China Energy Recovery Inc (OTC:CGYV)

WEB NEWS

Tuesday, September 18, 2012

Deal Flow

Item 1.01 — Entry into a Material Definitive Agreement

  

On September 5, 2012, Shanghai Hai Lu Kun Lun Hi-tech Engineering Co., Ltd. (“Shanghai Engineering”), a consolidated variable interest entity of China Energy Recovery, Inc. (“CER”), entered into a short-term loan contract with Bank of Shanghai. The total amount borrowed is RMB 15,000,000 (approximately $2,364,625) and can be used for working capital or similar purposes. This amount is due in one year and carries an annual interest rate of 7.2%. The loan is guaranteed by Mr. Qinghuan Wu, the Company’s Chief Executive Officer and Mrs. Jialing Zhou, Mr. Wu’s wife, and among which RMB 5,000,000 is collateralized by a building located in Shanghai, which is owned by Mr. Qinghuan Wu and his son. In addition, the balance, amounting to RMB 10,000,000, of this loan is guaranteed by Shanghai Chuang Ye Jie Li Financing Guarantee Co., Ltd (“Shanghai Chuangye”), after making a cash deposit of 5% of the total guarantee amount to Shanghai Chuangye. Shanghai Chuangye charged a 3% fee and required a counter-guarantee by CER Energy Recovery (Yangzhou) Co., Ltd. and CER Energy Recovery (Shanghai) Co., Ltd., which are both wholly-owned subsidiaries of CER. Shanghai Chuangye also required a second tier collateralization by the aforementioned building owned by Mr. Wu and his son and 60% of Mr. Wu’s ownership interest in Shanghai Engineering. Since this building had previously been collateralized under a facility agreement entered into with Ningbo Bank, Shanghai branch, this borrowing with the Bank of Shanghai will replace the existing Ningbo Bank facility.

 

 


Monday, June 18, 2012

Comments & Business Outlook

CHINA ENERGY RECOVERY, INC.  AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2012

(UNAUDITED)

 

    Three months ended March 31,  
    2011     2012  
    (Note 2(v))        
REVENUES                
Third parties:                
Engineering, procurement, and construction - third parties   $ 4,441,880     $ 19,411,694  
Engineering, procurement, and construction - related party (Note 16)     1,774,657       5,830,916  
Total EPC revenues     6,216,537       25,242,610  
Products - third parties     1,163,522       3,597,488  
Total revenue     7,380,059       28,840,098  
                 
COST OF REVENUES                
Cost of revenues – EPC (Note 16)     (4,979,718 )     (23,458,867 )
Cost of revenues - products     (1,161,423 )     (2,639,161 )
Total cost of revenues     (6,141,141 )     (26,098,028 )
                 
GROSS PROFIT     1,238,918       2,742,070  
                 
Selling, general, and administrative expenses     (1,813,081 )     (2,053,335 )
                 
(LOSS) INCOME FROM OPERATIONS     (574,163 )     688,735  
                 
OTHER INCOME (EXPENSE):                
Change in fair value of derivative liability for warrant     477,889       (26,751 )
Change in fair value of derivative liability for loan     162,217       (14,644 )
Subsidy income     -       90,679  
Other non-operating expenses, net     (190,617 )     (30,622 )
Interest expense, net     (369,525 )     (430,789 )
Total other income (expense), net     79,964       (412,127 )
                 
(LOSS) INCOME BEFORE INCOME TAXES     (494,199 )     276,608  
                 
Income Tax Benefit (Expense)     17,752       (470,884 )
                 
NET LOSS     (476,447 )     (194,276 )
                 
OTHER COMPREHENSIVE INCOME:                
Foreign currency translation adjustment     220,769       40,027  
                 
COMPREHENSIVE LOSS   $ (255,678 )   $ (154,249 )
                 
LOSS PER SHARE:                
Basic   $ (0.02 )   $ (0.01 )
Diluted   $ (0.02 )   $ (0.01 )
WEIGHTED AVERAGE SHARES OUTSTANDING:                
Basic     30,930,949       31,033,148  
Diluted     30,930,949       31,033,148  

Wednesday, April 4, 2012

Comments & Business Outlook

CHINA ENERGY RECOVERY, INC. 

CONSOLIDATED STATEMENTS OF  (LOSS) INCOME

AND OTHER COMPREHENSIVE (LOSS) INCOME

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2011

 

  Fiscal Year Ended December 31, 
  2010  2011 
REVENUES        
EPC - third parties $12,527,330  $49,720,612 
EPC - related party (Note 17)  -   32,503,158 
Total EPC revenues  12,527,330   82,223,770 
Products - third parties  8,555,323   8,763,477 
Total revenues  21,082,653   90,987,247 
         
Cost of revenues – EPC (Note 17)  (10,779,613)  (70,646,416)
Cost of revenues - products  (7,119,342)  (7,084,909)
Total cost of revenues  (17,898,955)  (77,731,325)
         
Gross Profit  3,183,698   13,255,922 
         
Selling, General and Administrative Expenses  (6,440,852)  (9,991,632)
         
(Loss) Income From Operations  (3,257,154)  3,264,290 
         
Other Income (Expenses):        
Change in fair value of warrant liability  40,187   1,294,407 
Change in fair value of derivative liability  628,624   402,033 
Subsidy income  1,274,356   998,686 
Other non-operating expense, net  (87,753)  (1,422,050)
Interest expense  (1,928,955)  (1,801,056)
Total other income (expenses)  (73,541)  (527,980)
         
(Loss) Income Before Income Taxes  (3,330,695)  2,736,310 
Income Tax Expense  (188,688)  (740,642)
         
Net (Loss) Income  (3,519,383)  1,995,668 
         
Other Comprehensive Income:        
Foreign currency translation adjustments  488,131   875,480 
         
Comprehensive (Loss) Income $(3,031,252) $2,871,148 
         
(Loss) Income per share:        
Basic $(0.11) $0.06 
Diluted $(0.11) $0.06 
Weighted average ordinary shares outstanding:        
Basic  30,850,058   31,033,148 
Diluted  30,850,058   31,033,148 

 

Fourth quarter 2011 loss per share of ($0.04) vs ($0.10) in prior year

Wednesday, March 14, 2012

Deal Flow

Item 1.01 – Entry into a Material Definitive Agreement

 

On March 6, 2012, China Energy Recovery (Shanghai) Co., Ltd. (“CER Shanghai”), a wholly-owned subsidiary of China Energy Recovery, Inc. (the “Company”), entered into a short-term comprehensive loan facility with the Bank of Communication, Shanghai Branch. The facility consists of RMB 40,000,000 (approximately $6,300,000) for trade financing or similar purposes. CER Shanghai is entitled to draw down RMB 40,000,000 (approximately $6,300,000) as a short-term loan or RMB 57,000,000 (approximately $9,000,000) as bank acceptance notes after making cash deposit of RMB 17,000,000 (approximately $2,700,000) to the bank. Any amounts due under the loan are repayable no later than January 20, 2013. The loan has been secured by a mortgage on the Company’s new office building in Zhangjiang, Shanghai and guaranteed by Qinghuan Wu, the Company’s Chief Executive Officer.


Wednesday, January 4, 2012

Deal Flow
On December 29, 2011, China Energy Recovery (Shanghai) Co., Ltd. (“CER Shanghai”), a wholly-owned subsidiary of  China Energy Recovery, Inc. (”CER”), borrowed $1,057,682 (RMB 6,680,000) from Industrial and Commercial Bank of China Limited, Zhangjiang Branch. The loan carries an annual interest rate of 6.405%. The term of the loan is six months commencing from December 29, 2011 to June 28, 2012. The loan is secured by a pledge of several bank acceptance notes owned by CER Shanghai in the amount of $1,176,433 (RMB 7,430,000).

Friday, December 30, 2011

Deal Flow

Item 1.01 – Entry into a Material Definitive Agreement

In December 2011, China Energy Recovery (Shanghai) Co., Ltd., a wholly-owned subsidiary of  China Energy Recovery, Inc. (”CER”), borrowed $789,639 (RM 5,000,000) from Shanghai Pudong Zhanjiang  Micro-credit Co., Ltd. The loan is secured by a mortgage of a building in Shanghai, which is held by Jiangsu SOPO (Group) Company Limited and guaranteed by Mr. Qinghuan Wu, the Chairman and Chief Executive Office of CER. The loan carries an annual interest rate of 12% and the due date of the loan is June 9, 2012.

The loan was drawn down in two installments, with $315,353 (RMB 2,000,000) and $474,286 (RMB 3,000,000) being drawn down on December 15, 2011 and December 22, 2011, respectively.


Monday, December 26, 2011

Notable Share Transactions
On December 22, 2011, China Energy Recovery Inc. (CER) announced that the Board of Directors has authorized a share repurchase program of up to $500,000. The funding for the repurchases will be from cash on hand.

Tuesday, November 15, 2011

Comments & Business Outlook

Third Quarter 2011 Results

  • Revenues increased 378% to $29.4 million.
  • Gross profit increased 265% to $5,088,000.
  • Net income of $2,605,000, compared to net loss of $854,000, an absolute increase of 405%.

"Revenue growth in the third quarter and the nine months of the year reflects our marketing efforts and new manufacturing facility and, in particular, one significant EPC contract," CER Chief Executive Officer Qinqhuan Wu said. Mr. Wu continued, "In the nine months of 2011, with our new manufacturing facility in operation and our ability to perform more EPC contracts, we achieved great improvements in our revenues and gross profits. For the last quarter of 2011, based on our current contracts and production schedule, we anticipate positive results in line with the third quarter of the year."


Thursday, November 10, 2011

Comments & Business Outlook

SHANGHAI, Nov. 9, 2011 /PRNewswire-Asia/ -- China Energy Recovery Inc. (CGYV.PK) ("CER"), an international leader in the design, fabrication and installation of waste heat recovery systems, announced today that it signed a contract with Jiangsu SOPO Group to manufacture and install the quay's pot area project and exterior tube rack which located in Zhenjiang City.

The contract is valued at 50 million RMB or $7.84 million (US).  The system is scheduled to be completed in 75 days.

"We are happy to see that our long-term customer, Sopo Group, choosing us again!"  Commented Mr. Qinghuan Wu, CER's CEO, "the successful company needs not only the more and more new customers, but also the old friends"


Tuesday, October 4, 2011

Deal Flow
On September 30, 2011 (“Loan Date”), China Energy Recovery, Inc., a Delaware corporation (“CER”), entered into a term loan arrangement with Hold And Opt Investments Limited, a Bahamian company (“Lender”). The proceeds of this loan are intended for use as working capital.

Pursuant to the terms of the agreement, CER has borrowed from the Lender the aggregate sum of USD$ 2,000,000 (“Loan Amount”). The outstanding principal amount under this loan agreement shall bear interest at the annual rate of 15.1% (monthly rate of 1.26%), commencing on the Loan Date, and continuing until the principal is paid in full.  If any payment of principal or interest is not made when due, then the payment will bear a monthly penalty equal to 1.5% of the amount due, compounded monthly, until paid in full.

The maturity date of the Loan Amount is October 30, 2011.  Interest will accrue monthly and will be due and payable at the maturity date. The payment of the Loan Amount, interest and any other sums due under this loan agreement will be paid to the Lender without any deduction for any withholding amounts imposed by any jurisdiction, taxes or fees.

CER and the Lender have agreed to comply with certain covenants customary for a loan of this type.  Furthermore, the Lender has the right of first refusal to provide any debt or equity financing to be undertaken by CER that is for capital raising purposes on the same terms as bona fide offer by any lender or investor while any of the principal or interest is outstanding and due.  


Friday, September 2, 2011

Liquidity Requirements
It is our practice to carefully monitor the state of our business, cash requirements and capital structure. We believe that funds generated from our operations and available from our credit facilities will be sufficient to fund current business operations over at least the next twelve months. Notwithstanding our resources for operations on a going forward basis at current operating levels, we will need capital for our expansion plans, including funding for the completion of phase 2 of our Yangzhou plant.

Thursday, September 1, 2011

Deal Flow
On August 23, 2011 and August 31, 2011, the wholly owned subsidiary of China Energy Recovery, Inc, located in the People’s Republic of China, entered into two separate loan facilities, one with the Industrial and Commercial Bank of China Limited, Zhangjiang Branch, in principal amount of $2.5 million U.S and second with Shanghai Pudong Development Bank, Luwan Branch, in principal amount of approximately $4.5 million U.S (RMB 29,000,000).

Monday, August 22, 2011

Comments & Business Outlook

SHANGHAI, August 22, 2011 /PRNewswire-Asia/ -- China Energy Recovery Inc. (CGYV.PK) ("CER"), an international leader in the design, fabrication and installation of waste heat recovery systems, announced today that it signed a contract with Beijing Guodian Longyuan Environmental Engineering Co., Ltd to design, manufacture and install a HRS system of acid making for an organic amine flue gas desulfurization project located in Guizhou province.

The contract is valued at RMB63.5 million or $USD 9.9 million. The system, which is scheduled to be completed in second quarter of 2012, will be capable of producing 17.8 tons of steam-per-hour and 43.75 tons of sulfuric acid-per-hour.

"We are glad to see more and more new customers choosing CER to build and install a heat recovery system." CER Chairman and Chief Executive Officer Qinghuan Wu said, "Beijing Guodian is a pioneer which goes into pollution control of electric environment. CER is looking forward to having much more cooperation with this kind of company on the electric field."


Tuesday, August 16, 2011

Comments & Business Outlook

Highlights for the 2nd quarter 2011, compared with the same quarter 2010:

  • Revenues increased 154% to $18.3 million.
  • Gross profit increased 217% to $3,142,000.
  • Net income increased 294% to $1,067,000.
  • EPS was $0.03 vs $0.01

Highlights for the half year, compared with first half year 2010:

  • Revenues increased 127% to $25.6 million.
  • Gross profit increased 172% to $4,381,000.
  • Net income increased 48% to $681,000.
  • EPS was $0.02 vs $0.02


"Revenue growth in the second quarter and first half of the year reflects our marketing efforts and new manufacturing facility and, in particular, one significant EPC contract," CER Chief Executive Officer Qinqhuan Wu said. Mr. Wu continued, "In the first half of 2011, with our new manufacturing facility in operation and our ability to perform more EPC contracts, we saw improvements in our revenues and gross profits. For the second half of 2011, based on our current contracts and production schedule, we anticipate positive results in line with the first half of the year."


Tuesday, April 19, 2011

Comments & Business Outlook

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE LOSS
FOR YEARS ENDED DECEMBER 31, 2009 AND 2010
 
   
Year ended December 31,
 
   
2009
   
2010
 
             
REVENUES
  $ 22,194,443     $ 21,082,653  
                 
COST OF REVENUES
    (18,842,557 )     (17,898,955 )
                 
GROSS PROFIT
    3,351,886       3,183,698  
                 
SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES
    (5,746,743 )     (6,440,852 )
                 
LOSS FROM  OPERATIONS
    (2,394,857 )     (3,257,154 )
                 
OTHER INCOME/(EXPENSE), NET:
               
Change in fair value of warrant liability
    1,539,233       40,187  
Change in fair value of derivative liability
    399,500       628,624  
Non-operating income, net
    80,692       1,186,603  
Interest expenses
    (868,388 )     (1,928,955 )
Total other income/(expense), net
    1,151,037       (73,541 )
                 
LOSS FROM OPERATIONS BEFORE INCOME TAXES
    (1,243,820 )     (3,330,695 )
                 
INCOME TAXES (EXPENSES)/BENEFITS
    357,340       (188,688 )
                 
NET LOSS
    (886,480 )     (3,519,383 )
                 
OTHER COMPREHENSIVE INCOME
               
Foreign currency translation adjustment
    29,152       488,131  
                 
COMPREHENSIVE LOSS
  $ (857,328 )   $ (3,031,252 )
                 
Loss per share
               
Basic
  $ (0.03 )   $ (0.11 )
Diluted
  $ (0.03 )   $ (0.11 )
Weighted average ordinary shares outstanding
               
Basic
    29,952,798       30,850,058  
Diluted
    29,952,798       30,850,058  

In October 2010, the State Council announced that China will continue to focus on supporting and developing the strategic new industries, such as energy-saving, new energy, high-side equipment manufacturing industries. The government encourages energy recycling and recovery to increase the efficiency of energy utilization. The goal is to increase the GDP of such strategic new industries to 8% and 15% of the total GDP, for the years 2015 and 2020, respectively. In February 2011, Ministry of Industry and Information Technology announced that China will continue to encourage energy-saving industries, to accelerate the development of recycling economics, recovery industries and energy-saving equipment. The supporting measures will be launched to achieve reductions in energy utilization and to mitigate the release of harmful emissions.

Facing a possible large market opportunity and potential government supports, we decided to enlarge our production capacity by setting up new production base. Our plan is to establish CER Yangzhou as a world-class international manufacturing facility of waste heat equipment, in both products and technology. We plan to make highly efficient energy-saving products, make using advanced manufacturing processes and equipment. We intend, for this manufacturing facility to embody a completely new look of a modern factory, thus making the Company more competitive; while promoting the development of the local economy and further exploiting the manufacturing advantages in renewable energy equipment and waste heat recovery core equipment. During the last years, production constraints limited our growth and affected our financial profitability. Thus in 2010, we focused much of our energies on the construction of our new manufacturing facility in,  Yangzhou, China, and completed the first phase of construction of the plant by January 2011. As a result, our production facilities are currently held in both Vessel Works Division and CER Yangzhou. We will complete the transfer of the remaining production function from Vessel Works Division to CER Yangzhou by end of April 2011. Phase two of the facility is still under construction and is anticipated to be complete in 2012.
 
In order to close down our existing manufacturing facility at Vessel Works Division in Shanghai, we deliberately accepted fewer product orders beginning in June 2010. However, with the factors mentioned above and the world economy beginning to recover, we took more orders than anticipated from existing and new customers. In year 2010, the Company doubled the amount of sales contracts to $65 million. The main reason is that we focused more attention and efforts on EPC contracts, which consolidated our leadership position in these sectors and contributed to higher revenue. All the EPC contracts are signed for projects with HRS techniques, which have been developed into the mature period in China. These techniques have been fully accepted by most of our customers. With the upward trend in energy price, we expect HRS techniques will have a bright future in the next five to ten years. Besides, with our widely recognized brand name and reputation for quality goods in the sulfuric acid industry, we believe we will benefit from this advantage and will have more opportunities in the future to put our expertise to good use.
 
With phase one of the new facility complete, we are prepared to expand our customer base and enter into more sectors. We expect to incur separate (unrelated to any particular customer project) research and development expenditures to support an expansion into new sectors, such as coke refining and cement, including adding more specialized talents to our engineering and design team. We are also planning on entering into marketing partnerships and licensing deals that will enable us to reach a boarder segment of the market. We believe that there is significant opportunity in international markets and we intend to enter these markets through partnerships.


Monday, January 10, 2011

Deal Flow
China Energy Recovery, Inc. entered into a loan arrangement as of December 31, 2010 with Hold & Opt Investments Limited, to replace and continue the prior lending arrangement which was entered into on March 21, 2009, to extend the term until which the principal amount of US$5,000,000 is due to September 29, 2012, and to change certain of the terms of the loan.  The loan agreement was executed January 7, 2011.  A related collateral agreement will be signed once the collateral is available for pledge pursuant to the terms of the loan agreement.

Wednesday, December 22, 2010

Deal Flow
On December 9, 2010, the wholly owned subsidiary in the Peoples Republic of China of China Energy Recovery, Inc., referred to together as the company, entered into a three-year, loan facility with the Bank of China, Yizheng Branch. The facility is for RMB 30,000,000 (approximately US$4,500,000).

Wednesday, November 3, 2010

Comments & Business Outlook

China Energy Recovery files 2009 10K:

  • Our revenues include revenues from sales of energy recovery systems, provision of design services and EPC services. Revenues decreased to $22,194,443 for the year ended December 31, 2009 as compared to $24,904,776 for the year ended December 31, 2008, a decrease of $2,710,333 or 10.9%. This decrease was mainly due to the decrease in the overall amount of revenue under our outstanding contracts which is consistent with the worldwide economic crisis.
  • Net loss was $886,480, for the year ended December 31, 2009 as compared to net income of $1,374,902, for the year ended December 31, 2008, a decrease of $2,261,382 or 164.5%. The decrease in net income is mainly due to the decrease of gross profit and the increase in operating expenses, offset by the change in fair value of the warrants and derivative liability.
  • EPS was $(0.03) vs. $0.05.
  • Non-GAAP EPS was $(0.03) vs. $0.11.

With the recovery of the economy and the Chinese government’s emphasis on energy efficiency and pollution reduction, it is anticipated that the business will continue to grow in future periods. We believe we are among the few companies in the industry with the necessary design and engineering capability to satisfy the growing market demand for larger energy recovery systems. Further, we have been expanding our marketing efforts to win new contracts by attending trade events both inside China and overseas, hosting focused industry seminars, increasing selling efforts to repeat customers and actively pursuing new customer prospects, and partnering with large engineering houses and foreign industry leaders. We are also building a new state-of-the-art manufacturing facility expected to be partly completed and into operation in late 2010, which is designed to expand our production capacity and solve the capacity limitations we experience at our current leased facility. The new plant with its higher efficiency and greater capacity, once in place, is expected to enable us to increase our sales and gross margin.

Management believes that as a result of our ongoing efforts to improve operational efficiency and implement stricter cost controls and cost reduction measures, including attempts to minimize those expenses related to public company operations, enhance accounts receivable collection to reduce bad debt expenses, and control headcount and salary costs, our operating expenses will not necessarily increase in proportion to the anticipated increase in our sales, and we will also benefit from economies of scale as we grow our sales and secure orders with larger contract values in the future periods. Management expects that the current global recession will adversely affect the demand for our products and thus slow our growth in 2010 as compared to prior years. However, management anticipates that our sales revenues will continue to grow in future as we currently have back-log orders and continue to see an increasing awareness and demand for our energy efficiency solutions and systems both in China and in other countries.


Liquidity Requirements

We believe that funds generated from our operations and available from our credit facilities will be sufficient to fund current business operations over at least the next twelve months. Notwithstanding our resources for operations on a going forward basis at current operating levels, we will need capital for our expansion plans, including funding for the building of our proposed new plant. To improve our cash and cash requirement position, we will take steps to improve the collection of receivables, examine costs in an attempt to control or reduce expenses and use non-cash compensation, such as stock grants, where appropriate, all of which should have a positive effect on our working capital and increase our cash resources.

On May 21, 2009, the Company entered into a series of agreements for an unsecured term loan arrangement with a private investor. In connection with this financing, we agreed to issue a two-year 9.5% Unsecured Convertible Promissory Note in the principal amount of $5 million, which may be converted into common stock at a conversion price of $1.80 per share. The Convertible Note Agreement permitted the Company to draw down up to $5,000,000 in principal amount, within six months of the making. Any amount borrowed bears interest at 9.5%, payable every six months, calculated and compounded quarterly. Each draw is due twenty-four months after the draw down date, together with any accrued and unpaid interest. The Company may pre-pay the note at any time, at its option. On September 28, 2009, the Company drew down $5,000,000, the full amount available. The proceeds of this loan are restricted to only the expenses related to the acquisition and construction of a new plant to be located in China to expand our production capacity, including the purchase of land for the plant, buildings and equipment and for facilitating loans from one or more in-China banks and institutional lenders for the plant. We have used $3,510,000 of the Convertible Note Agreement proceeds for the purchase of land use rights and design and construction costs for the plant, and we will use the balance of the proceeds for the commitments to the local government to purchase more land use rights and other costs associated with the plant. No interest was paid in 2009.


Investor Alert

On February 1, 2010, the Company entered into a series of agreements for a loan arrangement with two lenders. The proceeds of this loan are generally for construction of a new plant in China. The aggregate principal amount of the loan under the two Loan Agreements is $4,000,000. The principal is due January 15, 2013, and bears interest at the annual rate of 15.1%. As security for this Loan Agreement and the other loan agreements of all the lenders, Mr. Qinghuan Wu, the Chairman and Chief Executive Officer of CER pledged 8,000,006 shares of common stock of CER, which shares will be held in escrow for the benefit of all the lenders.

As a result of the Company not filing its reports with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended, on a timely basis for the fiscal year ended December 31, 2009 and the quarters ended March 31, 2010 and June 30, 2010, the Company was in violation of various loan covenants and default terms with respect its obligation to file SEC reports and comply with applicable laws under the terms of the loan for $4,000,000 in principal amount due January 15, 2013. The violation of the covenants and default permit the note holders to accelerate the repayment of the full amount of the principal and interest due on the loan. To date, the lenders have not delivered any notice of acceleration and have not indicated that they intend to give such a notice. One of the lenders representing $2,000,000 in principal amount of the loans provided to the Company on November 1, 2010, a waiver of the covenant and default terms and also provided sufficient time to make the necessary past due filings and the report for the quarter ended September 30, 2010, before a covenant violation or default would result again concerning these issues.


Wednesday, September 16, 2009

Comments & Business Outlook

'After the temporary slowdown in the first quarter, the second quarter topline results have put us back on the track we are used to being on and we expect to continue to improve our bottomline results to our regular levels by controlling our operating expenses while continuing to achieve expansion of our revenues,' commented Mr. Qinghuan Wu, Chairman and CEO of China Energy Recovery. 'Though we experienced a temporary impact from the recent economic downturn in the first quarter, we have seen that many Chinese industrial customers have resumed their facility expansion or retrofit plans as a result of the recent China's economic stimulus package. With our strong design and engineering capabilities, we are well equipped to capture the trend of the growing market demand for larger sized, more sophisticated energy recovery systems which we believe will ensure us a sustained growth in the years to come. With our current growing order backlog, we also expect to see an improved annual performance in 2009 compared to that in 2008.'

Source: PR Newswire (August 13, 2009)


Saturday, June 20, 2009

Comments & Business Outlook

China Energy Recovery has updated previous guidance information.  The company did not provide pre-tax margin information as is has in the past.

-- Q2 2009 sales expected to exceed average 2008 level of $5.8 million

-- 2009 annual performance expected to be an improvement on 2008

Source: see release


Thursday, May 21, 2009

Comments & Business Outlook

The company lowers guidance for full year 2009 in its First Quarter Release.  Revenue is expected to be between 94 and 98 million and net income between 26.8 to 28 million.  Also did not provide any specific eps guidance.

Previous guidance from Fourth Quarter release was  Revenue of 107.5 million and Net Income of 32.9 million with eps of .70


Saturday, May 9, 2009

Comments & Business Outlook

China Energy Recovery backlog increases 86% to RMB223 million in contract value (approximately US$32.7 million based on the exchange rate as of April 28, 2009).  These orders are expected to be completed in the next 12 months with the majority to be completed by the end of 2009.

Using 2008 year end data of:

  • Pre-tax margins, 10.34% (Adjusted for non-cash expenses of $720K)
  • Tax rate 34% 
  • Diluted shares outstanding, 27,033,819

The backlog figure translates into $0.08.  In 2008 the company reported EPS of $0.04 ($0.07 non-GAAP, after adding back non-cash expenses ).