- Total current assets 22,183,955 21,714,156 EQUIPMENT, NET 871,787 850,888 OTHER ASSETS: Inventories-non current 1,770,754 -- Long term accounts receivable, net of allowance for doubtful accounts of $231,808 and $0 as of September 30, 2009 and December 31, 2008, respectively 1,571,238 377,368 Cost and estimated earnings in excess of billings 3,588,446 -- Deferred finance costs 1,727,257 -- Total other assets 8,657,695 377,368 Total assets $31,713,437 $22,942,412 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $4,878,802 $3,352,521 Other payables 888,972 531,470 Customer deposits 7,784,224 7,044,234 Short term loans payable 880,200 381,420 Deferred revenue 2,181,974 1,726,701 Taxes payable 2,125,366 2,282,621 Total current liabilities 18,739,538 15,318,967 NON-CURRENT LIABILITIES: Notes payable 5,000,000 -- Warrant liabilities 2,941,248 -- Total non-current liabilities 7,941,248 -- Total Liabilities 26,680,786 15,318,967 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Series A preferred stock, $0.001 par value, 50,000,000 shares authorized, 662,963 and 714,963 issued and outstanding as of September 30, 2009 and December 31, 2008, respectively 663 715 Series B preferred stock , $0.001 par value, 100 shares authorized, Nil issued and outstanding as of September 30, 2009 and December 31, 2008, respectively -- -- Common stock, $0.001 par value, 100,000,000 shares authorized, 29,938,818 and 29,912,573 issued and outstanding as of September 30, 2009 and December 31, 2008, respectively 29,939 29,913 Paid-in-capital 5,113,296 7,645,404 Accumulated deficit (459,644) (363,147) Statutory reserves 408,403 408,403 Accumulated comprehensive loss (60,006) (97,843) Total shareholders' equity 5,032,651 7,623,445 Total liabilities and shareholders' equity $31,713,437 $ 22,942,412 CHINA ENERGY RECOVERY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 REVENUE $6,064,800 $6,123,704 $14,942,533 $15,980,191 COST OF REVENUE 4,691,381 4,513,038 11,936,853 12,467,448 GROSS PROFIT 1,373,419 1,610,666 3,005,680 3,512,743 OPERATING EXPENSE Selling expense 135,075 145,344 515,179 488,030 General and administrative expense 2,157,226 1,039,500 5,133,643 1,785,075 Total operating expense 2,292,301 1,184,844 5,648,822 2,273,105 INCOME (LOSS) FROM OPERATIONS (918,882) 425,822 (2,643,142) 1,239,638 OTHER INCOME (EXPENSE): Gain on change in fair value of warrants 941,277 -- 2,108,556 -- Finance expense (210,182) -- (326,409) -- Interest income (expense), net (6,081) 14,823 (3,175) (49,954) Other non-operating (expense) income, net 33,144 8,645 (1,148) 31,043 Total other income (expense), net 758,158 23,468 1,777,824 (18,911) INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES (160,724) 449,290 (865,318) 1,220,727 PROVISION (BENEFIT) FOR INCOME TAXES Current 24,933 204,434 102,377 411,639 Deferred (68,651) -- (221,587) -- Total provision (benefit) for income taxes (43,718) 204,434 (119,210) 411,639 NET INCOME (LOSS) (117,006) 244,856 (746,108) 809,088 OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency Translation adjustment 8,784 469 37,837 (44,436) COMPREHENSIVE INCOME (LOSS) $(108,222) $245,325 $(708,271) $764,652 EARNINGS (LOSS) PER COMMON SHARE: Basic $(0.00) $0.01 $(0.02) $0.03 Diluted $(0.00) $0.01 $(0.02) $0.03 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 29,938,818 27,460,695 29,931,806 24,415,471 Diluted 29,938,818 30,171,968 29,931,806 26,044,405
SOURCE China Energy Recovery Inc.