China Recycling Energy Corporation Reports Results for the First Quarter of 2020
China Recycling Energy Corporation (NASDAQ: CREG) reported significant operational highlights for Q1 2020. As of March 31, 2020, the company maintained a cash balance of approximately $55.0 million, up from $16.2 million at the end of 2019. The net loss was narrowed by approximately 69.2% to $(0.6) million, compared to $(1.9) million in Q1 2019. Despite facing business shutdowns due to the COVID-19 pandemic, operating expenses dramatically decreased by 94% to $154,178. CREG aims to leverage financial flexibility to explore growth opportunities in the smart power sector.
- Cash and cash equivalents increased by approximately $38.8 million from $16.2 million in 2019.
- Net loss decreased by approximately 69.2% to $(0.6) million compared to $(1.9) million in Q1 2019.
- Operating expenses reduced by 94% to $154,178, reflecting effective cost-cutting measures.
- Net sales were nil for Q1 2020, down from $0.6 million in the same period of 2019 due to business shutdowns.
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
"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 or94% . 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. T his 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
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 | ||||||||
| 76%;">Cash | 1%;"> | 1%;">$ | 9%;">55,028,489 | 1%;"> | 1%;"> | 1%;">$ | 9%;">16,221,297 | 1%;"> |
| 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, | 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 | ||||||||
| 76%;">Contingent rental income | 1%;"> | 1%;">$ | 9%;">- | 1%;"> | 1%;"> | 1%;">$ | 9%;">621,174 | 1%;"> |
| 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: | ||||||||
| 76%;">Net Loss | 1%;"> | 1%;">$ | 9%;">(598,551 | 1%;">) | 1%;"> | 1%;">$ | 9%;">(1,942,294 | 1%;">) |
| 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 | - | 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 | $ | 430,000 | $ | - |
Contact:
Investor Relations Inquiries:
Vivian Chen
vivianchen@irimpact.com
Media Inquiries:
Cathy Loos
cathyloos@irimpact.com
FAQ
What were the cash and cash equivalents for CREG as of March 31, 2020?
How much did CREG's net loss decrease in Q1 2020?
What were the operating expenses for CREG in the first quarter of 2020?
Did CREG generate any sales in Q1 2020?
What strategic opportunities is CREG pursuing in 2020?
