XI'AN, China, June 29, 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 March 31, 2020.
“As of March 31, 2020, we maintained a healthy cash and cash equivalents balance of approximately $55.0 million,” stated Mr. Guohua Ku, Chairman and CEO of the Company. In addition, we have accomplished significant cost cutting throughout our entire organization, evidenced by net loss narrowed by approximately 69.2% to approximately $(0.6) million in the first quarter ended March 31, 2020, as compared to approximately $(1.9) million in the same period of 2019. 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 that we expect will reposition our energy sustainability business in direct relation to smart power integrated solutions to vastly improve climate change efficiency in China, which we believe will better serve our clients, employees and shareholders. As such, we will maintain our focus on expense and working capital discipline so that we move forward with a strengthened platform to attempt to capitalize on the significant opportunities we see for growth.”
"Lastly, I want to thank all our employees for their service to the business and to our loyal customers. I am confident we will emerge from this challenge even stronger, given the strength of our brand, our people and the new opportunities ahead of us."
Financial Summary for the Full Year Ended December 31, 2019
Cash and cash equivalents were approximately $55.0 million as of March 31, 2020, an increase of approximately $38.8 million as compared to approximately $16.2 million as of December 31, 2019.
Net sales were nil as compared to $0.6 million for the same period of 2019 due to the shutdown of business during the COVID-19 pandemic.
Operating expenses were $154,178 for the three months ended March 31, 2020, compared to $2,699,990 for the three months ended March 31, 2019, a decrease of $2,545,812 or 94%. The decrease was mainly due to decreased bad debts expense by $108,396, decreased operating expense by $1,095,907 of Erdos TCH due to cease of the operation, and decreased loss on disposal of systems by $1,257,170. We disposed Chengli Boxing system, Xuzhou Huayu system, and Shenqiu Phase I & II systems during the three months ended March 31, 2019 for the repayment of entrusted loan.
Net loss for three months ended March 31, 2020 was $598,551 or $(0.28) per fully diluted share compared to $1,942,294 or $(1.61) per fully diluted share for the three months ended March 31, 2019, a decrease of loss of $1,343,743. This decrease in net loss was mainly due to the decrease operating expenses 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
MARCH 31, 2020
DECEMBER 31, 2019
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash
$
55,028,489
$
16,221,297
Accounts receivable, net
40,010,739
42,068,760
Interest receivable on sales type leases
-
5,245,244
Prepaid expenses
51,038
52,760
Other receivables
40,164
1,031,143
Total current assets
95,130,430
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
37,499
54,078
Property and equipment, net
26,628,705
27,044,385
Construction in progress
-
23,824,202
Total non-current assets
26,666,204
59,225,937
TOTAL ASSETS
$
121,796,634
$
123,845,141
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
2,166,401
$
2,200,220
Taxes payable
4,589,662
4,087,642
Accrued interest on notes
403,489
-
Notes payable, net of unamortized OID
1,134,876
-
Accrued liabilities and other payables
1,155,734
1,184,751
Operating lease liability
40,794
56,755
Due to related parties
28,723
41,174
Interest payable on entrusted loans
8,389,311
8,200,044
Entrusted loan payable
20,165,427
20,480,214
Total current liabilities
38,074,417
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
423,424
430,034
Entrusted loan payable
282,283
286,689
Refundable deposit from customers for systems leasing
-
544,709
Total noncurrent liabilities
6,488,332
8,964,795
Total liabilities
44,562,749
45,215,595
CONTINGENCIES AND COMMITMENTS (NOTE 17 &18)
STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value; 10,000,000 shares authorized, 2,179,387 shares and 2,032,721 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
2,179
2,033
Additional paid in capital
117,226,394
116,682,374
Statutory reserve
14,525,712
14,525,712
Accumulated other comprehensive loss
(7,473,890
)
(6,132,614
)
Accumulated deficit
(47,046,510
)
(46,447,959
)
Total Company stockholders’ equity
77,233,885
78,629,546
TOTAL LIABILITIES AND EQUITY
$
121,796,634
$
123,845,141
CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2020
2019
Revenue
Contingent rental income
$
-
$
621,174
Interest income on sales-type leases
-
174,235
Total operating income
-
795,409
Operating expenses
Bad debts
-
108,396
Loss on disposal of systems
-
1,257,170
General and administrative
154,178
1,334,424
Total operating expenses
154,178
2,699,990
Loss from operations
(154,178
)
(1,904,581
)
Non-operating income (expenses)
Loss on note redemption / conversion
(103,167
)
(893,958
)
Interest income
27,006
41,112
Interest expense
(355,244
)
(1,932,105
)
Other income (expenses), net
(12,968
)
356,367
Total non-operating expenses, net
(444,373
)
(2,428,584
)
Loss before income tax
(598,551
)
(4,333,165
)
Income tax benefit
-
(2,390,871
)
Net loss attributable to China Recycling Energy Corporation
(598,551
)
(1,942,294
)
Other comprehensive items
Foreign currency translation loss
(1,341,276
)
1,810,626
Comprehensive loss attributable to China Recycling Energy Corporation
$
(1,939,827
)
$
(131,668
)
Basic and diluted weighted average shares outstanding
2,135,340
1,206,572
Basic and diluted loss per share
$
(0.28
)
$
(1.61
)
The accompanying notes are an integral part of these consolidated financial statements.
CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss
$
(598,551
)
$
(1,942,294
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of OID and debt issuing costs of convertible note
12,500
59,661
Stock compensation expense
10,999
-
Operating lease expenses
16,374
-
Bad debts expense
-
108,396
Loss on disposal of 40% ownership of Fund Management Co
-
47,506
Loss on transfer of Chengli Boxing system
-
638,167
Loss on transfer of Xuzhou Huayu system
-
405,959
Loss on transfer of Shenqiu Phase I & II systems
-
213,044
Loss on disposal of fixed assets
-
293
Loss on notes redemption / conversion
103,167
893,958
Changes in deferred tax
-
(2,530,614
)
Changes in assets and liabilities:
Interest receivable on sales type leases
-
(174,235
)
Collection of principal and interest on sales type leases
13,984,746
-
Accounts receivable
25,791,539
(720,561
)
Prepaid expenses
926
-
Other receivables
911
(144,398
)
Construction in progress
-
1,156,480
Taxes payable
818
234,534
Payment of lease liability
(15,705
)
-
Interest payable on entrusted loan
320,095
1,900,658
Accrued liabilities and other payables
22,701
(430,025
)
Refundable deposit for systems leasing
-
(489,123
)
Net cash provided by (used in) operating activities
39,650,520
(772,594
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property & equipment
-
5,188
Net cash provided by investing activities
-
5,188
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes payable
-
2,000,000
Issuance of common stock
-
1,620,800
Net cash provided by financing activities
-
3,620,800
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS
(843,328
)
1,023,068
NET INCREASE IN CASH
38,807,192
3,876,462
CASH, BEGINNING OF PERIOD
16,221,297
53,223,142
CASH, END OF PERIOD
$
55,028,489
$
57,099,604
Supplemental cash flow data:
Income tax paid
$
-
$
-
Interest paid
$
-
$
-
Supplemental disclosure of non-cash operating activities Transfer of Tian’an project from construction in progress to accounts receivable.
$
23,814,532
$
-
Supplemental disclosure of non-cash financing activities Conversion of long-term notes into common shares
