AMCF Andatee China Marine Fuel Services Corp (CE)

Andatee China Marine Fuel Services Corporation (Nasdaq:AMCF), a leading independent operator engaged in the production, storage, distribution, trading of blended marine fuel oil for cargo and fishing vessels in China, today announced its unaudited financial results for the second quarter ended June 30, 2013.

Second Quarter 2013 Highlights

• Revenue in the second quarter of 2013 was $75.8 million, a 9.6% increase from the second quarter of 2012  
• Gross profit increased 44% year over year to $3.9 million as compared to $2.7 million in the same period of 2012, while gross profit margin during the quarter improved 120 base points year over year to 5.2% from 4%  
• Operating income in the second quarter of 2013 was $1.1 million, a 2.0% increase from the corresponding period in 2012  
• The Company ended the quarter with cash balance of approximately $3.5 million and restricted cash of $46.9 million.

"I am pleased to see the steady growth in our revenue as we have undertaken some initiatives, such as facilities investment and product line expansion, in a bid to provide our customers with easier access to Andatee's products and services," commented Mr. Fengbin An, Chairman & CEO of Andatee Marine Fuel Services Corporation, "During the quarter, we continued to expand our market coverage beyond our traditional Northern China region to more extended geographic areas, such as Shanghai and Zhejiang Province. Going forward, we will not only focus on attracting new customers to our current product offering, but also exploring various potential growth opportunities to enhance our growth rate as well as profit margin," he concluded. 

Second Quarter of 2013 Results

Revenue increased by $6.6 million, or 10%, from $69.12 million for the second quarter ended June 30, 2012 to $75.7 million for the second quarter ended June 30, 2013. The increase in the Company's revenue was mainly due to the increase in sales volume as well as selling price on certain key products.

For the three months ended June 30, 2013, #1 marine fuel represented 4.9% of the Company's sales, #2 marine fuel represented 6.7% of sales, #3 marine fuel represented 4.3% of sales, #4 marine fuel represented 64.7% of sales, 180CST represented 19.4% of sales and no sales were reported on 120CST.

Cost of revenues increased by $5.4 million, or 8%, from $66.4 million for the second quarter ended June 30, 2012 to $71.8 million for the second quarter ended June 30, 2013 primarily due to increased sales volume from 74,353 tons for the second quarter ended June 30, 2012 to 83,896 tons for second quarter ended June 30, 2013.

Gross profit increased by $1.19 million, or 44%, to $3.9 million for the quarter ended June 30, 2013 as compared to $2.7 million in the quarter ended June 30, 2012. As a percentage of revenues, gross profit margin was 5.2% and 4% for the second quarter of 2013 and 2012, respectively.

Total operating expenses from continuing operations for the second quarter of fiscal 2013 were $2.8 million, an increase of 64.7% from $1.7 million in the prior year period.

Selling expenses decreased by $51,535, or 13%, from $409,510 for the second quarter of 2012 to $357,975 in the second quarter of 2013. This decrease is mainly due to reduced sales promotion expenses and lease expenses. As a percentage of revenues, selling expenses decreased from 0.6% for the second quarter of 2012 to 0.5% for the second quarter of 2013.

General and administrative expenses increased by $1.22 million, or 98%, from $1.25 million for the second quarter of 2012 to $2.48 million for the second quarter of 2013. The increase was caused by increases in the depreciation expense, bad debt reserves, professional services fees and consulting fees. As a percentage of revenues, general and administrative expenses increased from 1.8% for the second quarter of 2012 to 3.3% for the second quarter of 2013.

Interest expense increased by $1.9 million, from $0.92 million for the second quarter ended June 30, 2012 to $2.84 million for the second quarter ended June 30, 2013. The increase in interest expense was due to the increased bank acceptance bills for the second quarter ended June 30, 2013 as compared to the second quarter ended June 30, 2012.

Net loss attributable to the Company increased by $1.94 million, from a net income of $217,449 for the second quarter ended June 30, 2012 to net loss of $1.81 million for the second quarter ended June 30, 2013. The increase in net loss was mainly the result of increase in cost of revenue, increase in operating expense and increase in interest expense for the period indicated.

Financial Condition

As of June 30, 2013, the Company had cash balance of approximately $3.5 million, and an addition to $46.9 million in restricted cash.

About Andatee China Marine Fuel Services

Andatee China Marine Fuel Services Corporation is a leading independent operator engaged in the production, storage, distribution, and trading of blended marine fuel oil for cargo and fishing vessels in China. Headquartered in the City of Dalian, a key international shipping hub and an international logistics center in Northern China, Andatee maintains operations in Liaoning, Shandong, Zhejiang Provinces and Shanghai area. Additional information about the Company is available via the Company filing with The Securities Exchange Commission at www.sec.gov.

Safe Harbor Relating to the Forward Looking Statements

Statements contained in this press release not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule under the Private Securities Litigation Reform Act of 1995. All forward-looking statements included herein are based upon information available to the Company as of the date hereof and, except as is expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. As a result, investors should not place undue reliance on these forward- looking statements. To the extent that any statements made here are not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "may," "anticipates," "believes," "should," "intends," "estimates" and other words of similar meaning. The Company may also make written or oral forward-looking statements in its periodic reports filed with the U.S. Securities and Exchange Commission and other written materials and in oral statements made by its officers, directors or employees to third parties. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by these forward-looking statements. Such risk factors include, without limitation, our ability to properly execute our business model, to address price and demand volatility, to counter weather and seasonal fluctuations, to attract and retain management and operational personnel, potential volatility in future earnings, fluctuations in the Company's operating results, our ability to expand geographically into new markets and successfully integrate future acquisitions, our ability to integrate and capitalize on the acquisitions in various markets, PRC governmental decisions and regulation, and existing and future competition that the Company is facing. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the Company's filings with the Securities and Exchange Commission under the caption "Risk Factors" in such filings.

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30, 2013	December 31, 2012
ASSETS
Current assets
Cash and cash equivalents	$ 3,522,403	$ 1,625,705
Restricted cash	46,909,212	9,173,002
Accounts receivable, net	47,678,251	18,220,089
Inventories, net	20,732,045	9,302,913
Advances to suppliers	22,352,330	16,387,613
Deposits for land use rights	2,332,664	698,291
Prepaid expense and other current assets	2,320,677	558,505
Deferred tax assets	1,065,813	840,540
Total current assets	146,913,395	56,806,658
Property, plant and equipment, net	52,379,442	40,880,091
Construction in progress	1,452,857	12,860,195
Equity investment	1,312,450	--
Intangible assets, net	8,882,727	8,953,602
Goodwill	1,238,169	1,213,036
Total assets	$ 212,179,040	$ 120,713,582
LIABILITIES AND EQUITY
Current liabilities
Short-term bank borrowings	$ 19,357,870	$ 9,314,247
Bank note payable	92,658,589	19,679,104
Accounts payable and accrued liabilities	19,258,163	8,367,697
Advances from customers	7,182,189	8,472,233
Loan from third parties	2,351,293	9,413,436
Related party loans payable	4,302,092	509,255
Taxes payable	2,871,938	2,719,517
Other liabilities	2,090,148	1,777,089
Total current liabilities	150,072,282	60,252,578
Warrant liability	92,686	--
Commitments and contingencies	--	--
Equity
Common stock, $0.001 par value; 50,000,000 shares authorized; 9,860,159 and 9,610,159 shares issued; 9,768,967 and 9,518,967 shares outstanding as of June 30, 2013, and December 31, 2012,respectively	9,860	9,610
Treasury stock, at cost; 91,192 shares	(497,693)	(497,693)
Additional paid-in capital	29,955,806	29,888,556
Accumulated other comprehensive income	5,621,023	4,297,827
Retained earnings	19,562,445	19,513,573
Statutory reserve	3,628,644	3,421,960
Total stockholders' equity of the Company	58,280,085	56,633,833
Noncontrolling interest	3,733,987	3,827,171
Total equity	62,014,072	60,461,004
Total liabilities and equity	$ 212,179,040	$ 120,713,582

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
	Three months ended June 30,		Six months ended June 30, 2013 ,
	2013	2012	2013	2012
Revenues	$ 75,766,037	$ 69,149,363	$ 129,397,690	$ 108,359,507
Cost of revenues	71,818,195	66,400,189	121,982,431	102,531,948
Gross profit	3,947,842	2,749,174	7,415,259	5,827,559
Operating expenses
Selling expenses	357,975	409,510	817,031	956,454
General and administrative expenses	2,486,902	1,258,168	4,136,767	2,405,462
Total operating expenses	2,844,877	1,667,678	4,953,798	3,361,916
Income from operations	1,102,965	1,081,496	2,461,461	2,465,643
Other income (expense)
Interest income	13,628	27,505	225,048	127,758
Interest expense	(1,167,686)	(928,513)	(3,757,998)	(2,640,621)
Income (loss) from equity investment	(8,566)	--	16,350	--
Change in fair value of warrants	10,150	--	10,150	--
Other income (expense)	(33,496)	(11,026)	(169)	289,872
Total other income (expense)	(1,185,970)	(912,034)	(1,829,835)	(2,222,991)
Income (loss) before income tax provision	(83,005)	169,462	631,626	242,652
Provision for Income Taxes	52,668	35,520	469,254	37,420
Net income (loss)	(135,673)	133,942	162,372	205,232
Less: net loss attributable to noncontrolling interest	(56,259)	(83,507)	(93,184)	(170,085)
Net income (loss) attributable to the Company	$ (79,414)	$ 217,449	$ 255,556	$ 375,317
Other comprehensive income (loss)
Total foreign currency translation adjustment	1,032,940	(33,280)	1,615,051	276,663
Less: foreign currency translation adjustment attributable to non-controlling interest	(60,466)	--	(291,855)	--
Foreign currency translation adjustment attributable to the Company	972,474	(33,280)	1,323,196	276,663
Comprehensive income (loss)	$ 893,060	$ 184,169	$ 1,578,752	$ 651,980
Basic and diluted weighted average shares outstanding	9,674,048	9,610,159	9,642,103	9,642,103
Basic and diluted net earnings (loss) per share	$ (0.01)	$ 0.02	$ (0.03)	$ 0.04

CONTACT: For more information, please contact:
         
         Company Contact:
         Mr. Hao Wang
         Chief Financial Officer
         Andatee China Marine Fuel Services Corporation
         Phone: +86-411-8360-4683