News Press Releases

China Recycling Energy Corporation Reports Results for the Second Quarter of 2020

CREG | August 14, 2020

XI'AN, China, Aug. 14, 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 June 30, 2020.

“As of June 30, 2020, we maintained a healthy cash and cash equivalents balance of approximately $62.7 million,” stated Mr. Guohua Ku, Chairman and CEO of the Company. "In addition, our company successfully collected approximately $2.8 million from overdue accounts receivable in the quarterly period ended June 30, 2020. Coupled with our continuing cost cutting efforts throughout our entire organization, our company has recognized net income of $993,940 in this quarter, or $0.43 per basic and diluted share. 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. We expect to reposition our energy sustainability business in direct relation to smart power integrated solutions to vastly improve climate change efficiency in China in order to better serve our clients, employees and shareholders. As such, we will maintain our focus on expense and working capital discipline, so that we can move forward with a strengthened platform to attempt to capitalize on the significant opportunities we see for growth.”

Financial Summary for the Quarter Ended June 30, 2020

Cash and cash equivalents were approximately $62.7 million as of June 30, 2020, an increase of approximately $46.5 million as compared to approximately $16.2 million as of December 31, 2019.
Net sales were nil as compared to $80,924 for the same period of 2019, due to the shutdown of our business during the COVID-19 pandemic.
Income from operations was approximately $1.4 million, due to the reversal of bad debts allowance compared to approximately loss from operations of approximately $3.3 million.
Net income for three months ended June 30, 2020 was $993,940 or $0.43 per fully diluted share compared to a net loss of approximately $5.3 million or $(0.33) per fully diluted share for the three months ended June 30, 2019, a decrease of net loss of approximately $6.5 million. This decrease in net loss was mainly due to the decrease in operating expenses resulting from a reversal of bad debts expense 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

	JUNE 30, 2020 (UNAUDITED)			DECEMBER 31, 2019

ASSETS

CURRENT ASSETS
Cash	$	62,666,385		$	16,221,297
Accounts receivable, net		31,793,218			42,068,760
Interest receivable on sales type leases		-			5,245,244
Prepaid expenses		51,078			52,760
Other receivables		44,653			1,031,143

Total current assets		94,555,334			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		21,655			54,078
Property and equipment, net		26,649,769			27,044,385
Construction in progress		-			23,824,202

Total non-current assets		26,671,424			59,225,937

TOTAL ASSETS	$	121,226,758		$	123,845,141

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,168,116		$	2,200,220
Taxes payable		2,483,681			4,087,642
Accrued interest on notes		3,935			-
Notes payable, net of unamortized OID		913,410			-
Accrued liabilities and other payables		1,165,256			1,184,751
Operating lease liability		25,611			56,755
Due to related parties		28,720			41,174
Interest payable on entrusted loans		8,711,500			8,200,044
Entrusted loan payable		20,181,378			20,480,214

Total current liabilities		35,681,607			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		423,759			430,034
Entrusted loan payable		282,506			286,689
Refundable deposit from customers for systems leasing		-			544,709

Total noncurrent liabilities		6,488,890			8,964,795

Total liabilities		42,170,497			45,215,595

CONTINGENCIES AND COMMITMENTS (NOTE 17 & 18)

STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value; 10,000,000 shares authorized, 2,493,197 shares and 2,032,721 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		2,493			2,033
Additional paid in capital		117,995,829			116,682,374
Statutory reserve		14,666,206			14,525,712
Accumulated other comprehensive loss		(7,415,203	)		(6,132,614	)
Accumulated deficit		(46,193,064	)		(46,447,959	)

Total Company stockholders’ equity		79,056,262			78,629,546

TOTAL LIABILITIES AND EQUITY	$	121,226,758		$	123,845,141

CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

	SIX MONTHS ENDED JUNE 30,						THREE MONTHS ENDED JUNE 30,
	2020			2019			2020			2019

Revenue
Contingent rental income	$	-		$	702,973		$	-		$	80,924

Interest income on sales-type leases		-			173,360			-			-

Total operating income		-			876,333			-			80,924

Operating expenses
Bad debts (reversal)		(1,649,622	)		2,824,903			(1,649,622	)		2,716,507
Loss on disposal of systems		-			1,264,256			-			-
General and administrative		390,864			2,017,336			236,686			682,912

Total operating (income) expenses		(1,258,758	)		6,106,495			(1,412,936	)		3,399,419

Income (loss) from operations		1,258,758			(5,230,162	)		1,412,936			(3,318,495	)

Non-operating income (expenses)
Loss on note redemption / conversion		(198,330	)		(893,958	)		(95,163	)		-
Interest income		72,617			82,610			45,611			41,498
Interest expense		(697,028	)		(3,793,920	)		(341,784	)		(1,861,815	)
Other income (expenses), net		(40,628	)		344,003			(27,660	)		(19,450	)

Total non-operating expenses, net		(863,369	)		(4,261,265	)		(418,996	)		(1,839,767	)

Income (loss) before income tax		395,389			(9,491,427	)		993,940			(5,158,262	)
Income tax (benefit) expense		-			(2,286,044	)		-			104,827

Net income (loss) attributable to China Recycling Energy Corporation		395,389			(7,205,383	)		993,940			(5,263,089	)

Other comprehensive items
Foreign currency translation gain (loss)		(1,282,589	)		(96,559	)		58,688			(1,907,185	)

Comprehensive income (loss) attributable to China Recycling Energy Corporation	$	(887,200	)	$	(7,301,942	)	$	1,052,628		$	(7,170,274	)

Basic and diluted weighted average shares outstanding		2,226,282			13,914,784			2,317,223			15,743,533

Basic and diluted loss per share	$	0.18		$	(0.52	)	$	0.43		$	(0.33	)

CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	SIX MONTHS ENDED JUNE 30,
	2020			2019

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	395,389		$	(7,205,383	)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Amortization of OID and debt issuing costs of notes		39,583			72,161
Stock compensation expense		10,999			-
Operating lease expenses		32,502			-
Bad debts expense (reversal)		(1,649,622	)		2,824,901
Loss on disposal of 40% ownership of Fund Management Co		-			47,267
Loss on transfer of Chengli Boxing system		-			634,963
Loss on transfer of Xuzhou Huayu system		-			403,922
Loss on transfer of Shenqiu Phase I & II systems		-			211,975
Loss on disposal of fixed assets		-			293
Loss on notes redemption / conversion		198,330			893,958
Changes in deferred tax		-			(2,364,088	)
Changes in assets and liabilities:
Interest receivable on sales type leases		-			(173,360	)
Collection of principal on sales type leases		13,879,575			-
Accounts receivable		35,552,191			65,001
Prepaid expenses		919			-
Other receivables		(3,589	)		(1,074,031	)
Accounts payable		-			(2,888,301	)
Taxes payable		(2,121,622	)		(1,283,246	)
Payment of lease liability		(31,174	)		-
Interest payable on entrusted loan		635,375			3,720,566
Accrued liabilities and other payables		57,740			(371,026	)
Refundable deposit for systems leasing		-			(486,668	)

Net cash provided by (used in) operating activities		46,996,596			(6,971,096	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property & equipment		-			5,162

Net cash provided by investing activities		-			5,162

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of notes payable		-			2,000,000
Issuance of common stock		-			3,309,475

Net cash provided by financing activities		-			5,309,475

EFFECT OF EXCHANGE RATE CHANGE ON CASH		(551,508	)		(80,341	)

NET INCREASE (DECREASE) IN CASH		46,445,088			(1,736,800	)
CASH, BEGINNING OF PERIOD		16,221,297			53,223,142

CASH, END OF PERIOD	$	62,666,385		$	51,486,342

Supplemental cash flow data:
Income tax paid	$	-		$	225,784
Interest paid	$	-		$	-

Supplemental disclosure of non-cash operating activities
Transfer of Tian’an project from construction in progress to accounts receivable	$	23,635,489		$	-

Supplemental disclosure of non-cash financing activities
Transfer of Xuzhou Huayu Project and Shenqiu Phase I & II projects to Mr. Bai	$	-		$	35,938,441
Conversion of convertible debt into common shares	$	-		$	1,070,000
Conversion of long-term notes into common shares	$	1,104,586		$	-