China Recycling Energy Corporation Reports Results for the Second Quarter of 2020 Nasdaq:CREG

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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   $     $ 35,938,441  
Conversion of convertible debt into common shares   $     $ 1,070,000  
Conversion of long-term notes into common shares   $ 1,104,586     $  

Investor Relations Inquiries:
Vivian Chen
vivianchen@irimpact.com

Media Inquiries:
Cathy Loos
cathyloos@irimpact.com



Original Source

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