SOURCE: Sino Clean Energy, Inc.

August 18, 2009 06:00 ET

Sino Clean Energy Reports Second Quarter 2009 Financial Results

XI'AN, CHINA--(Marketwire - August 18, 2009) - Sino Clean Energy, Inc. (OTCBB: SCLX) ("Sino Clean Energy," the "Company"), a producer and distributor of coal-water mixture ("CWM") in the People's Republic of China ("PRC"), announced its financial results for the second quarter ended June 30, 2009.

Second Quarter 2009 Highlights

--  Total revenue increased 151% period-over-period to $8.1 million
--  Gross profit increased 161% period-over-period to $2.6 million
--  Gross margin increased period-over-period from 30.9% to 32.2%
--  Income from operations increased 181% period-over-period to
    $2.19 million
    

Second Quarter 2009 Results

Total revenue for the second quarter of 2009 was $8,161,903, an increase of 151% from $3,251,224 for the same period in 2008. The number of our customers increased from 5 for the three months ended June 30, 2008, to 18 for the same period in 2009, contributing to the revenue increase period-over-period.

"Our sales and number of customers in the second quarter of 2009 as compared to the same period of 2008 are indicative of the growing market acceptance of coal-water mixture," commented Mr. Baowen Ren, Chairman and CEO of Sino Clean Energy.

Cost of sales increased 146% for the second quarter of 2009 to $5,534,929 from $2,245,700 a year ago, in line with our increase in sales. Gross profit increased 161% period-over-period, from $1,005,524 to $2,626,974, with gross margin rising to 32.2% for the second quarter of 2009 from 30.9% for the same period of 2008.

Income from operations for the second quarter of 2009 was $2,192,301, compared to $780,858 for the same period in 2008, an increase of 181%.

Net income for the second quarter of 2009 was $541,829, or $0.01 per diluted common share, as compared to $811,890, or $0.01 per diluted common share, for the same period of 2008, a decrease of 33%. GAAP results for the second quarter of 2009 include $120,166 of non-cash expense in the treatment as stock-based compensation of common shares placed in escrow by Mr. Ren in connection with our private financing in September 2008, as well as a change of $1,779,968 in the fair value of the warrants and the conversion feature of the debt instruments issued in the September 2008 financing, which are offset by non-cash income from extinguishment of derivative liabilities of $989,260. Excluding these items, net income for the second quarter of 2009 would have been $1,452,703 (See "About Non-GAAP Financial Measures" toward the end of this release).

Financial Condition

As of June 30, 2009, the Company had $9,351,117 in cash and cash equivalents, total liabilities of $7,632,787, working capital of $5,310,422, and total shareholders' equity was $17,616,347.

Recent Events

In July 2009, the Company raised approximately $11.6 million in gross proceeds from several investors in a private financing, and redeemed or converted all of the then outstanding convertible debentures that it issued in September 2008.

In August 2009, the Company added another independent director to its board of directors, Mr. Yong Li, who brings with him his financial experience and knowhow.

Business Outlook

"We anticipate 2009 to be a positive year for us," commented Mr. Ren. "Successfully raising $11.6 million in July, we believe that we have sufficient cash flow to satisfy the increasing demands for CWM from increasing numbers of customers."

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that exclude the stock-based compensation treatment of the common shares placed in escrow by Mr. Ren in connection with the September 2008 private financing as well as the change in fair value of the warrants and the conversion feature of the convertible debentures issued in that financing. The Company believes that these non-GAAP financial measures are useful to investors because they exclude non-cash charges that our management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of Sino Clean Energy. Accordingly, management excludes such items when making operational decisions. The Company believes that providing the non-GAAP measures that management uses 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. In addition, it allows investors to evaluate the Company's performance using the same methodology and information as that used by our 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, our management compensates for these limitations by providing the relevant disclosure of the items excluded.

The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.

                              Adjusted Income
                                (Unaudited)


                            Three months ended         Six months ended
                                 June 30,                  June 30,
                             2009         2008         2009         2008

Net income-U.S. GAAP     $   541,829  $   811,890  $ 2,107,305  $ 1,335,389
                         -----------  -----------  -----------  -----------
Add:
Amortization of deferred
 debt issuance costs         119,974                   217,102

Amortization of discount
 on convertible notes        423,687                   753,025

Expense related to
 escrow shares               120,166                   240,333

Charge for change in
 fair value of warrants
 and conversion feature    1,779,968                 1,200,990

Subtract:
Extinguishment of
 derivative liability        989,260                   989,260


Adjusted                 $ 1,996,364  $   811,890  $ 3,529,495  $ 1,335,389
                         -----------  -----------  -----------  -----------


About Sino Clean Energy

Sino Clean Energy is a U.S. publicly traded company and a China-based producer and distributor of coal-water mixture ("CWM"). Based in Shaanxi Province, Sino Clean Energy is the largest CWM producer in Northwestern China. For more information about Sino Clean Energy, please visit http://www.sinocei.net.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to uncertainties in product demand, the impact of competitive products and pricing, our ability to obtain regulatory approvals, changing economic conditions around the world, release and sales of new products and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


                  Sino Clean Energy Inc. and Subsidiaries
                  Condensed Consolidated Balance Sheets


                                                   June 30,    December 31,
                                                     2009          2008
                                                 ------------  ------------
                                                 (Unaudited)
                      ASSETS
Current assets
Cash and cash equivalents                        $  9,351,117  $  3,914,306
Accounts receivable, net                            2,113,857       899,629
Inventories                                           212,584        45,068
Prepaid inventories                                 1,177,530     1,996,584
Prepaid expenses                                       25,964        86,958
Refundable advance                                          -       731,861
Government grant receivable                                 -       146,314
Other receivables                                      23,438        16,986
Land use right - current portion                       38,719        38,703
                                                 ------------  ------------

Total current assets                               12,943,209     7,876,409

Property, plant and equipment, net of
 accumulated depreciation and amortization
 of $837,564 and $491,247, respectively             8,704,176     9,394,416
Land use right - non current portion                1,785,630     1,804,277
Prepayments and deposits                              946,515       994,395
Goodwill                                              762,018       762,018
Deferred debt issuance costs, net of
 accumulated amortization of $331,336
 and $114,233, respectively                           107,586       274,278
                                                 ------------  ------------

Total assets                                     $ 25,249,134  $ 21,105,793
                                                 ============  ============


                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Convertible notes, net                           $    736,515  $    383,490
Accounts payable and accrued expenses               1,463,595     1,004,999
Taxes payable                                         561,155       305,903
Amount due to directors                                70,000       465,049
Fair value of warrants and embedded
 conversion feature                                 4,801,522             -
                                                 ------------  ------------

Total current liabilities                           7,632,787     2,159,441
                                                 ------------  ------------

Commitments and Contingencies

Shareholders' Equity
Preferred stock, $0.001 par value, 50,000,000
 shares authorized, none issued and outstanding             -             -

Common stock, $0.001 par value, 200,000,000
 shares authorized, 97,181,416 and 92,181,750
 issued and outstanding as of June 30, 2009
 and December 31, 2008 respectively                    97,181        92,182
Additional paid-in capital                         12,499,688    12,696,549
Retained earnings                                   2,539,250     3,686,087
Statutory reserves                                    348,309       348,309
Accumulated other comprehensive income              2,131,919     2,123,225
                                                 ------------  ------------

Total shareholders' equity                         17,616,347    18,946,352
                                                 ------------  ------------

Total liabilities and shareholders' equity       $ 25,249,134  $ 21,105,793
                                                 ============  ============





                 Sino Clean Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Other Comprehensive Income
                                (Unaudited)


                        Three months ended           Six months ended
                             June 30,                    June 30,
                    --------------------------  --------------------------
                        2009          2008          2009          2008
                    ------------  ------------  ------------  ------------
Revenue             $  8,161,903  $  3,251,224  $ 15,901,486  $  5,736,352

Cost of goods sold    (5,534,929)   (2,245,700)  (10,883,036)   (3,930,379)
                    ------------  ------------  ------------  ------------

Gross profit           2,626,974     1,005,524     5,018,450     1,805,973

Selling, general
 and administrative
 expenses                434,673       224,666       987,131       390,569
                    ------------  ------------  ------------  ------------

Income from
 operations            2,192,301       780,858     4,031,319     1,415,404

Other income
 (expense)
Interest expense        (596,098)            -    (1,081,845)            -
Expense related to
 escrow shares          (120,166)            -      (240,333)            -
Commission income        152,597       144,875       191,291       144,875
Rental income, net             -        25,894             -        79,613
Interest income            7,285        11,511        11,271        11,511
Extinguishment of
 derivative
 liability               989,260             -       989,260             -
Change in fair
 value of warrants
 and conversion
 feature              (1,779,968)            -    (1,200,990)            -
Other                          -       (10,217)            -        26,843
Gain on disposal of
 property                      -        33,000             -        33,000
                    ------------  ------------  ------------  ------------

Total other income
 (expense)            (1,347,090)      205,063    (1,331,346)      295,842
                    ------------  ------------  ------------  ------------

Income before
 income taxes and
 noncontrolling
 interest                845,211       985,921     2,699,973     1,711,246

Provision (benefit)
 for income taxes        303,382       (21,375)      592,668        24,708
                    ------------  ------------  ------------  ------------

Income before
 noncontrolling
 interest                541,829     1,007,296     2,107,305     1,686,538

Income attributable
 to noncontrolling
 interest                      -      (195,406)            -      (351,149)
                    ------------  ------------  ------------  ------------

Net income               541,829       811,890     2,107,305     1,335,389

Other comprehensive
 income
Foreign currency
 translation
 adjustment               12,010       322,619         8,694       810,677
                    ------------  ------------  ------------  ------------

Comprehensive
 income             $    553,839  $  1,134,509  $  2,115,999  $  2,146,066
                    ============  ============  ============  ============

Weight average
 number of shares
- Basic               95,320,611    84,764,168    93,766,296    84,723,186
                    ============  ============  ============  ============
- Diluted             99,109,256    84,764,168    98,067,546    84,723,186
                    ============  ============  ============  ============

Income per common
 share
- Basic             $       0.01  $       0.01  $       0.02  $       0.02
                    ============  ============  ============  ============
- Diluted           $       0.01  $       0.01  $       0.02  $       0.02
                    ============  ============  ============  ============

Contact Information

  • Capital Group Communications, Inc. - Investor Relations
    Kevin Fickle
    Email Contact
    (415)332-7200
    (415)332-7201
    Website: http://www.capitalgc.com/

    Sino Clean Energy Inc.
    Ming Lee
    Assistant to the Chairman
    +86-29-84067376