CHINA CLEAN ENERGY INC. 
By FUQING CITY,
The following are estimates of the Company's preliminary unaudited
financial results for the first quarter ended
First Quarter 2010 Highlights
-- Revenue totaled $10.7 million, up 283% from the same period in 2009
-- Gross profit totaled $1.5 million, up 317% from the same period in 2009
-- Gross margin increased to 13.8%, up from 12.7% in the same period in
2009
-- Operating income was $1.0 million, compared a loss of $159 thousand in
the first quarter 2009
-- Net income was $350 thousand, or $0,01 per fully-diluted share
-- Cash and cash equivalents of $5.3 million at the end of March 2010
"Our strong results for the first quarter reflect our focused efforts over the past two years to design, build and commission our Jiangyin plant," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "As we discussed in the past, we received positive feedback, which have translated into substantial increase in orders from our existing customers as well as initial orders from new customers. In addition, our increased production scale has opened up new marketing opportunities to sell our biodiesel into power generation applications. We expect our current growth momentum to continue as we strive to expand our order book to support the ramp-up of production to full-capacity in the quarters ahead."
Preliminary First Quarter 2010 Results
China Clean Energy's net revenue in the first quarter was
Gross profit in the first quarter of 2010 was
Operating expense in the first quarter of 2010 was
Other expense totaled
Net income for the first quarter of 2010 was
Adjusted net income excluding the effect of non-cash charges to account
for change in fair value of warrants totaled
Financial Condition
As of
Recent Developments
In
Business Outlook
China Clean Energy's Jiangyin plant was commissioned in December of 2009 and was operating in commercial production mode during the whole of the first quarter 2010. During the quarter total shipments of specialty chemicals and biodiesel amounted to 10,217 tons, with Jiangyin plant accounting for 55% of total. Management continues to expect ramp-up of the new plant to 50% of capacity by the end of the second quarter of 2010 and to full capacity by the end of the year 2010. As previously disclosed, the Jiangyin plant has capacity to produce 30,000 tons of specialty chemicals capacity and 40,000 tons of biodiesel.
Mr. Ou added, "We are very happy with the operating performance of our new
plant, which is exceeding our expectations. We currently expect to deliver
revenue of approximately
Conference Call
China Clean Energy will hold its first quarter 2010 conference call for
all interested persons at
About China Clean Energy
China Clean Energy, through its wholly-owned subsidiaries, Fujian Zhongde Technology Co., Ltd. and Fujian Zhongde Energy Co., Ltd, is engaged in the development, manufacturing, and distribution of biodiesel and specialty chemical products made from renewable resources. For additional information please visit: http://www.chinacleanenergyinc.com
Safe Harbor Statement
This announcement contains forward-looking statements. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the effectiveness, profitability, and the marketability of the Company's products; the future trading of the common stock of the Company; the ability of the Company to capitalize on its expanded production capacity; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition resulting from changes in raw material prices, international oil prices and price controls imposed by the Chinese government; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that the Company's expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For more information, please contact:
China Clean Energy Inc.
William Chen, CFO
Email: william.chen@chinacleanenergyinc.com
Web: http://www.chinacleanenergyinc.com
CCG Investor Relations Inc.
Ed Job, CFA
Email: ed.job@ccgir.com
Michael Crawford. Sr. MI Executive
Phone: +1-646-833-3341
Email: michael.crawford@ccgir.com
Web: http://www.ccgirasia.com
--FINANCIAL TABLES FOLLOW--
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three months ended March 31,
2010 2009
REVENUES $10,737,691 $2,806,262
Less: cost of goods sold 9,251,495 2,449,930
GROSS PROFIT 1,486,196 356,332
OPERATING EXPENSES
Selling and marketing 54,046 48,056
General and administrative 432,280 441,390
Research and development 9,902 25,924
Total operating expenses 496,228 515,370
INCOME (LOSS) FROM OPERATIONS 989,968 (159,038)
OTHER INCOME (EXPENSE)
Interest income (expense), net (57,462) 953
Other income (expense) 117 (1,101)
Change in fair value of warrant
liabilities (357,357) 26,064
Total other income (expenses) (414,702) 25,916
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES 575,266 (133,122)
PROVISION FOR INCOME TAXES 225,094 10,362
NET INCOME (LOSS) 350,172 (143,484)
OTHER COMPREHENSIVE LOSS
Foreign currency translation
adjustment (983) (45,210)
COMPREHENSIVE INCOME (LOSS) $349,189 $(188,694)
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE
Weighted average number of
shares 31,512,269 31,512,269
Earnings (loss) per share $0.0111 $(0.005)
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME TO NET INCOME
The management of China Clean Energy uses non-GAAP adjusted net earnings to measure the performance of the Company's business internally by excluding non-recurring items as well as non-cash charges related to the warrants issued in connection with the Company's 2008 Private Placement offering. The Company's management believes that these non-GAAP adjusted financial measures allow the management to focus on managing business operating performance because these measures reflect the essential operating activities of China Clean Energy and provide a consistent method of comparison to historical periods. The Company believes that providing the non-GAAP measures - which management uses internally - to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods without variation of non-recurring items and non-operating related charges. In addition, it allows investors to better evaluate the Company's performance using the same methodology and information as those used by the management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, the management of China Clean Energy compensates for these limitations by providing the relevant disclosure of the items excluded.
The following table provides the non-GAAP financial measure and a reconciliation of the non-GAAP measure to the GAAP net income.
Three months ended March 31,
2010 2009
Net Income (Loss) $350,172 $(143,484)
Add back (Deduct):
Change in fair value of warrant $357,357 $(26,064)
Stock-based compensation $106,315 $93,094
Adjusted Net Income $813,844 $(76,454)
Diluted EPS $0.01 $(0.00)
Add back (Deduct):
Change in fair value of warrant $0.01 $(0.00)
Stock-based compensation $0.00 $0.00
Adjusted EPS $0.03 $(0.00)
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2010 2009
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $5,305,161 $4,154,814
Accounts receivable, net of
allowance for doubtful accounts of
$69,533 and $93,761 respectively 2,698,457 1,766,952
Other current assets 11,000 11,000
Deferred tax assets 69,268 69,466
Tax Receivable 335,908 --
Inventories, net 3,386,391 464,842
Advances for inventory purchases 698,757 188,659
Total current assets 12,504,942 6,655,733
Plant and Equipment, net 24,860,925 25,119,034
Intangible assets, net 4,795,104 4,860,645
Total assets $42,160,971 $36,635,412
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $1,868,308 $157,433
Accrued liabilities 200,631 279,516
Customer deposits 140,124 71,090
Taxes payable 320,727 130,287
Bank loans payable, current
portion 1,170,240 3,080,700
Total current liabilities 3,700,030 3,719,026
Warrants liability 1,617,131 1,259,774
Bank loans payable - net of
current portion 4,827,240 --
Total liabilities 10,144,401 4,978,800
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Preferred stock, par value
$0.001 per share, authorized
10,000,000 shares, no shares
issued and outstanding as of
March 31, 2010 and December
31, 2009, respectively -- --
Common stock, par value $0.001
per share, authorized
90,000,000 shares, 31,512,269
shares issued and outstanding
as of March 31, 2010 and
December 31, 2009,
respectively 31,512 31,512
Additional paid-in capital 12,526,838 12,420,523
Statutory reserves 1,630,882 1,630,882
Retained earnings 14,757,620 14,407,448
Accumulated other comprehensive
income 3,069,718 3,166,247
Total shareholders' equity 32,016,570 31,656,612
Total liabilities and
shareholders' equity $42,160,971 $36,635,412
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended
March 31
2010 2009
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $350,172 $(143,484)
Adjusted to reconcile net
income (loss) to cash
provided
by (used in) operating
activities:
Depreciation 363,810 177,236
Allowance for doubtful
accounts (24,228) 29,153
Amortization of
intangible assets 107,739 58,463
Stock-based
compensation expense 106,315 93,094
Writedown on inventory -- 25,464
Change in warrants
liability 357,357 (26,064)
Changes in operating
assets and liabilities
Accounts receivable (907,277) (203,504)
Inventories (2,921,549) (19,346)
Other receivables and
prepaid expenses -- --
Advances for inventory
and other current
assets (510,098) 102,880
Accounts payable 1,710,875 607,346
Accrued liabilities (78,885) 29,803
Customer deposits 69,034 (129,361)
Taxes payables 190,440 (12,235)
Taxes receivable (335,908) --
Deferred tax assets 198 --
Net cash provided by
(used in) operating
activities (1,522,005) 589,445
CASH FLOWS FROM INVESTING
ACTIVITIES
Addition to construction
in progress -- (558,889)
Purchase of equipment (105,701) (2,102)
Proceeds from sale of
equipment -- --
Advances for equipment
purchases -- (194,631)
Addition to intangibles (42,198) --
Net cash (used in)
investing activities (147,899) (755,622)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from bank loans 4,827,240 (236,002)
Payments on bank loans (1,910,460) (21,525)
Net cash provided by
(used in) financing
activities 2,916,780 (257,527)
EFFECT OF EXCHANGE RATE ON
CASH (96,529) (31,164)
INCREASE IN CASH AND CASH
EQUIVALENTS 1,150,347 (454,868)
CASH AND CASH EQUIVALENTS,
beginning of period 4,154,814 2,913,711
CASH AND CASH EQUIVALENTS,
end of period $5,305,161 $2,458,843
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Interest expenses paid $55,773 $2,652
Income taxes paid $68,675 $--
Reclassification of
advance of equipment
purchase to construction
in progress $587,612 $--
SOURCE China Clean Energy Inc.
