China Energy Recovery, Inc.

CIK:0001208790|SEC Filings

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
REVENUES
Total EPC revenues	$ 78,756,659	$ 82,223,770
Products - third parties	13,705,054	8,763,477
Total revenues	92,461,713	90,987,247
COST OF REVENUES
Total EPC cost revenues	(67,058,420)	(70,646,416)
Products - third parties	(10,424,125)	(7,084,909)
Total cost of revenues	(77,482,545)	(77,731,325)
Gross Profit	14,979,168	13,255,922
Selling, General and Administrative Expenses	(13,153,371)	(9,991,632)
Income From Operations	1,825,797	3,264,290
Other Income (Expenses):
Change in fair value of warrant liability	22,806	1,294,407
Change in fair value of derivative liability	21,274	402,033
Other non-operating income/(expenses), net	328,989	(423,364)
Investment income	2,977	0
Interest expense	(866,261)	(1,801,056)
Total other income (expenses)	(490,215)	(527,980)
Income Before Income Taxes	1,335,582	2,736,310
Income Tax Expense	(1,238,289)	(740,642)
Net Income	97,293	1,995,668
Other Comprehensive Income:
Foreign currency translation adjustments	316,655	875,480
Comprehensive Income	413,948	2,871,148
Income per share:
Basic (in dollars per share)	$ 0.003	$ 0.06
Diluted (in dollars per share)	$ 0.003	$ 0.06
Weighted average ordinary shares outstanding:
Basic (in shares)	31,077,632	31,033,148
Diluted (in shares)	31,077,632	31,033,148
Third Party [Member]
REVENUES
EPC	72,158,200	49,720,612
COST OF REVENUES
Total EPC cost revenues	(58,528,814)	(42,755,666)
Related Party [Member]
REVENUES
EPC	6,598,459	32,503,158
COST OF REVENUES
Total EPC cost revenues	$ (8,529,606)	$ (27,890,750)

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Dec. 31, 2012	Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 97,293	$ 1,995,668
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	1,724,365	1,481,661
Loss on disposal of property, plant, and equipment	0	51,548
Discount reflected in revenue for payment extensions on long-term accounts receivable (Note 3)	1,709,299	0
Interest income - long term accounts receivable accretion (Note 3)	(1,311,915)
Provision for impairment loss of receivables	3,428,447	1,010,102
Provision for inventory	16,186	26,763
Common stock issued for consulting services	0	40,308
Restricted common stock issued for settlement of exchange rate loss related to long-term loan	0	144,498
Stock based compensation	28,266	260,224
Investment income	(2,977)	0
Change in fair value of warrant and derivative liabilities	(44,080)	(1,696,440)
Accretion of interest on convertible note and long term loan	149,055	241,233
Amortization of deferred financing costs	0	215,623
Capitalized interest expenses	(134,579)	(14,729)
Debt issue cost	73,343	0
Cancellation of warrants	0	(15,547)
Deferred income taxes	(166,473)	(450,164)
Changes in operating assets and liabilities:
Notes receivable	1,281,652	(437,874)
Accounts receivable	(6,818,667)	(5,645,663)
Accounts receivable - related party	(3,264,221)	(9,088,157)
Inventories	6,211,871	(6,048,551)
Other current assets and receivables	(91,662)	851,656
Advances on inventory purchases	11,959,536	(9,023,724)
Long term accounts receivable - related party	0	4,679,121
Accounts payable	7,990,531	11,690,296
Notes payable	(1,227,991)	1,396,648
Accrued expenses and other liabilities	2,286,348	(642,594)
Advances from customers	(24,049,858)	15,212,013
Deferred revenue	157,540	89,068
Taxes payable	1,831,572	(411,173)
Effect of exchange rate changes on operating activities	15,656	951,317
Net cash provided by operating activities	1,848,537	6,863,131
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(5,885,111)	(9,076,046)
Changes in restricted cash	(2,552,396)	(664,082)
Purchase of intangible assets	(46,167)	(2,434,629)
Purchase of short-term investments	82,332	(79,355)
Proceeds from disposal of property, plant, and equipment	0	24,863
Net cash used in investing activities	(8,401,342)	(12,229,249)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans	30,744,479	15,814,185
Repayments of short-term loans	(21,681,692)	(10,703,605)
Repayment of convertible note	(5,000,000)	0
Repayments of long-term loans	0	(3,803,621)
Proceeds from letter of credit	0	4,490,741
Acquisition of treasury stock	(9,950)	0
Net cash provided by financing activities	4,052,837	5,797,700
Effect of Exchange Rate Changes on Cash	11,735	151,788
Increase (Decrease) in Cash	(2,488,233)	583,370
Cash, beginning balance	3,579,446	2,996,076
Cash, ending balance	1,091,213	3,579,446
Supplemental disclosure of cash flow information:
Cash paid for income taxes	680,087	1,237,609
Cash paid for interest	1,267,393	1,394,203
Supplemental schedule of non-cash investing and financing activities:
Common stock for consulting services	0	40,308
Common stock issued for settlement of exchange rate loss related to long-term loan	0	144,498
Accounts payable relating to purchases of property, plant and equipment	$ 2,835,719	$ 5,377,061

CONSOLIDATED BALANCE SHEETS(USD ($))	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Cash	$ 1,091,213	$ 3,579,446
Restricted cash	3,434,824	882,428
Notes receivable	497,581	1,779,233
Accounts receivable - third parties	14,726,322	11,639,138
Accounts receivable - related parties	1,605,100	9,088,157
Inventories, net	8,449,766	14,678,312
Other current assets and receivables	425,038	333,376
Advances on purchases	9,317,116	21,276,652
Short-term investments	0	79,355
Total current assets	39,546,960	63,336,097
Non-Current Assets:
Property, plant and equipment, net	28,199,889	26,159,602
Deferred tax assets	788,413	621,940
Intangible assets	4,930,452	4,999,883
Long term accounts receivable, net - third parties	4,023,840	0
Long term accounts receivable, net - related party	6,608,981	0
Total non-current assets	44,551,575	31,781,425
Total Assets	84,098,535	95,117,522
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable (including accounts payable of the consolidated variable interest entity without recourse to the Company of $7,998,479 and $11,394,637 as of December 31, 2011 and 2012, respectively)	26,935,238	21,625,205
Notes payable (including notes payable of the consolidated variable interest entity without recourse to the Company of nil and nil as of December 31, 2011 and 2012, respectively)	168,657	1,396,648
Accrued expenses and other liabilities (including accrued expenses and other liabilities of the consolidated variable interest entity without recourse to the Company of $82,936 and $1,254,253 as of December 31, 2011 and 2012, respectively)	3,556,298	1,269,950
Advances from customers (including advances from customers of the consolidated variable interest entity without recourse to the Company of $7,151,306 and $4,407,224 as of December 31, 2011 and 2012, respectively)	18,692,220	42,742,078
Taxes payable (including taxes payable of the consolidated variable interest entity without recourse to the Company of $1,180,672 and $1,809,749 as of December 31, 2011 and 2012, respectively)	3,051,906	1,220,334
Long term loans, current portion (including long term loans, current portion of the consolidated variable interest entity without recourse to the Company of nil and nil as of December 31, 2011 and 2012, respectively)	0	4,850,945
Short term loans (including short term loans of the consolidated variable interest entity without recourse to the Company of nil and $7,222,950 as of December 31, 2011 and 2012, respectively)	23,524,779	14,388,649
Derivative liability, current (including derivative liability, current of the consolidated variable interest entity without recourse to the Company of nil and nil as of December 31, 2011 and 2012, respectively)	0	21,274
Total current liabilities	75,929,098	87,515,083
Non-Current Liabilities:
Warrant liability (including warrant liability of the consolidated variable interest entity without recourse to the Company of nil and nil as of December 31, 2011 and 2012, respectively)	0	22,806
Deferred revenue (including deferred revenue of the consolidated variable interest entity without recourse to the Company of nil and nil as of December 31, 2011 and 2012, respectively)	246,608	89,068
Total non-current liabilities	246,608	111,874
Total liabilities	76,175,706	87,626,957
Commitments and contingencies (Note 19)	0	0
Shareholders' Equity:
Convertible preferred stock (US$0.001 par value; 50,000,000 shares authorized, 200,000 shares issued and outstanding both as of December 31, 2011 and 2012, respectively)	189	189
Common stock (US$0.001 par value; 100,000,000 shares authorized, 31,085,859 and 31,085,859 shares issued and outstanding as of December 31, 2011 and 2012, respectively)	31,085	31,085
Treasury Stock (Nil and 33,853 shares repurchased as of December 31, 2011 and December 31, 2012, respectively)	(9,950)	0
Additional paid-in-capital	8,786,502	8,758,236
Accumulated deficits	(2,997,374)	(3,094,667)
Statutory reserves	509,596	509,596
Accumulated other comprehensive income	1,602,781	1,286,126
Total shareholders' equity	7,922,829	7,490,565
Total liabilities and shareholders' equity	$ 84,098,535	$ 95,117,522