China
Architectural Engineering Announces Second Quarter


2010
Financial Results




ZHUHAI,
China & NEW YORK, August 16, 2010 – China Architectural Engineering, Inc.
(“CAE” or the “Company”) (NASDAQ: CAEI),a
provider of design, engineering, fabrication and installation of high-end
building envelope systems, today announced its financial results for the second
quarter ended June 30, 2010.





Second Quarter 2010
Results





Revenues
from contracts for the second quarter of 2010 were $5.7 million, a decrease of
$24.9 million, or 81%, from $30.6 million for the comparable period in 2009,
mainly as a result of fewer projects, due to the declining global construction
activities and the Company’s suspension of international
projects.





Gross
loss was $0.4 million, compared to a gross profit $10.0 million for the second
quarter of 2009. The decrease in gross profit was primarily a result of
increases in raw material, labor and administrative costs in China, as well as
adjustments made in accordance to the percentage-of-completion method of
accounting because of increases in estimated costs of current
projects.





Selling,
general and administrative expenses were $1.8 million for the second quarter of
2010, versus $6.1 million a year ago.  Payroll expenses accounted for
approximately 44% of the total expenses, followed by depreciation expenses of
8%, and rental expenses of 6%.





Interest
expenses were $1.9 million for the second quarter ended June 30, 2010, an
increase of $0.4 million from $1.5 million a year ago. The increase was
mainly due to the additional interest expense related to short-term bank loans,
as well as the increase in accretion of bonds interest discount.





Net loss
was $3.3 million, or a loss of $0.06 per fully diluted share, compared to a net
profit of $2.5 million, or $0.05 per fully diluted share, for the comparable
period in 2009.




Liquidity and Capital
Resources




The
Company had an unrestricted cash balance of approximately $0.6 million as of
June 30, 2010, as compared to $0.5 million as of March 31, 2010.  Net cash
provided by operating activities was $9.0 million for the six months ended June
30, 2010, compared to $2.7 million for same period in 2009.




Mr. Ken
Luo, chairman and chief executive officer of CAE, commented, "Our second quarter
sales performance was primarily impacted by the fewer number of projects
executed as a result of the global economic slowdown.  However, this
summer, we have seen a much improved market sentiment.  Leveraging our
unique design, technology and craftsmanship, we have signed new contracts in the
second quarter worth approximately $21.5 million, including the Terrace Garden
Project and Xinhai Revolution Museum in Hubei, and Liuzhou Sports Centre in
Guangxi.  We are also making good progress in the designing and
constructing of high-end curtain wall system segment. We expect most of these
revenues to be recognized in the second half of this year. With our advanced
technical capabilities, we have strategically targeted China’s high-end landmark
projects that involve more design and consulting services to highlight our value
proposition and capabilities. To date, we have won approximately $3 million
worth of such contracts, including contracts with the Shenzhen Airport, Hangzhou
Railway Station and Joy Coast at Overseas Chinese Town.”




Business
Updates





Mr. Luo
continues, “Despite the difficult global economic crisis that heavily impacted
high-end construction and engineering companies, we are working diligently to
counter the negative impact on CAE. Such efforts include our corporate
restructuring, through which we believe that CAE can benefit from a more
diversified business model, while lowering both operational and financial risks.
We are pleased to announce that we have entered into a definitive agreement for
the acquisition of a 60% interest in ConnGame.  We expect to announce
the closing of this deal in the near future. After the completion of this
acquisition, we envision CAE becoming a web-based engineering and design service
platform that complements ConnGame’s core online gaming business.









“In the
architecture construction and engineering segment, we will be more selective and
focus only on quality projects that return higher profits and pose lower risks.
In the online gaming segment, we currently intend to launch our new games in the
following months, and we expect this segment to soon drive the majority of our
revenues. We believe our pending acquisition of a 60% interest in ConnGame will
enable CAE to take greater advantage of our core architectural engineering and
design market, and more importantly, to capture China’s large and rapidly
growing online game market.





“Upon the
completion of the acquisition, CAE’s board and management team will be
reorganized to reflect the new business model. I truly look forward to the new
management team to grow our combined businesses and to deliver greater value to
our supportive shareholders,” Mr. Luo concludes.







About
China Architectural Engineering





China
Architectural Engineering, Inc. (NASDAQ:CAEI) is a provider of design,
engineering, fabrication and installation services of high-end curtain wall
systems, roofing systems, steel construction systems, and eco-energy
systems.  Founded in 1992, CAEI has maintained its market leadership
by providing timely, high-quality, reliable, fully integrated, and
cost-effective solutions.  Collaborating with world-renowned
architects and building engineers, the Company has successfully completed over
one hundred large, complex and unique projects worldwide, including numerous
award-winning landmarks across Asia’s major cities.





For
further information on China Architectural Engineering, Inc., please visit
www.caebuilding.com







Forward-Looking
Statements





In
addition to historical information, the statements set forth above may include
forward-looking statements that may involve risk and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Actual results could differ materially from the expectations
contained in forward-looking statements as a result of risks and uncertainties,
including, but not limited to, the proposed acquisition of ConnGame;
difficulties in moving into the online gaming market; the Company’s ability to
integrate the personnel and operations of the Company and ConnGame; required
Company payments under the waiver agreement and ability to maintain the
conditions of the bondholder extension; identification and remediation of the
Company's deficiencies and weaknesses in its internal controls over financial
reporting, potential claims or litigation that may result from the occurrence of
restatements, ability to identify and secure debt, equity, and/or other
financing required to continue the operations of the Company;difficulties
related to integration and management of the combined operations; reduction or
reversal of the Company's recorded revenue or profits due to "percentage of
completion" method of accounting and expenses; increasing provisions for bad
debt related to the Company's accounts receivable; fluctuation and
unpredictability of costs related to our products and services; adverse capital
and credit market conditions; fluctuation and unpredictability of costs related
to the Company's products and services; expenses and costs associated with its
convertible bonds, regulatory approval requirements and competitive conditions;
and various other matters, many of which are beyond our control. These and other
factors that may result in differences are discussed in greater detail in the
Company's reports and other filings with the Securities and Exchange
Commission.










Investor
Contact:


ICR:


Michael
Tieu


Tel:   +86-10-6599-7960


Email:
michael.tieu@icrinc.com





Bill
Zima


Tel:   +1-203-682-8200


Email:
bill.zima@icrinc.com










CHINAARCHITECTURAL ENGINEERING,
INC.
 CONSOLIDATED BALANCE
SHEETS
 AS OFJUNE 30, 2010 (UNAUDITED)AND DECEMBER 31, 2009(STATED IN US
DOLLARS)


June30,
                              2010
                            
                            
                            December 31,
                              2009(unaudited)ASSETSCurrent
    assetsCash and cash
      equivalents
                            
                            $
                            631,444
                            
                            
                            $
                            740,125Restricted
    cash
                            
                            
                            3,102,371
                            
                            
                            
                            3,033,819Contract receivables,
      net
                            
                            
                            86,205,606
                            
                            
                            
                            89,189,103Costs and earnings in excess of
      billings
                            
                            
                            8,424,430
                            
                            
                            
                            8,100,580Job disbursements
      advances
                            
                            
                            1,347,604
                            
                            
                            
                            2,696,794Other
      receivables
                            
                            
                            27,104,828
                            
                            
                            
                            30,768,067Inventories
                            
                            
                            170,076
                            
                            
                            
                            727,499Deferredincometaxes,current
                            
                            
                            112,603
                            
                            
                            
                            113,033Other current
      assets
                            
                            
                            256,510
                            
                            
                            
                            297,838Total current
      assets
                            
                            
                            127,355,472
                            
                            
                            
                            135,666,858Non-current
      assetsPlant and equipment,
      net
                            
                            
                            2,214,877
                            
                            
                            
                            2,539,457Intangible
      assets
                            
                            
                            60,998
                            
                            
                            
                            70,610Goodwill
                            
                            
                            7,995,896
                            
                            
                            
                            7,995,896Other non-current
      asset
                            
                            
                            377,910
                            
                            
                            
                            287,586TOTAL
ASSETS
                            
                            $
                            138,005,153
                            
                            
                            $
                            146,560,407
  Current
      liabilitiesShort-term bank
      loans
                                      
                                      $
                                      6,969,821
                                      
                                      
                                      $
                                      9,529,880Accounts
      payable
                                      
                                      
                                      27,256,636
                                      
                                      
                                      
                                      26,614,484Billingsover costs and estimated
      earnings
                                      
                                      
                                      4,613,674
                                      
                                      
                                      
                                      6,098,666Amount due to
      shareholder
                                      
                                      
                                      3,540,998
                                      
                                      
                                      
                                      10,080,345Other
    payables
                                      
                                      
                                      13,874,058
                                      
                                      
                                      
                                      9,360,314Business and other taxes
      payable
                                      
                                      
                                      4,670,310
                                      
                                      
                                      
                                      4,923,771Customers’ deposits
                                      
                                      
                                      5,939,674
                                      
                                      
                                      
                                      6,392,676Other
    Accrual
                                      
                                      
                                      4,756,148
                                      
                                      
                                      
                                      4,324,011Total current
      liabilities
                                      
                                      
                                      71,621,319
                                      
                                      
                                      
                                      77,324,147June 30, 2010
                                      
                                      
                                      December 31,
      2009(unaudited)Non-current
      liabilitiesLong term bank
      loans
                                      
                                      $
                                      70,415
                                      
                                      
                                      $
                                      109,239Convertible bond payable,
      net
                                      
                                      
                                      26,569,215
                                      
                                      
                                      
                                      24,564,161TOTAL
      LIABILITIES
                                      
                                      $
                                      98,260,949
                                      
                                      
                                      $
                                      101,997,547STOCKHOLDERS’
      EQUITYPreferred stock, $0.001 par value,
      10,000,000 shares authorized, 0 shares issued and outstanding atJune30, 2010and December 31, 2009; Common stock, $0.001 par value,
      100,000,000 shares authorized,55,156,874shares issued and outstanding atJune 30, 2010and53,256,874 shares issued at and
      outstandingDecember
      31, 2009
                                      
                                      $
                                      55,157
                                      
                                      
                                      $
                                      53,257Additional paid in
      capital
                                      
                                      
                                      28,465,904
                                      
                                      
                                      
                                      26,495,876Statutory
      reserves
                                      
                                      
                                      3,040,595
                                      
                                      
                                      
                                      3,040,595




Accumulated
      other comprehensive income
                  
                  
                  3,931,932
                  
                  
                  
                  3,868,437Retained
      earnings
                  
                  
                  4,280,864
                  
                  
                  
                  11,131,084Total
      Company shareholders’ equity
                  
                  
                  39,774,452
                  
                  
                  
                  44,589,249Noncontrollinginterests
                  
                  
                  (30,248
                  )
                  
                  
                  (26,389
                  )Total shareholders’equity
                  
                  
                  39,744,204
                  
                  
                  
                  44,562,860TOTAL
      LIABILITIES ANDSTOCKHOLDERS’
      EQUITY
                  
                  $
                  138,005,153
                  
                  
                  $
                  146,560,407




CHINA
ARCHITECTURAL ENGINEERING, INC.
 UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
 FOR
THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2010 AND 2009
 (STATED
IN US DOLLARS)


Three Months
      Ended
                                    June30,
                                  
                                  
                                  SixMonths Ended
                                    June30,2010
                                  
                                  
                                  2009
                                  
                                  
                                  2010
                                  
                                  
                                  2009Contract
      revenues earned
                                  
                                  $
                                  5,708,417
                                  
                                  
                                  $
                                  30,598,974
                                  
                                  
                                  $
                                  17,180,540
                                  
                                  
                                  $
                                  66,942,038Cost
      of contract revenues earned
                                  
                                  
                                  (6,137,792
                                  )
                                  
                                  
                                  (20,647,144
                                  )
                                  
                                  
                                  (15,281,985
                                  )
                                  
                                  
                                  (48,809,377
                                  )Gross
      profit / (Loss)
                                  
                                  $
                                  (429,375
                                  )
                                  
                                  $
                                  9,951,830
                                  
                                  
                                  $
                                  1,898,555
                                  
                                  
                                  $
                                  18,132,661Selling,
      general and administrative expenses
                                  
                                  
                                  (1,845,895
                                  )
                                  
                                  
                                  (6,119,798
                                  )
                                  
                                  
                                  (6,068,575
                                  )
                                  
                                  
                                  (12,070,828
                                  )Income
      / (Loss) from operations
                                  
                                  $
                                  (2,275,270
                                  )
                                  
                                  $
                                  3,832,032
                                  
                                  
                                  $
                                  (4,170,020
                                  )
                                  
                                  $
                                  6,061,833Interest
      income
                                  
                                  
                                  2,867
                                  
                                  
                                  
                                  46,259
                                  
                                  
                                  
                                  5,283
                                  
                                  
                                  
                                  49,965Interest
      expense
                                  
                                  
                                  (1,867,885
                                  )
                                  
                                  
                                  (1,463,851
                                  )
                                  
                                  
                                  (3,493,996
                                  )
                                  
                                  
                                  (2,775,584
                                  )Other
      expense
                                  
                                  
                                  (8,081
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (8,930
                                  )
                                  
                                  
                                  -Other
      income
                                  
                                  
                                  816,414
                                  
                                  
                                  
                                  138,619
                                  
                                  
                                  
                                  823,928
                                  
                                  
                                  
                                  160,456Income
      / (Loss) before taxation on Continuing Operations
                                  
                                  $
                                  (3,331,955
                                  )
                                  
                                  $
                                  2,553,059
                                  
                                  
                                  $
                                  (6,843,735
                                  )
                                  
                                  $
                                  3,496,670(Income
      tax) / tax benefit
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (9,575
                                  )
                                  
                                  
                                  -Net
      earnings/(Loss) including non-controlling interests
                                  
                                  
                                  (3,331,955
                                  )
                                  
                                  
                                  2,553,059
                                  
                                  
                                  
                                  (6,853,310
                                  )
                                  
                                  
                                  3,496,670(Income)
      / Loss attributable to non-controlling interests
                                  
                                  
                                  1,619
                                  
                                  
                                  
                                  (1,405
                                  )
                                  
                                  
                                  3,090
                                  
                                  
                                  
                                  (1,405
                                  )Net
      earnings/(Loss) attributable to the Company
                                  
                                  $
                                  (3,330,336
                                  )
                                  
                                  $
                                  2,551,654
                                  
                                  
                                  $
                                  (6,850,220
                                  )
                                  
                                  $
                                  3,495,265Earnings/(Loss)
      per share:Basic
                                  
                                  $
                                  (0.06
                                  )
                                  
                                  $
                                  0.05
                                  
                                  
                                  $
                                  (0.12
                                  )
                                  
                                  $
                                  0.07Diluted
                                  
                                  $
                                  (0.06
                                  )
                                  
                                  $
                                  0.05
                                  
                                  
                                  $
                                  (0.12
                                  )
                                  
                                  $
                                  0.07Weighted
      average shares outstanding:Basic
                                  
                                  
                                  55,156,874
                                  
                                  
                                  
                                  53,256,874
                                  
                                  
                                  
                                  54,945,763
                                  
                                  
                                  
                                  53,256,874Diluted
                                  
                                  
                                  55,156,874
                                  
                                  
                                  
                                  53,256,874
                                  
                                  
                                  
                                  54,945,763
                                  
                                  
                                  
                                  53,256,874