-- Revenue Grew by 95.6% to $23.2 Million in FY 2008 SHANGHAI,
March 31 /PRNewswire-Asia/ -- China Energy Recovery, Inc.
(OTC:CGYV) (BULLETIN BOARD: CGYV) (ISIN: US16943V2060; "CER"), a
leader in the waste heat energy recovery sector of the industrial
energy efficiency industry, today announced record financial
results for the fiscal year and fourth quarter ended December 31,
2008. Full Year 2008 Financial Results Revenue for 2008 increased
by 95.6% to $23.18 million from $11.85 million in 2007. Product
sales generated revenue of $18.50 million, or 79.8% of the total
revenue, and increased by 125.7% from $8.20 million in 2007. Design
services generated revenue of $1.27 million, or 5.5% of the total
revenue, and increased by 187.8% from $0.44 million in 2007.
Revenue from an EPC (engineering, procurement and construction)
project that required the company's special technological expertise
accounted for $3.42 million, or 14.7% of the total revenue. Gross
profit increased to $5.07 million, a 138.2% increase from $2.13
million in 2007. The company's gross margin was 21.9%, compared to
18.0% in 2007. The increase in the company's gross margin is mainly
due to an increase of licensing and design service contracts, which
normally achieve greater margins, and our obtaining higher margin
orders leveraging our special technical expertise. Operating income
increased by 110.6% to $1.61 million in 2008 from $0.76 million in
2007. If the expenses of $1.47 million related to public company
operations, including $0.72 million in non-cash, stock-based
service and compensation expenses and finance expense, were
excluded so as to be comparable to 2007 in which the company did
not incur such expenses, operating income would have amounted to
$3.08 million. Net income for 2008 was $1.11 million, an increase
of 73.3% from $0.64 million in 2007. Without the aforementioned
non-cash expenses of $0.72 million, net income would have been
$1.83 million, an increase of 185.9% over that of 2007. Further, to
be comparable to 2007, without the $1.47 million expenses related
to public company operations, net income would have been $2.58
million, representing a growth of 303.1% over that of 2007. Fourth
Quarter of 2008 Financial Results Revenue for the fourth quarter of
2008 increased by 67.1% year over year to a record $7.20 million
from $4.31 million in Q4 2007. "I am very proud to have achieved
another record year of growth in 2008," commented Mr. Qinghuan Wu,
Chairman and CEO of China Energy Recovery. "In 2008, we continued
to strengthen our leadership position in supplying superior energy
recovery systems to the chemical and paper-making industries in
China. Going public on an American exchange in 2008 helped us open
a new era for the company and has helped increase the awareness for
the company internationally. Though there will continue to be
challenges in 2009 resulting from the global economic recession, we
believe the company will continue to grow and capitalize on market
opportunities created by the increasing demands for greater energy
efficiency and global environmental protection initiatives. The
market recognition for our superior design and engineering
capabilities coupled with our expertise in waste energy recovery
has helped us achieve a well-earned reputation for quality --
something we've endeavored for since the company's founding. We
intend to continue to strengthen our core competencies, streamline
our business model and expand into other market segments such as
cement manufacturing. We will also continue to seek opportunities
to expand our manufacturing capacity for our core products. All
these efforts will lay a solid foundation for the sustained,
long-term growth for the company in order to maintain a reputation
as a world leader in waste energy recovery." For more detailed
financial information about CER, please refer to CER's Annual
Report on Form 10-K for the fiscal year ended December 31, 2008,
filed with the Securities and Exchange Commission on March 30,
2009. 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 vast amounts of that wasted
energy and converting it into usable heat energy or electricity,
dramatically lowering energy costs. Energy recovery systems are
also 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. The company's primary focus is on the
Chinese market. CER's technology captures industrial waste energy
to produce low-cost electrical power, enabling industrial
manufacturers to reduce their energy costs, shrink their emissions
footprint, and generate sellable emissions credits. CER has
deployed its systems throughout China and in such international
markets as Egypt, Korea, Vietnam and Malaysia. CER focuses on
numerous industries in which a rapid payback on invested capital is
achieved by its customers, including: chemical, paper
manufacturing, refining (including methanol refining), etc. CER
continues to invest in R&D and plans to build China's first
state-of-the-art energy recovery system research and fabrication
facility to allow it to meet the increased demand for its products
and services. For more information on CER, please visit:
http://www.chinaenergyrecovery.com/s/Home.asp . Information on
CER's website does not comprise a part of this press release.
Forward-Looking Statement Disclaimer This press release includes
"forward-looking statements" within the meaning of the Securities
Litigation Reform Act of 1995, as amended. All statements, other
than statements of historical fact, included in the press release
that address activities, events or developments that CER believes
or anticipates will or may occur in the future are forward-looking
statements. These statements are based on certain assumptions made
based on experience, expected future developments and other factors
that CER believes are appropriate under the circumstances. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of CER and may
not materialize, including, without limitation, the efficacy and
market acceptance of CER's products and services, CER's ability to
execute on its business plan and strategies and CER's ability to
successfully complete orders and collect revenues therefrom.
Investors are cautioned that any such statements are not guarantees
of future performance. Actual results or developments may differ
materially from those projected in the forward-looking statements
as a result of many factors. Furthermore, CER does not intend (and
is not obligated) to update publicly any forward-looking
statements, except as required by law. The contents of this release
should be considered in conjunction with the warnings and
cautionary statements contained in CER's filings with the
Securities and Exchange Commission, including CER's Annual Report
on Form 10-K filed with the Securities and Exchange Commission on
March 30, 2009. CHINA ENERGY RECOVERY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2008 AND 2007 2008
2007 ASSETS CURRENT ASSETS: Cash $6,136,403 $306,150 Restricted
cash 597,949 89,115 Notes receivable 120,749 351,799 Accounts
receivable, net of allowance for doubtful accounts of $151,094 and
$237,475 as of December 31, 2008 and 2007, respectively 4,935,142
577,005 Accounts receivable - related party 1,006,060 572,036
Inventories 7,774,775 5,262,329 Costs and estimated earnings in
excess of billings -- 1,155,909 Other receivables 98,271 37,852
Advances on inventory purchases 1,044,807 1,995,345 Total current
assets 21,714,156 10,347,540 EQUIPMENT, net 850,888 649,392 OTHER
ASSETS: Long term accounts receivable, retainage 377,368 588,433
Due from shareholder -- 463,663 Total other assets 377,368
1,052,096 Total assets $22,942,412 $12,049,028 LIABILITIES AND
SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable
$3,331,293 $2,196,508 Other payables 466,392 275,591 Other payables
- related party 65,078 60,819 Accrued liabilities 21,228 27,851
Customer deposits 7,044,234 8,052,570 Taxes payable 2,282,621
719,132 Deferred revenue 1,518,431 930,546 Deferred revenue -
related party 208,270 -- Short term loans payable 381,420 -- Total
current liabilities 15,318,967 12,263,017 COMMITMENTS AND
CONTINGENCIES -- -- SHAREHOLDERS' EQUITY: Preferred stock, $0.001
par value, 50,000,000 shares authorized, 714,963 and 0 issued and
outstanding as of December 31, 2008 and 2007 715 -- Common stock,
$0.001 par value, 100,000,000 shares authorized, 29,912,573 issued
and outstanding as of December 31, 2008 20,757,090 issued and
outstanding as of December 31, 2007 29,913 20,757 Paid-in-capital
7,645,404 870,787 Accumulated deficit (363,147) (1,270,165)
Statutory reserves 408,403 204,758 Accumulated other comprehensive
loss (97,843) (40,126) Total shareholders' equity 7,623,445
(213,989) Total liabilities and shareholders' equity $22,942,412
$12,049,028 CHINA ENERGY RECOVERY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR YEARS ENDED DECEMBER 31, 2008 AND 2007 2008 2007 REVENUES Third
parties $19,793,175 $10,923,338 Related party 3,384,900 923,554
Total revenue 23,178,075 11,846,892 COST OF SALES Third parties
16,155,562 8,929,769 Related party 1,951,549 788,655 Total cost of
sales 18,107,111 9,718,424 GROSS PROFIT 5,070,964 2,128,468
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,463,682 1,365,321
INCOME FROM OPERATIONS 1,607,282 763,147 OTHER INCOME (EXPENSE),
NET: Non-operating income, net 126,512 11,259 Interest expense, net
(57,411) (42,446) Total other income (expense), net 69,101 (31,187)
INCOME FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES 1,676,383
731,960 PROVISION FOR INCOME TAXES 565,720 91,041 NET INCOME
1,110,663 640,919 OTHER COMPREHENSIVE INCOME Foreign currency
translation adjustment (57,717) (201,560) COMPREHENSIVE INCOME
$1,052,946 $439,359 EARNINGS PER SHARE: Basic Weighted average
number of shares 25,705,500 20,757,090 Earnings per share $0.043
$0.031 Diluted Weighted average number of shares 27,033,819
20,757,090 Earnings per share $0.041 $0.031 CHINA ENERGY RECOVERY,
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
YEARS ENDED DECEMBER 31, 2008 AND 2007 2008 2007 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $1,110,663 $640,919 Adjustments to
reconcile net income to cash provided by (used in) operating
activities: Depreciation 92,885 51,715 Change in allowance for
uncollectible accounts 55,549 164,445 Common stock issued for
services 469,631 -- Stock based compensation 193,222 -- Value of
warrants related to convertible notes 52,279 -- Loss on fixed
assets disposal 13,186 -- Change in operating assets and
liabilities Notes receivable 251,239 (201,663) Accounts receivable
(4,298,231) 1,390,834 Accounts receivable - related party (387,120)
(549,380) Inventories (2,106,701) (2,296,726) Costs and estimated
earnings in excess of billings 1,215,348 (1,110,127) Other
receivables (57,199) 65,151 Advances on inventory purchases
1,072,567 (1,229,206) Long term accounts receivable, retainage
221,919 (565,128) Other assets (2,018) 1,211 Accounts payable
946,615 207,593 Other payables 168,521 (4,565) Other payables -
related party -- (370,764) Accrued liabilities (8,225) 23,899
Customer deposits (1,544,864) 5,005,764 Customer deposits - related
party -- (190,186) Taxes payable 1,486,832 137,740 Deferred revenue
718,290 163,590 Net cash provided by (used in) operating activities
(335,612) 1,335,116 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase
equipment (246,196) (246,264) Repayment of loans to shareholder
487,507 (707,003) Net cash provided by (used in) investing
activities 241,311 (953,267) CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (587,555) (89,115) Cash received from
re-organization 119 -- Capital contribution -- 67,150 Proceeds from
issuing preferred stock, net of offering costs 6,619,278 --
Shareholder distribution from VIE (519,744) (210,756) Cash proceeds
from short term bank loans 361,920 282,040 Repayment of short term
bank loans -- (298,980) Net cash provided by (used in) financing
activities 5,874,018 (249,661) EFFECTS OF EXCHANGE RATE CHANGE IN
CASH 50,536 26,357 INCREASE IN CASH 5,830,253 158,545 CASH,
beginning 306,150 147,605 CASH, ending $6,136,403 $306,150 For more
information, please contact: Media Sean Mahoney Tel:
+1-310-867-0670 Email: Investor Relations Jim Blackman Tel:
+1-713-256-0369 Email: DATASOURCE: China Energy Recovery, Inc.
CONTACT: Media - Sean Mahoney at +1-310-867-0670 or ; Investor
Relations - Jim Blackman at +1-713-256-0369 or Web site:
http://www.chinaenergyrecovery.com/s/Home.asp
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