China Electric Motor (PINK:CELM)

Second Quarter 2010 Financial Highlights:

    -- Total revenue increased by 13.3% year-over-year to $25.3 million,
       compared to $22.3 million in the second quarter of 2009.
        -- 60.7% of revenue was from sales to original equipment manufacturers
           ("OEMs").
    -- Gross profit increased by 22.9% year-over-year to $7.4 million versus
       $6.0 million in the second quarter of 2009.
    -- Operating income was $5.3 million, an 81.2% increase over operating
       income of $2.9 million in the second quarter of 2009.
    -- Net income was $4.1 million, a 93.2% increase compared to net income of
       $2.1 million in the second quarter of 2009.
    -- Basic and diluted earnings per share were $0.20 based on 20,744,743 and
       20,832,957 weighted average shares outstanding, respectively, versus
       basic and diluted earnings per share of $0.18 and $0.17 in the second
       quarter of 2009, based on 12,125,842 and 12,510,623 weighted average
       shares outstanding, respectively.

Mr. Yue Wang, Chief Executive Officer of China Electric, said, "Our strong second quarter results, which exceeded our guidance, were fueled by growing demand for our products and for home appliance motors in particular. We were able to convert favorable industry trends and a robust macroeconomic environment into a larger customer base, and I am pleased to report that we are executing sales and attracting new customers in an increasingly efficient manner. Our intention is to build the proportion of higher-margin sales in China and to original equipment manufacturers ("OEMs") in our sales mix. Our second quarter results demonstrate that we have been able to achieve this yet again."

He continued, "We believe that the strength of market demand is sustainable, and that the quality and flexibility of our products give us the opportunity to gain share and build a leadership position in the market. Therefore, we are building capacity in a phased manner in order to continue to expand our product offering and capture favorable trends in new industry verticals."

Third Quarter Guidance:

• Revenue will be in the range of $30.0 million to $31.5 million. Management expects
• Net income to be in the range of $4.3 million to $4.725 million. Management estimates that
• Basic and diluted earnings per share will be between $0.20 and $0.22, based on 21,409,960 shares outstanding on a fully diluted basis.

2010 Year End Guidance: ("Due to a delay in the expected government approval of our application for a tax reduction in 2010, we have updated our net income outlook for the year. We are confirming our full year revenue guidance.")

• Revenue to be in the range of $110 million to $120 million.
• Net income to be in the range of $17.2 million and $18.5 million, primarily due to a delay in the government approval of the Company's tax reduction application in 2010.

Note that the company did not issued full year EPS guidance.