Andatee China Marine Fuel Services Announces First Quarter 2010 Financial Results

DALIAN, China, May 17 /PRNewswire-Asia/ -- Andatee China Marine Fuel Services Corporation (Nasdaq: AMCF), the leading independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China, today announced financial results for the first quarter ended March 31, 2010.

Fourth Quarter 2009 Highlights

-- Revenue increased 18.0% to approximately $29.8 million

-- Gross profit increased 19.3% to $3.6 million from $3.0 million in first

quarter 2009

-- Income from operations was $2.2 million, up 11.7% from $2.0 in the

first quarter 2009

-- Operating margin was 7.4%

-- Earnings per share were approximately $0.16

"We are pleased to deliver another quarter of solid financial results despite the impact from a longer winter season, which resulted in a decrease in sales volume during the first quarter of 2010. Nonetheless, we were able to maintain healthy growth and favorable gross margins, as our strategy to focus our sales into the less price sensitive retail market has proven successful," commented Mr. Fengbin An, Chairman and CEO of Andatee China Marine Fuel Services Corporation. "As we prepare for the busy quarters ahead, we remain confident with the outlook for our business in 2010, as our customers continue to show increasing demand for our blended marine fuel product," concluded Mr. An.

Full Year 2009 Results

Revenues for the first quarter ended March 31 were $29.8 million, an increase of $18.0% as compared with $25.2 million during the same period in 2009. This increase was attributable to the increase in retail sales due to the expansion of our sales network and higher international crude oil price.

Total sales volume for the first quarter of 2010 was down 14% to 47,000 tons as compared with 55,000 tons during the same period last year primarily attributable to the decrease in sales due to cold weather across the ports that represent substantial portion of the Company's sales. Sales volume of 4# marine fuel, mainly used by fishing boats, represented 66.5% of our sales; sales volume for 3# represented 10% while sales volume of 2# marine fuel, mainly used by fishing boats, was 10.2% of total sales; and sales of 180CST and 120 CST were 6.9% and 6.3% of sales, respectively.

Gross profit margin was 12.0% for the first quarter of 2010, as compared with 11.9% during the same period last year. The increase in our gross profit margin was primarily due to an increase in sales of higher margin products to retail customers. Sales to retail customers increased from 36% of total sales in first quarter of 2009 to 44% of sales in first quarter of 2010 as the result of our expansion and acquisition of retail distribution facilities.

Selling, general and administrative expenses were approximately $1.4 million in the first quarter of 2010 as compared with $1.0 million during the same period last year. The increase was primarily due to increased expenses related to maintaining the Company's status as a public company in the United States.

As a result, income from operations in the first quarter of 2010 was $2.2 million, representing 11.7% increase from $2.0 million last year. Operating margin was 7.4% in the first quarter of 2010 compared to 7.9% in the first quarter of 2009.

Net income during the first quarter of 2010 was $1.4 million, or $0.16 per share, compared to $1.5 million, or $0.24 per share, for first quarter of 2009.

Financial Condition

Following the completion of its January 2010 IPO, as of March 31, 2010, Andatee had $21.2 million in cash and cash equivalents, and approximately $25.4 million in working capital, compared to $3.9 million for the quarter ended December 31, 2009. Stockholders' equity as of March 31, 2010 was $39.0 million, an increase of 121.6% over the $17.6 million recorded as of December 31, 2009.

Business Outlook

As the leading supplier in the highly fragmented small- and medium-sized fishing vessel market, Andatee continues to be well positioned to participate in the expected growth in demand for marine fuel in China. The Company intends to leverage the quality of its products as well as its brand recognition to continue to expand its geographic footprint by building or acquiring new facilities. The Company anticipates an increase in demand for its marine fuel product as it addresses the quality and pricing volatility issues faced by the local fishing and cargo operators, and expects to continue to focus on retail sales customers in order to maintain strong margins.

"Given our strong balance sheet position, we will continue our effort to expand to more facilities closer to end markets, through business acquisitions, partner cooperation and building local platform for our products as well as value-added service to promote our "Xingyuan" brand," concluded Mr. An.

About Andatee China Marine Fuel Services

Andatee China Marine Fuel Services Corporation is a leading independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China. Headquartered in the City of Dalian, a key international shipping hub and an international logistics center in Northern China, Andatee maintains operations in Liaoning, Shandong and Zhejiang Provinces in the People's Republic of China.

Andatee China Marine Fuel Services provides customers with value-added benefits, including single-supplier convenience, competitive pricing, logistical support and fuel quality control. Its products are substitutes for diesel used throughout east China fishing industry. Backed by core facilities, such as storage tanks, marine fuel pumps, blending facilities and berths (the space allotted to a vessel at the wharf) and small to medium sized cargo vessels, its sales network covers major depots along the towns of Dandong, Shidao and Shipu along the east coast of China. Additional information about the Company is available at http://www.andatee.com .

Safe Harbor Relating to the Forward Looking Statements

Statements contained in this press release not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule under the Private Securities Litigation Reform Act of 1995. All forward-looking statements included herein are based upon information available to the Company as of the date hereof and, except as is expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. As a result, investors should not place undue reliance on these forward-looking statements. To the extent that any statements made here are not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "may," "anticipates," "believes," "should," "intends," "estimates" and other words of similar meaning. The Company may also make written or oral forward-looking statements in its periodic reports filed with the U.S. Securities and Exchange Commission and other written materials and in oral statements made by its officers, directors or employees to third parties. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by these forward-looking statements. Such risk factors include, without limitation, our ability to properly execute our business model, to address price and demand volatility, to counter weather and seasonal fluctuations, to attract and retain management and operational personnel, potential volatility in future earnings, fluctuations in the Company's operating results, PRC governmental decisions and regulation, and existing and future competition that the Company is facing. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the Company's filings with the Securities and Exchange Commission under the caption "Risk Factors" in such filings.

For more information, please contact:

Mr. Wen Tong

Chief Financial Officer

Andatee China Marine Fuel Services Corporation

Tel: +86-411-8360-4683

Email: bill.wen@andatee.com

Website: http://www.andatee.com

FINANCIAL TABLES FOLLOW

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION.

COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME

Three months ended March 31,

2010 2009

(Unaudited) (Unaudited)

Revenues $29,781,090 $25,236,918

Cost of revenues 26,200,695 22,235,541

Gross profit 3,580,395 3,001,377

Operating expenses

Selling expenses 737,551 819,572

General and

administrative expenses 624,295 196,427

Total operating expenses 1,361,846 1,015,999

Income from operations 2,218,549 1,985,378

Other income (expense)

Interest income -- 24,560

Interest expense (120,464) --

Other expense (172) --

Total other income (expense) (120,636) 24,560

Net income before tax provision 2,097,913 2,009,938

Tax provision 566,736 506,840

Net income 1,531,177 1,503,098

Net income attributable to the

noncontrolling interest 140,992 52,981

Net income attributable to the

Company $1,390,185 $1,450,117

Foreign currency translation

adjustment (20,416) 14,179

Comprehensive income

attributable to the Company 1,369,769 1,464,296

Comprehensive income

attributable to the

noncontrolling interest 140,992 52,981

Comprehensive income $1,510,761 $1,517,277

Basic and diluted weighted

average shares outstanding 8,415,631 6,000,000

Basic and diluted net earnings

per share $0.16 $0.24

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION.

COMBINED AND CONSOLIDATED BALANCE SHEETS

March 31, December 31,

2010 2009

(Unaudited) (Audited)

ASSETS

Current assets

Cash and cash equivalents $21,243,259 $1,539,009

Accounts receivable, net 2,571,920 2,515,403

Other receivables, net 1,414,470 1,307,474

Inventories 17,426,023 13,302,530

Advances to suppliers 7,424,344 7,691,266

Related party receivable -- 122,667

Deferred expense -- 150,943

Deferred tax assets 112,761 112,743

Total current assets 50,192,777 26,742,035

Property, plant and equipment,

net 10,318,635 10,441,246

Construction in progress 891,809 632,202

Intangible assets 2,675,263 2,691,974

Goodwill 1,118,103 1,117,923

Total assets $65,196,587 $41,625,380

LIABILITIES AND EQUITY

Current liabilities

Accounts payable $803,756 $565,802

Short-term loan 10,239,757 10,238,109

Taxes payable 11,069,195 11,001,715

Advances from customers 1,721,454 456,715

Dividends payable 231,899 231,861

Other payable 746,259 287,914

Total current liabilities 24,812,320 22,782,116

Total liabilities 24,812,320 22,782,116

Commitments and contingencies

Equity

Stockholder's equity of the

Company

Common stock: par value $.001;

50,000,000 shares authorized:

9,605,159 and 6,000,000 shares

issued and outstanding as of

March 31,2010 and December 31,

2009 respectively 9,605 6,000

Additional paid-in capital. 29,560,256 9,533,619

Other comprehensive income 468,224 488,640

Retained earnings (Deficit) 8,934,179 7,543,994

Total stockholders' equity of

the Company 38,972,264 17,572,253

Noncontrolling interest 1,412,003 1,271,011

Total equity 40,384,267 18,843,264

Total liabilities and equity $65,196,587 $41,625,380

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION.

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months ended March 31,

2010 2009

(Unaudited) (Unaudited)

Cash flows from operating activities:

Net income attributable to the

Company $1,390,185 $1,450,117

Adjustments to reconcile net

income to net cash

provided by operating

activities:

Noncontrolling interest 140,992 52,981

Option issued for services 40,738

Depreciation 125,643 51,753

Amortization 16,711 17,359

Changes in operating assets and

liabilities:

Accounts receivable (56,523) (378,528)

Inventories (4,123,493) (1,564,577)

Other receivables (107,063) 1,316,349

Advances to suppliers 266,922 10,701

Prepaid expense 150,943 --

Accounts payable 237,954 2,029,588

Salary and accrued benefit

payable -- (10,807)

Advances from customers 1,264,739 (915,141)

Taxes payable 67,480 1,148,375

Other payable 458,345 147,548

Net cash used provided by (used in)

in operating activities (126,427) 3,355,718

Cash flows from investing activities

Consideration for acquisition -- (2,208,402)

Purchase of property and

equipment (3,032) (2,892)

Construction contracts (259,607) (1,515,806)

Payment received from related

party 122,667 1,988,469

Due from related party - (527,885)

Net cash used in investing

activities (139,972) (2,266,516)

Cash flows from financing activities

Proceeds from shareholders 19,989,504 --

Repayment of short term loans -- (584,233)

Net cash provided by (used in)

financing activities 19,989,504 (584,233)

Effect of exchange rate on cash (18,855) 6,257

Net increase in cash and cash

equivalents 19,704,250 511,226

Cash and cash equivalents, beginning

of period $1,539,009 $4,923,913

Cash and cash equivalents, end of

period $21,243,259 $5,435,139

Supplemental cash flow information:

Cash paid during the period

for:

Interest $107,934 $176,259

Income taxes $606,832 $653,682

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