-- Revenues increased to $7.6 million by 34% from $5.7 million in Q2 2008

-- Gross profit rose to $1.6 million by 84% compared to Q2 2008 and gross

margin increased to 20.6% from 15%

China Energy Recovery, Inc. (OTC Bulletin Board: CGYV) (ISIN: US16943V2060; "CER"), a leader in the waste heat energy recovery sector of the industrial energy efficiency industry, today announced financial results for the second fiscal quarter and the six months ended June 30, 2009.

Revenues for the second quarter ended June 30, 2009 increased to $7.6 million, up by 34% from $5.7 million for the second quarter of 2008. The increase in revenues is due to higher sales price per contract as we completed larger sized energy recovery systems as a result of evolving market demands for systems of larger sizes. Compared to revenues of $1.3 million for the first quarter ended March 31, 2009, revenues for the second quarter of 2009 rose by 503%.

Gross profit increased by 84% to $1.6 million, representing a 20.6% gross margin, for the three months ended June 30, 2009, compared with gross profit of $0.9 million, or a 15% gross margin, for the same period in 2008. The increase in gross profit is mainly attributable to the better margins of some orders including the EPC contract to retrofit a heat recovery system for a repeat customer in the period.

Operating expenses were $1.8 million for the second quarter ended June 30, 2009, or 23.8% of revenues, as compared to $0.9 million, or 15.7% of revenues, for the same period in 2008. The increase is mainly due to the increases of the professional expenses related to public company operations and the allowance for doubtful accounts per the company's normal provision policies. There were also $0.4 million of non-cash expenses related to issuance of shares and stock options for services.

Operating loss was $0.25 million for the second quarter ended June 30, 2009 as compared to a loss of $0.04 million for the same period in 2008. The increase is mainly attributable to the increase in operating expenses.

Net income increased to $0.8 million for the second quarter ended June 30, 2009 as compared to a net loss of approximately $0.2 million for the same period in 2008. The increase in net income is mainly attributable to increased revenues, improved gross margin and the gain due to the change in the fair value of the outstanding warrants.

"After the temporary slowdown in the first quarter, the second quarter topline results have put us back on the track we are used to being on and we expect to continue to improve our bottomline results to our regular levels by controlling our operating expenses while continuing to achieve expansion of our revenues," commented Mr. Qinghuan Wu, Chairman and CEO of China Energy Recovery.