NEW YORK and HARBIN, China, March 19, 2010 (GLOBE NEWSWIRE) -- Eastern Environment Solutions Corp. (OTCBB:EESC), a leading provider of municipal solid waste (MSW) processing and disposal services in northeast China, today provided a business update and announced its financial results for the fourth quarter of 2009.
During the fourth quarter of 2009, the company previously announced it had reopened its Harbin landfill. The company subsequently announced in February 2010 that it has resumed full operations at its landfill, which has sufficient capacity to dispose of 1,200 tons of municipal solid waste per day, or approximately 34% of the total municipal solid waste produced by the population of Harbin. With the full resumption of operations, the landfill returned to levels last seen in early 2007, before the company temporarily suspended its landfill in order to implement modifications that would further reduce the environmental impact of the landfill.
Most recently, in March 2010, the company announced that it will increase its disposal capacity beyond 2009 levels. Due to the recent closure of a competing landfill, Eastern Environment's landfill will begin handling 25% more waste every day. The company obtained approval from the Harbin Municipal Urban Administrative Bureau (HMUAB) to increase its daily waste disposal from 1,200 tons to 1,500 tons, and the local government has announced that it will divert this amount of additional waste to the landfill operated by Eastern Environment
According to Ms. Feng Yan, the Chairman and Chief Executive Officer of the company, "We are extremely pleased with the resumption of operations at our Harbin landfill, which led to a 19% increase in revenue for the fourth quarter of 2009 compared to the same period last year. Heading into in the first quarter of 2010, we expect sequential revenue growth compared to the fourth quarter of 2009, as we have now resumed full operations at the site. Moreover, the recent approval granted by the HMUAB to further increase waste disposal capacity by 25% will directly grow the company's revenues by a similar amount."
The company also announced that it had entered into a letter of intent with Veolia Environment, one of the world's leading environmental services firms. Specifically, the company and Veolia plan to establish a power plant that would utilize recaptured landfill gas from Eastern Environment's Harbin landfill to power turbines and generate electricity. In addition to the sale of electricity, the company would gain revenue from the sale of carbon credits related to the methane recapture. So the relationship would simultaneously reduce pollution, create energy, and generate additional revenue.
Ms. Feng Yan commented: "Eastern Environment has had much good news this quarter, including the full reopening of the Harbin landfill, approval to increase waste disposal operations by an additional 25%, and a proposal to create a partnership that will convert the landfill's greenhouse gases into green energy and carbon credits. Each of these major milestones will have a direct and positive impact on the company's cash flow and its bottom line."
Ms. Feng Yan continued, "As encouraging as these individual pieces of good news are, however, we feel that their greater significance is in what they mean for the company's operations. The local government has approved our return to full operations and an expansion of those operations, while a leading global environmental services firm is planning a partnership with us to produce green electricity. Each of these events illustrates the level of trust and respect that Eastern Environment has gained both within the region and internationally. This trust will be the bedrock beneath any future expansion of the company or its operations."
Ms. Feng Yan added, "The business discussions with Veolia show that our business plan of creating additional profit streams through recycling and green technology is both feasible and lucrative. The company will continue these efforts, with the intention of creating significant new sources of revenue."
Revenue for the fourth quarter ended December 31, 2009 was $538,748, as compared to $451,875 for the fourth quarter ended December 31, 2008. During the period of suspended operations, the HMUAB was required to pay the Company a sum equivalent to the fee for processing 800 tons of waste per day, which represented approximately 66% of the Landfill's capacity, in accordance with the terms of the Company's BOT contract. The difference in revenue primarily reflects the resumption of operations at the landfill in November 2009. Gross profit was $442,854 for the three months ended December 31, 2009, as compared to $356,014 for the three months ended December 31, 2008. Operating income was $279,359 for the three months ended December 31, 2009, as compared to $207,224 for the three months ended December 30, 2008. Net income for the three months ended December 31, 2009 was $229,006, or $0.02 per diluted share, compared to net income of $209,279, or $0.02 per diluted share, for the same period last year.
Revenue for the twelve months ended December 31, 2009 was $1.9 million, as compared to $1.8 million for the twelve months ended December 31, 2008. The difference in revenue primarily reflects the resumption of operations at the landfill in November 2009 and the decreased value of the U.S. Dollar compared to the Chinese Renminbi. Gross profit was $1.5 million for 2009, as compared to $1.5 million for 2008. Operating income was 951,624 for 2009, as compared to $926,372 for 2008. Net income for 2009 was $786,271 or $0.06 per diluted share, compared to net income of $938,935, or $0.08 per diluted share in 2008.
As of December 31, 2009, the Company had cash and cash equivalents of $428,052, working capital of $4.0 million, and shareholders' equity of $12.9 million.
About Eastern Environment Solutions Corp.
Eastern Environment Solutions Corp. is the first regional environmental engineering company to operate under a Build-Operate-Transfer ("BOT") contract in China. The landfill is 17 km away from urban areas. The Harbin Municipal Urban Administrative Bureau, authorized by the Harbin Municipal Government, signed a franchise contract for 17 years with the company. The landfill can be used to dispose of 1,500 tons of MSW per day, or approximately 42% of the total municipal solid waste produced by the population of Harbin. Additional information about the Company is available at www.useesc.com/">www.useesc.com.
In addition to historical information, this press releases contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements represent Management's belief as to the future of Eastern Environment Solutions, Corp. Whether those beliefs become reality will depend on many factors that are not under Management's control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled "Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
| EASTERN ENVIRONMENT SOLUTIONS CORPORATION | |||
| CONSOLIDATED BALANCE SHEETS | |||
| AS OF DECEMBER 31, | |||
| 2009 | 2008 | ||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 428,052 | $ 1,112,487 | |
| Accounts receivable | 4,253,203 | 2,518,920 | |
| Inventory | 42,650 | 81,203 | |
| Other receivables | 440,208 | 183,996 | |
| Loans to related parties | 42,828 | 243,662 | |
| Total Current Assets | 5,206,941 | 4,140,268 | |
|
Property and equipment, net of accumulated depreciation of $1,312,131 and $1,066,957, respectively |
6,319,005 | 6,276,030 | |
| Other asset: | |||
| Advance to suppliers | 3,783,981 | 3,824,984 | |
| Total Other Asset | 3,783,981 | 3,824,984 | |
| Total Assets | $ 15,309,927 | $ 14,241,282 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Loan payable - current portion | $ 966,592 | $ 2,271,492 | |
| Accounts payable | 810 | 887 | |
| Taxes payable | 174,375 | 108 | |
| Accrued expenses and other payables | 92,192 | 94,439 | |
| Total Current Liabilities | 1,233,969 | 2,366,926 | |
| Long-term liabilities: | |||
| Loan payable - net of current portion | 1,087,416 | -- | |
| Total Liabilities | 2,321,385 | 2,366,926 | |
| Commitments and Contingencies | |||
| Stockholders' Equity | |||
|
Common stock, $0.0001 par value, 100,000,000 shares authorized; 14,970,186 shares issued and outstanding as of December 31, 2009 and 2008 |
1,497 | 1,497 | |
| Additional paid-in-capital | 3,836,165 | 3,453,415 | |
| Accumulated other comprehensive income | 1,945,261 | 2,000,096 | |
| Statutory reserves | 186,156 | 186,156 | |
| Retained earnings - Unappropriated | 7,019,463 | 6,233,192 | |
| Total Stockholders' Equity | 12,988,542 | 11,874,356 | |
| Total Liabilities and Stockholders' Equity | $ 15,309,927 | $ 14,241,282 | |
| EASTERN ENVIRONMENT SOLUTIONS CORPORATION | ||
| CONSOLIDATED STATEMENTS OF INCOME | ||
| FOR THE YEARS ENDED | ||
| DECEMBER 31, | ||
| 2009 | 2008 | |
| Revenues | $ 1,881,302 | $ 1,770,054 |
| Cost of Goods Sold | 347,142 | 307,874 |
| Gross Profit | 1,534,160 | 1,462,180 |
| Selling, General and Administrative | 582,536 | 535,808 |
| Income from operations | 951,624 | 926,372 |
| Other Income (Expense) | ||
| Interest income | 8,972 | 12,563 |
| Other expense | (55) | -- |
| Total other income / (expense) | 8,917 | 12,563 |
| Income from Operations before Income Taxes | 960,541 | 938,935 |
| Provision for Income Taxes | 174,270 | -- |
| Net Income | 786,271 | 938,935 |
| Other Comprehensive Income -- | ||
| Foreign currency translation gain (loss) | (54,835) | 842,549 |
| Comprehensive Income | $ 731,436 | $ 1,781,484 |
| Basic & Diluted Income Per Share | ||
| Basic | $ 0.08 | $ 0.09 |
| Diluted | $ 0.06 | $ 0.08 |
| Weighted Average Number of Common Shares Outstanding | ||
| Basic | 10,020,186 | 10,020,186 |
| Diluted | 12,466,935 | 12,380,881 |
| EASTERN ENVIRONMENT SOLUTIONS CORPORATION | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| FOR THE YEARS ENDED DECEMBER 31, | ||
| 2009 | 2008 | |
| Cash Flows From Operating Activities: | ||
| Net income | $ 786,271 | $ 938,935 |
| Adjustments to reconcile net income to net cash | ||
| used in operating activities: | ||
| Depreciation and amortization | 245,734 | 241,104 |
| Amortization of stock compensation | 382,750 | 322,917 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (1,734,283) | (1,671,389) |
| Inventory | 38,553 | (73,877) |
| Other receivables | -- | 16,235 |
| Accounts payable | (77) | (20,506) |
| Taxes payable | 174,266 | (34) |
| Accrued expenses and other payables | (2,246) | 23,044 |
| Net cash used in operating activities | (109,032) | (223,571) |
| Cash Flows From Investing Activities: | ||
| Purchase of property and equipment | (1,298) | (494) |
| Additions to construction in process | (42,288) | (679,411) |
| Payment of capitalized interests for construction loan | (210,801) | (281,502) |
| Payments on loans to unrelated party | (256,213) | (182,987) |
| Collections (payments) on loans to related parties | 200,835 | (210,693) |
| Net cash used in investing activities | (309,766) | (1,355,087) |
| Cash Flows From Financing Activities | ||
| Repayment of bank loan payable | (217,483) | (96,659) |
| Net cash used in financing activities | (217,483) | (96,659) |
| Effect of exchange rate changes on cash and cash equivalents | (48,155) | 682,549 |
| Decrease in Cash and Cash Equivalents | (684,435) | (992,768) |
| Cash and Cash Equivalents - Beginning of year | 1,112,487 | 2,105,255 |
| Cash and Cash Equivalents - End of year | $ 428,052 | $ 1,112,487 |