- FY08 Revenue Increases 44.8% to $53.7 Million - - Mr. Edward Chan
Named Chief Operating Officer - - Dr. Weizhong Xiang Named Chief
Technology Officer - BEIJING, April 16 /PRNewswire-Asia-FirstCall/
-- China Solar & Clean Energy Solutions, Inc. ("CSOL" or "China
Solar" or the "Company") (OTC:CSOL) (BULLETIN BOARD: CSOL) , a
premier manufacturer and distributor of solar water heaters,
renewable energy solutions, and space heating devices in the
People's Republic of China, today reported its financial results
for the year ended December 31, 2008 and announced two new
additions to its senior management team -- Mr. Edward Chan and Dr.
Weizhong Xiang as Chief Operating Officer and Chief Technology
Officer, respectively. Full Year 2008 Results Revenues for 2008
increased 44.8% to $53.7 million, compared to $37.1 million for
2007, driven by higher revenues from the Heat Pipe and
Energy-saving segments. Heat Pipe revenues increased 136% to $16.6
million from $7.0 million in 2007, as CSOL did not begin to sell
Heat Pipe related products until its acquisition of Tianjin Huaneng
on July 1, 2007, and therefore, Heat Pipe revenue in 2007 only
reflected 2H07 total sales. Energy-saving revenues increased 169%
to $9.1 million, versus $3.4 million in 2007, as the Company
completed its acquisition of Shenzhen PengSangPu ("SZPSP") in March
2008. During the year, revenues for the Solar Heater/Biomass
Stove/Boiler ("Solar-Biomass-Boiler") segment decreased by $1.6
million to $25.1 million in 2008, as the Company accounted for the
sales of certain products of this segment under a new fourth
segment and, to a lesser extent, due a decrease in the selling
prices as a result of increased competition. In 2008, the Company
added a new revenue segment named Solar Heat Collector and Others
and recorded $3.0 million of revenues in this segment, as compared
to zero in 2007. Gross margin for 2008 was 17.4%, compared to 22.4%
in 2007, primarily due to a decrease in the selling prices as a
result of increased competition in the industry. Operating expenses
increased to $9.1 million for 2008 as compared to $5.1 million for
2007, primarily due to higher marketing and promotional expenses
and higher salary and benefits associated with the expansion of the
sales force. While recurring administrative expenses improved in
2008, the Company incurred one-time liquidated expenses of
approximately $0.5 million paid to certain investors due a delay in
effecting a registration pursuant to its agreement with such
investors in its February 2008 private placement. The Company also
recognized higher administrative expenses attributable to the
consolidation of SZPSP and professional fees associated with the
private placement. Operating income was $0.2 million for 2008, as
compared to $3.2 million for 2007, and operating margin was 0.5% in
2008, as compared to 8.6% in 2007. In 2008, the Company recognized
non-recurring expenses of approximately $3.0 million, including
goodwill impairment of $2.3 million related to its acquisition of
SZPSP and inventory write-downs of approximately $0.2 million.
Consequently, the Company reported a net loss of $4.2 million in
2008, compared with a net income of $2.5 million in 2007. Net loss
per share was $0.34 in 2008 versus diluted net income per share of
$0.22 in 2007. Cash and cash equivalents decreased to $2.4 million
on December 31, 2008, compared to $5.5 million on December 31,
2007. This decrease was due to increased spending on working
capital and capital expenditures and to two loans totaling $3.4
million made to Shenzhen Fuwaysun Technology Co., Ltd.
("Fuwaysun"), as part of a pending acquisition agreement between
China Solar and Fuwaysun. Net cash used in operating activities was
$4.6 million for 2008, as compared to net cash provided for
operations of $4.7 million for 2007, mainly due to an increase in
inventories, advancements to suppliers, and production costs for
energy saving projects. As of December 31, 2008, the Company had
net working capital of $8.7 million and zero debt. Mr. Deli Du,
Chief Executive Officer and President of CSOL, commented, "While
I'm pleased that our total revenue increased 45% in 2008, in
retrospect, fiscal year 2008 was a transition year for CSOL.
Although we have successfully integrated our acquisitions of
Tianjin Huaneng and SZPSP and witnessed higher revenues in their
respective segments, we experienced lower selling prices and gross
margins in our Solar Heater segment. As we continued to invest into
our sales organization and manufacturing infrastructure, we have
yet to realize the full benefits from these investments and
therefore incurred net losses for the full fiscal year. I am,
however, excited about the significant expansion of our senior
management team. In March, we announced the appointment of Ms.
Veronica Jing Chen, a seasoned executive with broad experience and
proven leadership, as our new Chief Financial Officer. Today, I am
delighted to announce the creation of two new senior positions of
Chief Operating Officer and Chief Technology Officer and the
addition of two excellent members to our growing senior management
team, as we demonstrate our commitment to continue building a
strong, diverse and capable management team." Expanded Management
Team CSOL has appointed Mr. Edward Chan and Dr. Weizhong Xiang to
two newly created positions of Chief Operating Officer and Chief
Technology Officer, respectively. Mr. Chan, COO, has rich
operations knowledge and a strong management track record gained
from more than 20 years of experience in sales, marketing and
general management with various companies throughout China. Prior
to joining CSOL, he was the Associate Managing Director of Shenzhen
Coolead Industry Co. Ltd., a company specialized in constructing
energy efficient buildings in China. Before that, Mr. Chan served
as marketing director of Hitachi China, Strategy General Manager of
Broad Air Conditioning, Business Consultant of Philips (China) and
Sales manager of Aluminum Corporation of China. Mr. Chan holds an
MBA from Royal Roads University and a Bachelor's degree from the
Hong Kong Polytechnic University. Dr. Xiang, CTO, possesses deep
technical expertise in large-scale clean tech and energy-saving
projects as well as broad engineering experience in the United
Kingdom and China. Prior to joining CSOL, he served as Vice
Director of the Hoare Lea Consulting Engineers, a firm of
consulting engineers specializing in mechanical, electrical and
environmental engineering. Dr. Xiang has consulted and advised on
more than 50 large-scale construction projects, primarily
consisting of clean tech and energy-saving building projects, such
as London 2012 Olympic projects, Heathrow Airport and the
University of Oxford Science Park. Before that, he was Senior
Analyst in charge of thermal products analysis at GE (UK) Fluid and
Heat Division, where he successfully led the development of several
major products and optimized product designs in various others. A
registered engineer in the United Kingdom, Dr. Xiang holds a Ph.D
from Brunel University and a Master's Degree from the Harbin
Institute of Technology. Mr. Du continued, "I am elated in
welcoming Messrs. Chan and Xiang to our senior management team. As
COO, Mr. Chan will lead our continued efforts in streamlining our
operations while helping me to coordinate our launch of new
products and expansions into new markets. As CTO, Dr. Xiang will
draw on his deep expertise to lead our technology teams in the
development and adoption of new products and technologies. We plan
to leverage Dr. Xiang's rich experience and strong technical
skills, both in China and the UK, to integrate our various
technologies and products and to innovate new clean energy
solutions as we aim capture a growing share of China's large clean
energy market opportunities." Growth Strategy Mr. Du concluded,
"With our strong, expanded management team in place, our solid
portfolio of technologies and products in development, our
nationwide distribution and sales force strengthened, CSOL is well
positioned to capture the many attractive opportunities in our
immediate industry, as well as complementary markets in China and
abroad. I am encouraged by the government's initiatives to expand
the availability of and access to electricity in China's immense
rural areas, which will create substantially higher demand for our
products and solutions. I am energized by our gainful technical and
marketing abilities to win additional market share in the
energy-saving segment, as our customers continue to recognize the
economic and social benefits of recycling. I am excited by our
unique business model and pioneering solutions for solar projects
in hot water systems throughout China's numerous Universities. This
business model, though requiring initial capital investments, can
deliver reliable profits and cash flows for many years to come. We
continue to explore government-supported financing facilities and
subsidies that can further accelerate the ROIs of our unique
solutions. "Moreover, we continue to pursue additional strategic
opportunities to further augment our existing business. On April 9,
2009, our Board approved an amendment to extend the consummation of
our acquisition of Fuwaysun until June 30, 2009. We believe that
Fuwaysun's market leadership in portable solar applications for
rural settings, combined with our nationwide distribution and
marketing resources, will deliver immediate accretion to our
revenue, margins, and overall profits upon completion of the
acquisition. We have identified many applications both in China and
abroad for Fuwaysun's core technologies, and we are very excited by
the responses from Fuwaysun's existing and potential customers. We
remain confident that we will complete Fuwaysun's acquisition by
the end of June 2009. "Thus, as we near the completion our business
transition and the completion of our Fuwaysun acquisition, I
believe that CSOL will achieve strong revenue growth, margin
expansions, and solid profits and cash flows in the near future.
Our new management team is dedicated to growing a strong,
profitable and responsive enterprise at China Solar, and
importantly, to serving the best interests of our supportive
shareholders and maximizing our shareholders' value." About China
Solar & Clean Energy Solutions, Inc China Solar & Clean
Energy Solutions, Inc. operates through its wholly owned
subsidiaries Bazhou Deli Solar Energy Heating Co. Ltd. ("Deli Solar
(Bazhou)"), Beijing Deli Solar Technology Development Co., Ltd.,
Shenzhen PengSangPu Solar Industrial Products Corporation and its
51% ownership in Tianjin Huaneng Group, all located in the PRC. The
Company manufactures and distributes hot water and space heating
devices to customers in the PRC, in addition to waste heat recovery
systems. For more information, please visit
http://www.delisolar.com/ . Cautionary Statement Regarding Forward
Looking Information Safe Harbor Statement: Certain statements in
this news release may contain forward-looking information about
China Solar & Clean Energy Solutions and its subsidiaries
business and products within the meaning of Rule 175 under the
Securities Act of 1933 and Rule 3b-6 under the Securities Exchange
Act of 1934, and are subject to the safe harbor created by those
rules. The actual results may differ materially depending on a
number of risk factors including, but not limited to, the general
economic and business conditions in the PRC, market and customer
acceptance and demand for products, ability to market products,
fluctuations in foreign currency markets, the use of estimates in
the preparation of financial statements, the impact of competitive
products and pricing, the ability to develop and launch new
products on a timely basis, the regulatory environment,
fluctuations in operating results, and various other factors beyond
its control. All forward-looking statements are expressly qualified
in their entirety by this Cautionary Statement and the risks
factors detailed in the Company's reports filed with the Securities
and Exchange Commission. China Solar & Clean Energy Solutions
undertakes no duty to revise or update any forward-looking
statements to reflect events or circumstances after the date of
this release. For more information, please contact: Veronica Chen
China Solar & Clean Energy Solutions, Inc. Tel:
+86-10-6386-8188 Email: Michael Tieu ICR Tel: +86-10-6599-7960
Email: CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC. CONSOLIDATED
STATEMENTS OF INCOME (Currency expressed in United States Dollars
("US$")) Year Ended December 31, 2008 2007 2006 As adjusted and
Restated* Revenue, net $53,683,651 $37,072,346 $21,468,313 Cost of
revenue 28,772,078 16,842,994 44,363,787 Gross profit 9,319,863
8,300,268 4,625,319 Operating expenses: Depreciation and
amortization 955,443 282,822 154,946 Selling and distribution
3,995,401 827,839 459,746 General and administrative 4,127,069
4,003,973 2,800,015 Total operating expenses 9,077,912 5,114,634
3,414,707 Income from operations 241,951 3,185,634 1,210,612 Other
income (expenses): Other income 197,154 220,057 45,606 Interest
income 262,233 -- -- Other expense (547,705) -- -- Interest expense
(292,167) (65,481) (16,717) Loss on nonrecurring items (3,012,488)
-- -- Total other income (expenses) (3,392,973) 154,576 28,889
Income before income taxes (3,151,022) 3,340,210 1,239,501 Income
tax expense (193,418) (615,325) -- Minority interests (818,893)
(199,744) -- NET INCOME $(4,163,332) $2,525,141 $1,239,501 NET
INCOME AVAILABLE TO COMMON STOCKHOLDERS (4,163,332) $1,549,334
1,239,501 Net income per share - basic (0.34) $0.25 0.20 Net income
per share - diluted (0.34) $0.24 0.18 Weighted average shares
outstanding - basic 12,158,482 6,205,290 6,205,290 Weighted average
shares outstanding - diluted 12,158,482 6,396,697 6,957,876 *
RESTATEMENT ON CONSOLIDATED FINANCIAL STATEMENTS In April 2008, we
filed a registration statement on Form S-1 with the Securities and
Exchange Commission relating to the sale by certain selling
stockholders identified in the related prospectus of up to
5,160,649 shares of our common stock including 469,150 shares they
may acquire on exercise of warrants. When reviewing our financial
statements for inclusion in the prospectus, we became aware of an
error in the calculation of diluted net income per share for the
year ended December 31, 2007. We misapplied the treasury stock and
the "if converted" methods under SFAS No. 128 and because of the
error we identified, we have restated our historical financial
statements for 2007 to record an increase of 10 cents in diluted
net income per share. This 10 cents per share adjustment was
non-cash. The error had no impact on our reported assets,
liabilities, equity, revenue, expenses or earnings. There was no
cumulative effect on retained earnings or other components of
equity in the balance sheet at December 31, 2007. It had no impact
on basic earnings per share. Nor did it have any impact on cash or
cash equivalents. It had no impact on prior year financial
statements and, likewise, will have no impact on future financial
statements. The following table sets forth the income statement
impact of the restatement: December 31, 2007 As reported Adjustment
As Restated Diluted - Total weighted average shares outstanding
11,233,026 (4,836,329) 6,396,697 Diluted net income per share $0.14
0.10 0.24 The impact of the restatement on the disclosures of
earnings per share data is set forth in the table below: December
31, 2007 As reported Adjustment As Adjusted Denominator: - Weighted
average preferred stock outstanding 1,337,097 (1,337,097) -- -
Weighted average warrant shares outstanding 3,690,639 (3,499,232)
191,407 Diluted - Total weighted average shares outstanding
11,233,026 4,836,329 6,396,697 Diluted net income per share $0.14
0.10 0.24 CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS (Currency expressed in United States
Dollars ("US$"), except for number of shares) As of December 31,
2008 2007 ASSETS Current assets: Cash and cash equivalents
$2,404,996 $5,466,637 Accounts receivable, net 7,284,255 7,453,009
Inventories 6,950,844 3,875,658 Other receivables and prepayments
7,870,575 1,637,948 Lease receivables, current 156,579 -- Total
current assets 24,667,249 18,433,252 Property, plant and equipment,
net 15,366,009 8,819,216 Goodwill 2,284,903 1,789,324 Intangible
assets, net 1,709,184 1,597,921 Customer relationships, net
1,017,500 -- Intellectual property - unpatented technology, net
869,500 -- Lease receivables, non-current 654,578 -- TOTAL ASSETS
$46,568,923 $30,639,713 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable, trade $5,301,349 $2,111,028
Income tax payables 2,236,298 1,108,433 Other payables and accrued
liabilities 8,386,698 8,552,452 Total current liabilities
15,924,345 11,771,913 Deferred tax liability 15,779 -- Minority
interests 1,704,248 935,825 Stockholders' equity: Convertible
preferred stock: par value $0.001; 25,000,000 shares authorized,
373,000 and 1,774,194 shares issued and outstanding, respectively
373 1,774 Common stock, $0.001 par value; 66,666,667 shares
authorized; 13,799,450 and 6,205,690 shares issued and outstanding,
respectively 13,799 6,205 Additional paid-in capital 22,966,404
9,260,607 Accumulated other comprehensive income 1,615,082
1,134,270 Retained earnings 3,365,788 7,529,119 Profit earning
reserves 963,106 -- 28,924,551 17,931,975 Total stockholders'
equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,568,923
$30,639,713 CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Currency expressed in United
States Dollars) Years ended December 31, 2008 2007 2006 Cash flows
from operating activities: Net income (4,163,332) $2,525,141
$1,239,501 Adjustments to reconcile net income to net cash provided
by operating activities: Depreciation and amortization 1,280,429
324,157 178,437 Impairment for goodwill, inventory 2,702,488 -- --
Provision for allowance on accounts receivable 978,006 650,432
(77,267) Changes in operating assets and liabilities: Accounts
receivable, trade (965,831) (7,232,995) (238,334) Inventories
(3,313,403) (3,559,893) 67,418 Other receivables and prepayments
(6,232,627) (250,037) (238,268) Accounts payable, trade 3,190,321
1,963,127 58,526 Income tax payable 1,127,865 1,108,433 -- Other
payables and accrued liabilities (59,921) 8,209,641 262,885
Minority interest 818,893 935,825 -- Net cash provided by operating
activities (4,637,112) 4,673,831 1,252,898 Cash flows from
investing activities: Acquisition of a subsidiary (662,491)
(489,459) -- Deposits made to acquire subsidiary -- -- (256,278)
Purchase of intangible assets (981,283) (635,726) (932,732)
Purchase of property, plant and equipment (7,364,222) (4,294,741)
(2,815,398) Net cash used in investing activities (9,007,996)
(5,419,926) (4,004,408) Cash flows from financing activities:
proceeds from warrants exercised 107,500 (180,694) (130,112)
Capital contribution received from shareholders 9,995,156 -- --
Proceeds from issuance of preferred stock (net of offering costs of
$169,000 paid in cash) -- 2,581,000 -- Related receivable -- --
82,639 Related payables -- -- 22,528 Net cash (used in) provided by
financing activities 10,102,656 2,400,306 (24,945) Foreign currency
translation adjustment 480,812 600,361 359,352 NET CHANGE IN CASH
AND CASH EQUIVALENTS (3,061,640) 2,254,572 (2,417,103) CASH AND
CASH EQUIVALENTS, BEGINNING OF YEAR 5,466,637 3,212,065 5,629,168
CASH AND CASH EQUIVALENTS, END OF YEAR 2,404,996 $5,466,637
$3,212,065 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash
paid for income taxes 538,332 $939,798 $-- Cash paid for interest
expenses 302,961 $95,446 $16,717 SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING TRANSACTIONS SUPPLEMENTAL DISCLOSURE OF
NONCASH INVESTING AND FINANCING TRANSACTIONS Warrant shares granted
for offering costs $541,695 $138,338 $-- Issuance of common stock
for acquisitions of SZPSP $2,839,458 $-- $-- Issuance of warrants
for the $92,193 acquisitions of SZPSP $-- $-- Preferred share
converted $1,401 $-- $-- DATASOURCE: China Solar & Clean Energy
Solutions, Inc. CONTACT: Veronica Chen of China Solar & Clean
Energy Solutions, Inc., +86-10-6386-8188, ; or Michael Tieu of ICR,
+86-10-6599-7960,
Copyright