Sino Clean Energy Reports Third Quarter 2008 Financial Results

• Press Release
• Source: Sino Clean Energy Inc.
• On Tuesday December 2, 2008, 9:30 am EST

XI'AN, CHINA--(MARKET WIRE)--Dec 2, 2008 -- Sino Clean Energy Inc. (OTC BB:SCLX.OB - News) ("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 third quarter ended September 30, 2008.

Third Quarter 2008 Highlights

 
--  Total revenue increased 1,357.5% year-over-year to $3.4 million
--  Gross profit increased 2,015.3% year-over-year to $1.1 million
--  Gross margin improved to 32.8% from 22.6% a year ago
--  Net income increased 872.9% year-over-year to $1.1 million

Third Quarter 2008 Results

For the third quarter of 2008, total revenue increased 1,357.5% to $3.4 million from $0.2 million a year ago. The Company's CWM production facility became operational and CWM production commenced in August of 2007 and since then has increased its production volume to meet demands, reflecting the revenue increase year over year.

"We are very pleased with our third quarter results," commented Mr. Baowen Ren, Chairman and Chief Executive Officer of Sino Clean Energy. "We expect strong revenue growth to continue in the fourth quarter with the onsets of the winter months."

Gross profit during the quarter increased 2,015.3% to $1.1 million, or 32.8% of total sales, from $0.05 million, or 22.6% of total sales, the prior year. The increase in gross margin was attributed to better control of production overhead and improved production efficiency.

General and administrative expenses increased to a little over two hundred thousand dollars in the third quarter of 2008 from about one hundred ninety seven thousand dollars in the same period of 2007.

For the third quarter of 2008, net income was $1.1 million, compared with net loss of one hundred fifty thousand dollars in the same quarter of 2007.

Diluted earnings per share were $0.0124, compared with loss of $0.0017 per diluted share in the third quarter of fiscal 2007.

Nine Month 2008 Results

Total sales for the first nine months of 2008 were $9.2 million, up 3,802.3% from sales of $0.2 million during the same period the prior year. Gross profit was $2.9 million, or 32.0% of sales, up 5,417.9% from $0.05 million, or 22.6% of sales, in the first half of 2007. Net income for the first nine months of 2008 was $2.5 million, compared to net loss of $0.1 million in the same period a year ago. Diluted earnings per share were $0.0269, compared with loss of $0.0015 per diluted share in the same period a year ago.

Financial Condition

As of September 30, 2008, the Company had $2.5 million in cash and cash equivalents, total liabilities of $1.3 million and working capital of $9.1 million. Shareholders' equity increased to $17.0 million from $11.4 million as of December 31, 2007.

In September 2008, Sino Clean Energy completed a private placement of 8% secured convertible debentures, convertible into shares of the Company's common stock at an initial conversion price of $0.15 per share, and warrants to purchase 8,904,334 shares of Sino Clean Energy common stock with an initial exercise price of $0.15 per share. The transaction generated approximately $1.3 million in gross proceeds which the Company plans to use to fund its working capital requirements.

Business Outlook

"We are very optimistic about our performance for the rest of 2008. We are in the process of installing a new production line. Once online, we anticipate the new production line to increase our current annual production capacity by 250 thousand tons. By expanding our production capacity, we are positioning ourselves to achieve substantial growth in an industry where demand far outpaces supply," commented Mr. Ren. "The overall result should be increased market penetration, and greater growth in revenues and net income."

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 Xi'an Province, Sino Clean Energy is the largest CWM producer in Northwestern China. For more information about Sino Clean Energy, please visit http://www.suoang.com.

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.

- FINANCIAL TABLES FOLLOW -

 
                  Sino Clean Energy Inc. and Subsidiaries
                        Consolidated Balance Sheets
                    (Amounts expressed in U.S. Dollars)

                                  ASSETS

                                              September 30,  December 31,
                                                  2008           2007
                                              -------------- --------------
                                                (Unaudited)     (Audited)
Current assets
Cash and cash equivalent                      $    2,533,999 $    2,832,132
Accounts receivable, net                           6,242,716      1,068,303
Deposits and prepayments                             732,420      2,542,929
Other receivables                                    160,829        138,523
Prepaid land use right - current portion              38,845         36,285
Government grant receivable                                -        411,000
Assets on discontinued operation
   Other receivable - related                              -        141,795
Inventories                                          293,101         40,959
                                              -------------- --------------

Total current assets                              10,001,910      7,211,926

Deferred debt issuance cost, net                     209,519              -
Property, plant and equipment, net                 5,915,779      5,435,804
Prepaid land use right - non current portion       1,810,955      1,718,744
Goodwill                                             410,869              -
Intangible assets, net                                 1,268          1,478
                                              -------------- --------------

Total assets                                  $   18,350,300 $   14,367,952
                                              ============== ==============



                   LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities
Accounts payable                              $       47,043 $       41,827
Accrued expenses and other payables                  735,079        893,732
Amount due to a director                               1,178          8,527
Obligations under capital leases                      13,450              -
Taxes payable                                        150,031        130,332
Deposit on sales of property                               -      1,507,000
                                              -------------- --------------

Total current liabilities                            946,781      2,581,418
                                              -------------- --------------

Non-current liabilities
Convertible debentures                               383,856              -
Obligations under capital leases                       4,265              -
                                              -------------- --------------

Total non-current liabilities                        388,121              -
                                              -------------- --------------

Total liabilities                                  1,334,902      2,581,418
                                              -------------- --------------

Minority interest                                          -        352,789
                                              -------------- --------------

Commitments and Contingencies

Shareholders' Equity
Preferred stock, $0.001 par value,
 50,000,000 shares authorized,
 nil issued and outstanding                                -              -
Common stock, $0.001 par value,
 200,000,000 shares authorized,
 92,181,750 and 84,681,750 issued and
 outstanding as of September 30, 2008
 and December 31, 2007,
 respectively                                         92,182         84,682
Additional paid-in capital                        11,312,205      9,153,174
Retained earnings                                  3,166,608        686,482
Statutory reserves                                   348,309        348,309
Accumulated other comprehensive income             2,096,094      1,161,098
                                              -------------- --------------

Total shareholders' equity                        17,015,398     11,433,745
                                              -------------- --------------

Total liabilities and shareholders' equity    $   18,350,300 $   14,367,952
                                              ============== ==============




                  Sino Clean Energy Inc. and Subsidiaries
              Consolidated Statements of Income (Operations)
                      and Other Comprehensive Income
  For the three months and nine months ended September 30, 2008 and 2007
                    (Amounts expressed in U.S. Dollars)
                                (Unaudited)


                           Three months ended         Nine months ended
                              September 30,             September 30,
                            2008         2007         2008         2007
                        -----------  -----------  -----------  -----------

Revenue                 $ 3,419,941  $   234,639  $ 9,156,293  $   234,639

Cost of goods sold       (2,297,227)    (181,563)  (6,227,606)    (181,563)
                        -----------  -----------  -----------  -----------

Gross profit              1,122,714       53,076    2,928,687       53,076

Selling expenses              3,106       17,229        7,871       19,009
General and administrative
 expenses                   204,915      197,371      590,719      330,282
                        -----------  -----------  -----------  -----------


Income (loss) from
 operations                 914,693     (161,524)   2,330,097     (296,215)
                        -----------  -----------  -----------  -----------

Other income (expenses)
  Rental income, net of
   outgoings                    230            -       79,843            -
  Interest income             8,026        3,449       19,537       13,372
  Commission income          80,072            -      224,947            -
  Sundry income (expenses)       78        6,471       26,921         (131)
  Other income (expenses)         -       (7,601)           -      137,339
  Gain on disposal of
   property                      95            -       33,095            -
  Government grant          141,614            -      141,614            -
                        -----------  -----------  -----------  -----------

Total other income          230,115        2,319      525,957      150,580
                        -----------  -----------  -----------  -----------

Income (loss) before
 provision for income
 taxes                    1,144,808     (159,205)   2,856,054     (145,635)

Provision for income
 taxes                           71            -       24,779            -
                        -----------  -----------  -----------  -----------

Net income (loss)
 before minority
 interest               $ 1,144,737  $  (159,205) $ 2,831,275  $  (145,635)
                        -----------  -----------  -----------  -----------

Less: Minority interest           -       11,099     (351,149)      21,190
                        -----------  -----------  -----------  -----------

Net income (loss)         1,144,737     (148,106)   2,480,126     (124,445)

Other comprehensive
 income
  Foreign currency
   translation
   adjustment               124,319      116,066      934,996      385,813
                        -----------  -----------  -----------  -----------

Comprehensive income
 (loss)                 $ 1,269,056  $   (32,040) $ 3,415,122  $   261,368
                        ===========  ===========  ===========  ===========

Weight average number
 of shares
  - Basic and diluted    92,181,750   84,681,750   92,181,750   84,681,750
                        ===========  ===========  ===========  ===========

Income (loss) per
 common share

  - Basic and diluted   $    0.0124  $   (0.0017) $    0.0269  $   (0.0015)
                        ===========  ===========  ===========  ===========



                 Sino Clean Energy Inc. and Subsidiaries
                  Consolidated Statements of Cash Flows
                    (Amounts expressed in U.S. Dollars)
                                (Unaudited)


                                               Period ended September 30,
                                                  2008           2007
                                              -------------  -------------

Cash flows from operating activities:
Net income                                    $   2,480,126  $    (124,445)
Adjustments to reconcile net income to cash
 provided by operating activities:
  Minority interest                                 351,149        (21,190)
  Net income from discontinued operations                 -       (137,339)
  Amortization of deferred debenture expenses         8,399              -
  Discount on debenture                              35,127              -
  Depreciation and amortization                     175,399         40,607
  Gain on disposal of property                      (33,095)             -
(Increase) decrease in assets:
Accounts receivable                              (4,923,476)      (248,645)
Deposits and prepayments                          1,921,371     (2,633,573)
Other receivables                                   (14,227)       207,656
Prepaid land use rights                              28,031              -
Receipt from government grant                       411,000              -
Other receivables - discontinued operations         141,795              -
Inventories                                        (240,670)       (28,160)
Increase (decrease) in liabilities:
Accounts payable                                      2,187        148,429
Advance from customers                                    -        602,864
Accrued expenses and other payable                 (198,852)       105,435
Taxes payables                                       10,143         37,730
Net cash provided by discontinued operations              -         69,729
                                              -------------  -------------
Net cash provided from (used in) operating
 activities                                         154,407     (1,980,902)
                                              -------------  -------------

Cash flows from investing activities:
Amount due from a director                                -        133,255
Purchase of property, plant and equipment        (2,791,475)    (1,187,120)
                                              -------------  -------------
Net cash used in investing activities            (2,791,475)    (1,053,865)
                                              -------------  -------------

Cash flows from financing activities:
(Payment to) advance from a director                 (7,427)        74,515
Proceeds from disposal of property                1,025,437              -
Issuance of convertible debenture                 1,148,491              -
Capital element of capital lease                     44,423              -
Obligations under capital leases                    (27,318)             -
                                              -------------  -------------
Net cash provided by financing activities         2,183,606         74,515
                                              -------------  -------------

Effect of foreign currency translation              155,329        120,880
                                              -------------  -------------

Net decrease in cash and cash equivalents          (298,133)    (2,839,372)

Cash and cash equivalents, beginning of
 period                                           2,832,132      4,450,557
                                              -------------  -------------

Cash and cash equivalents, end of period      $   2,533,999  $   1,611,185
                                              =============  =============

Supplemental Disclosure Information

Interest paid                                 $           -  $           -
                                              =============  =============

Income taxes paid                             $           -  $           -
                                              =============  =============

Major non-cash transaction
Issuance of share in exchange of equity
 interest
                                              $   1,500,000  $           -
                                              =============  =============

     Contact:
     Capital Group Communications, Inc. - Investor Relations
     (415) 332-7200
     (415) 332-7201
     Website: http://www.capitalgc.com
      
     Sino Clean Energy Inc.
     Ming Lee
     Assistant to the Chairman
     +86-29-84067376