SHANGHAI, Nov. 3, 2010 /PRNewswire-Asia/ -- China Energy Recovery Inc. (CGYV.PK) ("CER"), an international leader in the design, fabrication, installation and servicing of waste heat recovery systems, announced today that it filed its Form 10-K for fiscal year ended Dec. 31, 2009, with the U.S. Securities and Exchange Commission (SEC).
Fiscal 2009 results
For fiscal 2009, CER recorded $22.2 million in total revenue compared to $24.9 million in total revenue in the prior fiscal year. The company posted a net loss for the year of ($886,480) or ($0.03) per basic share compared to a net profit of $1.4 million or $0.05 per basic share in the prior year. CER's net loss in 2009 was primarily a result of the global economic disruption, which compelled the company to reduce its sales margins in order to maintain its contract flow, prevent contract cancellation and win new orders. This had an adverse impact on the company's overall margins and net revenues.
As of Dec. 31, 2009, CER's balance sheet showed the company had $2.4 million in cash with $23.9 million in total current assets and $23.5 million in total current liabilities.
"We are gratified to have our 2009 annual report filing in place after unexpected delays due to extra work that came about during the transition from our prior audit firm to PricewaterhouseCoopers," Qinghuan Wu, CER Chairman and Chief Executive Officer, said. "With that matter settled, we are moving quickly to bring our remaining quarterly report filings up to date.
"CER's business continues to move ahead. We are booking orders and shipping systems to a growing list of customers," Mr. Wu said. "We also enjoy a growing reputation for the performance of our waste heat recovery technology. This recognition comes at a time when our customer base in China and abroad is more aware of the economic advantages that CER's heat recovery systems provide; both as retrofit solutions for existing industrial plants and as integral systems in new plants."
Restated 2008 results
The company's annual report on Form 10-K for fiscal 2009 restates results for fiscal 2008. In the process of changing accountants and doing an internal audit of the 2008 financial results, the company found that it needed to change certain entries that were no longer supported by prior analysis and assumptions and that there were certain mistakes. The company had stated in May of this year that it would be restating the 2008 financial results.
Among CER's restated results for fiscal 2008 was an increase in total current assets of $174,314 and a reduction in total current liabilities of $1.2 million on the company's balance sheet. On CER's Consolidated Statements of Income for fiscal 2008, the restatement adds $1.7 million to total revenues, reduces the total cost of revenues by almost $394,000 and adds $514,000 to the company's income from operations. Net income for fiscal 2008 was restated with an additional $264,239 for a total net income of approximately $1.4 million, which after adjustments for currency translation is equal to $0.05 per basic share based on 25.7 million shares outstanding. For more detail on CER's restated 2008 financials, see the company's Form 10-K for fiscal 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 as much as two-thirds of that wasted energy and converting it into usable heat energy or electricity, dramatically lowering energy costs. Energy recovery systems are also capable of lowering heat pollution and 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 engineering and manufacturing company that specializes in the design, construction and installation of waste heat energy recovery systems that captures and converts industrial waste energy produced by heavy industrial processes such as petroleum and chemicals refining, paper manufacturing and refining into low-cost electrical power, which enables industrial manufacturers to reduce their energy costs, shrink their emissions footprint and generate salable emissions credits. The company's primary focus is the Chinese market; however, CER's systems are operating in heavy industrial plants located in Egypt, Korea, Vietnam and Malaysia. CER is building China's first state-of-the-art, energy recovery system research and fabrication facility, which will allow CER to meet 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.
CHINA ENERGY RECOVERY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND 2009
Accounts receivable, net of allowance for doubtful accounts
Accounts receivable - related party
Other current assets and receivables
Deferred financial cost - current
Deferred tax assets - current
Advances on inventory purchases
Total current assets
Deferred tax assets
Deferred financial cost
Long-term accounts receivable
Total other assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Other payables - related party
Advances from customers
Short-term bank loans
Derivative liability, current
Convertible note, current
Total current liabilities
Total non-current liabilities
Commitment and contingency
Preferred stock(US$0.001 par value; 50,000,000 shares authorized, 714,963 and 662,963 shares issued and outstanding as of December 31, 2008 and 2009, respectively)
Common stock(US$0.001 par value; 100,000,000 shares authorized, 29,912,573 and 30,638,720 shares issued and outstanding as of December 31, 2008 and 2009, respectively)
Accumulated other comprehensive loss
Total shareholders' equity
Total liabilities and shareholders' equity
CHINA ENERGY RECOVERY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR YEARS ENDED DECEMBER 31, 2008 AND 2009
Year ended December 31,
COST OF REVENUES
Total cost of revenues
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
INCOME/(LOSS) FROM OPERATIONS
OTHER INCOME, NET:
Change in fair value of warrant liability
Change in fair value of derivative liability
Non-operating income, net
Total other income , net
INCOME/(LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES
INCOME TAXES (EXPENSES)/BENEFITS
OTHER COMPREHENSIVE INCOME/(LOSS)
Foreign currency translation adjustment
Earnings/(loss) per share
Weighted average ordinary shares outstanding
SOURCE China Energy Recovery Inc.