China Green Material Technologies, Inc. Reports First Quarter 2010 Financial Results

-- Q1 2010 revenues increase 31.4% to $2.8 million -- Q1 2010 gross profit increases 23.7% to $1.2 million -- Q1 2010 operating income increases 18% to $0.9 million -- Net income per diluted share $0.02 on an additional 3.7M shares(1) -- Adjusted net income per diluted share $0.03(2) -- Q1 2010 cash flow from operations $2.0 million

HARBIN, China, May 17 /PRNewswire-Asia-FirstCall/ -- China Green Material Technologies, Inc. (OTC Bulletin Board: CAGM; "CAGM" or "the Company"), a Chinese leader in developing and manufacturing starch-based biodegradable containers, tableware and packaging materials, today announced financial results for the first quarter ended March 31, 2010.

Revenues -- First quarter revenues increased 31.4% to $2.8 million compared to $2.1 million in the first quarter of 2009. The results reflect growing demand for the Company's products from existing customers, as well as the successful development of new customers and penetration of new geographic markets.

Gross Profit -- Cost of goods sold was $1.6 million versus $1.2 million in the first quarter of 2009. Gross profit in the first quarter of 2010 increased 23.7% to $1.2 million compared to $0.9 million in the first quarter of last year, while gross margin was 42.1% versus 44.7% a year ago. The decline in gross margin was due to increased raw material costs in China. The Company expects to reduce production costs and improve gross margins when its new manufacturing facility comes on line in the second half of this year.

Operating Expense -- Operating expenses in the first quarter of 2010 totaled $285,000, or 10.2% of sales versus $197,000, or 9.2% of sales in the first quarter of 2009. Selling expenses were essentially flat year-over-year, while general and administrative expenses increased to $243,000 in 2010 compared to $158,000 in 2009. The increase of $85,000 was primarily attributable to professional fees.

Operating Income -- First quarter income from operations increased 18.2% to $888,000 compared to $751,000 in the 2009 period. Operating margin was 31.8% in the 2010 period versus 35.4% a year ago.

Other Income (Expense) -- Other expenses were $360,000 in the first quarter of 2010 compared to other income of $6,540 in the first quarter of 2009. The expenses are primarily attributable to a $123,000 loss on the disposal of fixed assets and a $197,000 loss on investments.

Net Income -- Net income in the first quarter of 2010 was $435,000 compared to $644,000 in the first quarter of 2009. Adjusted net income (non-GAAP) was $755,000, an increase of 17.3% versus a year ago. Net income per diluted share was $0.02 in the first quarter of 2010 versus net income per diluted share of $0.03 in the first quarter of 2009 based on weighted average shares of 22.4 million and 18.7 million, respectively. The increase in share count reflects the issuance of 5.0 million common shares in a private placement completed in the first quarter of 2010. Adjusted net income per diluted share (non-GAAP) was $0.03 in the first quarter of 2010.

The Company's effective tax rate was 17.8% in the first quarter of 2010 versus 15.0% for the same period in 2009.

As of March 31, 2010, the Company had $13.8 million in cash and cash equivalents, an increase of $6.5 million, primarily due to net proceeds from a private placement in the first quarter of 2010. Cash flow from operations in the first quarter totaled $2.0 million. The Company had $18.2 million in working capital and no long-term debt as of March 31, 2010.

Mr. Su Zhonghao, Chief Executive Officer of China Green Material Technologies, stated, "We are pleased to report a 31% increase in revenues, which reflects increased sales to existing customers, as well as our ability to attract new customers in China and internationally. In 2009, we expanded our sales team and developed additional distributor relationships, which is allowing us to capitalize on the growing worldwide demand for environmentally-friendly biodegradable products."

"We believe there is a significant market opportunity for China Green given our early mover advantage, intellectual property, expert R&D team and low-cost manufacturing process," continued Mr. Su Zhonghao. "In 2010 we plan to significantly expand our production capacity, with a new facility expected to come on line in the second half of this year. We anticipate the additional capacity, coupled with our targeted sales and marketing programs, will result in continued increases in revenues. Additionally, increased efficiency from the new manufacturing facility should enable us to expand our gross margins across all product lines."

Mr. Su Zhonghao concluded, "Looking ahead, we are focusing on two key areas of growth: 1) further expanding our presence in China and entering key overseas markets, including the U.S., Italy, France, the U.K., Israel, Korea and Japan; and 2) developing new product categories such as trash bags, shopping bags and medical products. Importantly, we have a dedicated and capable team and the financial resources to execute our plans."

(1) The Company issued common shares during the first quarter of 2010. (2) Adjusted net income and adjusted net income per diluted share are non- GAAP measures that the Company uses to provide information about its operating trends and are considered important metrics in evaluating the Company's business. The Company calculates adjusted net income and adjusted net income per diluted share by excluding the impact of certain non-recurring items; for the first quarter of 2010 the excluded non-recurring items are a $123,404 loss on the disposal of fixed assets and a $197,098 loss on long-term investments. About China Green Material Technologies, Inc. Website: http://www.sinogreenmaterial.com/

China Green Material Technologies, Inc. (OTCBB: CAGM) is a China-based manufacturer of starch-based biodegradable containers, tableware and packaging products. Headquartered in Harbin city of China, the Company currently has 153 employees. The Company has developed proprietary biodegradable food packaging materials technologies.

Safe Harbor Statement

This press release contains certain statements that may include 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipate," "optimistic," "intend," "will" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and other factors, including the risk that the Company may not successfully open its planned new production facility in 2010 and those risks and other factors discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission, including the Annual Report on Form 10-K filed April 12, 2010. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2010 December 31, (Unaudited) 2009 Assets Current Assets: Cash and equivalents $ 13,837,255 $ 7,321,276 Cash - restricted 100,000 3,443 Accounts receivable, net 5,706,576 6,524,510 Inventories 280,299 456,970 Accrued receivables 322,283 549,288 Other receivables 114,193 19,210 Deferred income tax assets 4,301 4,918 Prepaid expenses 49,856 29,436 Other current assets -- 78,863 Total Current Assets 20,414,763 14,987,913 Property and Equipment, Net 9,876,919 10,394,584 Intangible Assets, Net 5,033,587 5,060,559 Know-how Right, Net 2,133,293 2,160,533 Investment - At Cost 113,383 310,419 Total Assets $ 37,571,945 $ 32,914,007 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued expenses $ 99,362 $ 302,786 Customer deposits -- 4,213 Due to stockholders/ officers, net 305,756 300,792 Taxes payable 346,359 430,408 Other current liabilities 1,493,499 1,469,121 Total Current Liabilities 2,244,976 2,507,320 Total Liabilities 2,244,976 2,507,320 Stockholders' Equity Common stock, $0.001 par value, 100,000,000 shares authorized, 23,762,849 and 18,711,388 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively 23,763 18,711 Additional paid-in capital 22,372,194 17,895,324 Reserve funds 1,215,465 1,152,569 Retained earnings 8,081,734 7,709,729 Accumulated other comprehensive income 3,633,813 3,630,353 Total Stockholders' Equity 35,326,969 30,406,687 Total Liabilities and Stockholders' Equity $ 37,571,945 $ 32,914,007 CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED) 2010 2009 Revenues $ 2,789,398 $ 2,122,120 Cost of Goods Sold 1,615,790 1,173,830 Gross Profit 1,173,608 948,290 Operating Expenses Selling expenses 42,723 39,129 General and administrative expenses 242,761 157,829 Total Operating Expenses 285,484 196,958 Income From Operations 888,124 751,332 Other Income (Expenses) Interest income 1,527 667 Loss on investments (197,098) -- Other income (expense) (164,260) 5,873 Total Other Expenses, Net (359,831) 6,540 Income Before Income Taxes 528,293 757,872 Provision for Income Taxes 93,394 113,892 Net Income $ 434,899 $ 643,980 Foreign Currency Translation Adjustment 3,460 (45,240) Comprehensive Income $ 438,359 $ 598,740 Net Income Per Common Share -Basic and Diluted -Basic $ 0.02 $ 0.03 -Diluted $ 0.02 $ 0.03 Weight Common Shares Outstanding -Basic and Diluted -Basic 22,415,793 18,711,388 -Diluted 22,415,793 18,711,388 CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED) 2010 2009 Cash flows From Operating Activities: Net Income $ 434,899 $ 643,980 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and amortization 340,394 325,961 Changes in deferred tax 617 -- Bad debt expenses (4,115) 3,673 Loss on long-term investment 197,098 -- Loss on disposal of fixed assets 123,404 -- Changes in operating assets and liabilities Accounts receivable 822,663 (724,202) Inventories 176,703 51,785 Accrued receivables 236,460 201 Prepaid expenses and other receivables (45,943) (3,834) Other current assets -- (55,924) Accounts payable and accrued expenses (207,805) 80,710 Customer deposits 24,362 (9,985) Taxes payable (84,087) 295,151 Other current liabilities -- 3,185 Net Cash Provided by Operating Activities 2,014,650 610,703 Cash Flows From Investing Activities: Restricted cash (96,557) -- Purchase of property and equipment (7,297) (52,241) Proceeds from disposal of fixed assets 117,183 -- Net Cash Provided by (Used in) Investing Activities 13,329 (52,241) Cash Flows From Financing Activities: Proceeds from shareholders/ officers loan 4,941 4,936 Proceeds from stock issued 4,481,913 -- Net Cash Provided by Financing Activities 4,486,854 4,936 Effect of Exchange Rate Changes on Cash and Equivalents 1,146 (10,461) Net Increase in Cash and Equivalents 6,515,979 552,937 Cash and Equivalents at Beginning of Period 7,321,276 4,245,044 Cash and Equivalents at End of Period $ 13,837,255 $ 4,797,981 SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION Cash paid for Interest $ -- $ -- Cash paid for Income taxes $ 219,036 $ -- About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for financial and operational decision making, and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures are useful to investors because they exclude a loss on the disposal of fixed assets and a loss on long-term investments that our management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of CAGM. Accordingly, management excludes the losses when making operational decisions. The Company believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods. In addition, it allows investors to evaluate the Company's performance using the same methodology and information as that used by our management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, our management compensates for these limitations by providing the relevant disclosure of the items excluded. The following table provides a reconciliation of non-GAAP earnings per share to the equivalent GAAP measure.

First Quarter Ended (in thousands, except per share data) 31-Mar 31-Mar 2010 2009 Net income $435 $644 Loss on disposal of fixed assets $123 -- Loss on investments $197 -- Adjusted net income (non-GAAP) $755 $644 Adjusted diluted earnings per share (non-GAAP): Basic $0.03 $0.03 Diluted $0.03 $0.03 For more information, please contact: In China: Feng Peng HC International, Inc. Tel: [phone] Email: [e-mail] In the U.S.: Christine Greany HC International, Inc. Tel: [phone] Email: [e-mail]

China Green Material Technologies, Inc.

CONTACT: In China: Feng Peng, HC International, Inc., [phone],
or [e-mail]; In the U.S.: Christine Greany,
HC International, Inc., [phone], or
[e-mail]

Web site: http://www.sinogreenmaterial.com/