As
filed with the Securities and Exchange Commission on December 1, 2017.
Registration
No. 333-_____
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
China
Recycling Energy Corporation
(Exact
Name of Registrant as Specified in Its Charter)
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Nevada
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90-0093373
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(State
or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S.
Employer
Identification Number)
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12/F,
Tower A
Chang
An International Building
No.
88 Nan Guan Zheng Jie
Xi’an
City, Shaanxi Province
China
710068
+
86-29-8765-1098
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Guohua
Ku, Chief Executive Officer
12/F,
Tower A
Chang
An International Building
No.
88 Nan Guan Zheng Jie
Xi
An City, Shaanxi Province
China
+
86-29-87659-1098
(Name,
Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies
to:
Jeffrey
Li
Peter
B. Cancelmo
Chelsea
Anderson
Garvey
Schubert Barer
Flour
Mill Building
1000 Potomac Street NW, Suite 200
Washington, D.C. 20007-3501
(202)
298-1735
Approximate
date of commencement of proposed sale to the public:
From time to time after the effective date of this registration statement.
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box. ☐
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check
the following box. ☒
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If
this form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to rule 413(b) under the Securities Act, check the following
box. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer ☐ (Do not check if smaller reporting company)
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Smaller
reporting company ☒
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Emerging
growth company ☐
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION
OF REGISTRATION FEE
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Title of Securities
To Be Registered
(1)
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Amount
To Be
Registered
(1)
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Proposed
Maximum
Offering Price
Per Share
(2)
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Proposed
Maximum
Aggregate
Offering Price
(2)
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Amount Of
Registration Fee
(3)
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Common Stock, $0.001 par value per share
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Preferred Stock
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Warrants
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Units
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Total
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$
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50,000,000
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N/A
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$
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50,000,000
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$
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6,225.00
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(1)
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We
are registering under this Registration Statement such indeterminate number of shares
of common stock and preferred stock, such indeterminate number of warrants to purchase
common stock and/or preferred stock, and such indeterminate number of units as may be
sold by the registrant from time to time, which together shall have an aggregate initial
offering price not to exceed $50,000,000. We may sell any securities we are registering
under this Registration Statement separately or as units with the other securities we
are registering under this Registration Statement. We will determine, from time to time,
the proposed maximum offering price per unit in connection with our issuance of the securities
we are registering under this Registration Statement. The securities we are registering
under this Registration Statement also include such indeterminate number of shares of
common stock and preferred stock as we may issue upon conversion of or exchange for preferred
stock that provide for conversion or exchange, upon exercise of warrants or pursuant
to the anti-dilution provisions of any of such securities. In addition, pursuant to Rule
416 under the Securities Act of 1933 (the “Securities Act”), the shares we
are registering under this Registration Statement include such indeterminate number of
shares of common stock and preferred stock as may be issuable with respect to the shares
we are registering as a result of stock splits, stock dividends or similar transactions.
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(2)
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We will determine the proposed maximum aggregate offering
price per class of security from time to time in connection with our issuance of the securities we are registering under this
Registration Statement and we are not specifying such price as to each class of security pursuant to General Instruction II.D.
of Form S-3 under the Securities Act.
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(3)
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Calculated
pursuant to Rule 457(o) under the Securities Act.
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The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these
securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED DECEMBER 1, 2017
PRELIMINARY
PROSPECTUS
China
Recycling Energy Corporation
$50,000,000
Common
Stock
Preferred
Stock
Warrants
Units
We
may offer from time to time shares of our common stock, par value $0.001 (“Common Stock”), preferred stock, warrants
and units that include any of these securities. The aggregate initial offering price of the securities sold under this prospectus
will not exceed $50,000,000. We will offer the securities in amounts, at prices and on terms to be determined at the time of the
offering.
Our
Common Stock is quoted on the NASDAQ Capital Market under the symbol “CREG.” As of November 29, 2017, the aggregate
market value of our outstanding Common Stock held by non-affiliates was approximately $13,718,368 based on 8,310,198 shares of
outstanding Common Stock, of which 4,036,563 shares are held by affiliates, and a price of $3.21 per share, which was the last
reported sale price of our Common Stock as quoted on the NASDAQ Capital Market on that date. As of the date of this prospectus,
we have not offered any securities during the past twelve months pursuant to General Instruction I.B.6 of Form S-3. You are urged
to obtain current market quotations of our Common Stock.
Each
time we sell securities hereunder, we will attach a supplement to this prospectus that contains specific information about the
terms of the offering, including the price at which we are offering the securities to the public. The prospectus supplement may
also add, update or change information contained or incorporated in this prospectus. You should read this prospectus and the applicable
prospectus supplement carefully before you invest in our securities.
The
securities hereunder may be offered directly by us, through agents designated from time to time by us or to or through underwriters
or dealers. If any agents, dealers or underwriters are involved in the sale of any securities, their names, and any applicable
purchase price, fee, commission or discount arrangement between or among them will be set forth, or will be calculable from the
information set forth, in the applicable prospectus supplement. See the section entitled “About This Prospectus” for
more information.
Investing
in our securities involves certain risks. See “
Risk Factors
” beginning on page 10 of this
prospectus. In addition, see “
Risk Factors
” in our Annual Report on Form 10-K for the year ended December
31, 2016, which has been filed with the Securities and Exchange Commission and is incorporated by reference into this
prospectus. You should carefully read and consider these risk factors before you invest in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is ●, 2017
.
TABLE
OF CONTENTS
The
distribution of this prospectus may be restricted by law in certain jurisdictions. You should inform yourself about and observe
any of these restrictions. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities
offered by this document are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then
the offer presented in this prospectus does not extend to you.
This
prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide
a prospectus supplement that will contain specific information about the terms of the offering and the offered securities. This
prospectus, together with applicable prospectus supplements, any information incorporated by reference, and any related free writing
prospectuses we file with the Securities and Exchange Commission (the “SEC”), includes all material information relating
to these offerings and securities. We may also add, update or change in the prospectus supplement any of the information contained
in this prospectus or in the documents that we have incorporated by reference into this prospectus, including without limitation,
a discussion of any risk factors or other special considerations that apply to these offerings or securities or the specific plan
of distribution.
We
have not authorized anyone to give any information or make any representation about us that is different from, or in addition
to, that contained in this prospectus, including in any of the materials that we have incorporated by reference into this prospectus,
any accompanying prospectus supplement, and any free writing prospectus prepared or authorized by us. Therefore, if anyone does
give you information of this sort, you should not rely on it as authorized by us. You should rely only on the information contained
or incorporated by reference in this prospectus and any accompanying prospectus supplement.
You
should not assume that the information contained in this prospectus and any accompanying supplement to this prospectus is accurate
on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference
is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus and any accompanying
supplement to this prospectus is delivered or securities are sold on a later date.
Neither the delivery of this prospectus,
nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in our affairs
since the date hereof or that the information incorporated by reference herein is correct as of any time subsequent to the date
of such information.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the SEC, using a “shelf”
registration process. Under this shelf registration process, we may, from time to time, offer and sell any combination of the
securities described in this prospectus in one or more offerings. The aggregate initial offering price of all securities sold
under this prospectus will not exceed $50,000,000.
This
prospectus provides certain general information about the securities that we may offer hereunder. Each time we sell securities,
we will provide a prospectus supplement that will contain specific information about the terms of the offering and the offered
securities. The prospectus supplement will contain the specific information about the terms of the offering. In each prospectus
supplement, we will include the following information:
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the
number and type of securities that we propose to sell;
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the
public offering price;
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the
names of any underwriters, agents or dealers through or to which the securities will
be sold;
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any
compensation of those underwriters, agents or dealers;
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any
additional risk factors applicable to the securities or our business and operations;
and
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any
other material information about the offering and sale of the securities.
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In
addition, the prospectus supplement may also add, update or change the information contained or incorporated in this prospectus.
The prospectus supplement will supersede this prospectus to the extent it contains information that is different from, or that
conflicts with, the information contained or incorporated in this prospectus. You should read and consider all information contained
in this prospectus and any accompanying prospectus supplement in making your investment decision.
You should also read and
consider the information contained in the documents identified under the heading “Incorporation of Certain Documents by
Reference” and “Where You Can Find More Information” in this prospectus
.
Unless
the context otherwise requires, the terms “CREG,” “the Company,” “we,” “us” and
“our” in this prospectus refer to China Recycling Energy Corporation, our subsidiaries and consolidated entities.
“China” and the “PRC” refer to the People’s Republic of China.
THE
COMPANY
Overview
We
are currently engaged in the recycling energy business, providing energy savings and recycling products and services. We are a
leading developer of waste energy recycling projects for industrial applications in China, and we believe we are the only developer
to use a Build-Operate-Transfer (“BOT”) model to provide energy saving and recovery facilities for multiple energy
intensive industries in China. Our waste energy recycling projects allow customers who use substantial amounts of electricity
to recapture previously wasted pressure, heat, and gas from their manufacturing processes to generate electricity. We currently
offer waste energy recycling systems to companies for use in iron and steel, nonferrous metal, cement, coal and petrochemical
plants. We construct our projects at our customer’s facility and the electricity produced is used on-site by the customer.
While some of our competitors offer projects targeting one or two verticals, we serve multiple verticals.
We
develop fully customized projects across several verticals to better meet customer’s energy recovery needs. Our waste pressure-to-energy
solution primarily consists of the Blast Furnace Top Gas Recovery Turbine Unit (“TRT”), a system that utilizes high
pressure gas emitted from the blast furnace top to drive turbine units and generate electricity. Our waste heat-to-energy solution
primarily consists of heat power generation projects for applications in cement, steel, coking coal, and nonferrous metal industries,
which collect the residual heat from various manufacturing processes, e.g. the entrance and exit ends of the cement rotary kilns,
to generate electricity. Our waste gas-to-energy solution primarily consists of the Waste Gas Power Generation system (“WGPG”)
and the Combined Cycle Power Plant (the “CCPP”). A WGPG system utilizes flammable waste gas from coal mining, petroleum
exploitation, refinery processing or other sources as a fuel source to generate electricity through the use of a gas turbine.
A CCPP system employs more than one power generating cycle to utilize the waste gas, which not only generates electricity by burning
the flammable waste gas in a gas turbine (as a WGPG) but also uses the waste heat from burning the gas to make steam to generate
additional electricity via a steam turbine.
We
provide a clean-technology and energy-efficient solution aimed at reducing the air pollution and energy shortage problems in China.
Our projects capture industrial waste energy to produce low-cost electricity, enabling industrial manufacturers to reduce their
energy costs, lower their operating costs, and extend the life of primary manufacturing equipment. In addition, our waste energy
recycling projects allow our industrial customers to reduce their reliance on China’s centralized national power grid, which
is prone to black-outs or brown-outs or is completely inaccessible from certain remote areas. Our projects generally produce lower
carbon dioxide emissions and other pollutants, and are hence more environmentally friendly than other forms of power generation.
Since
2007, we have primarily used the BOT model to serve our customers. For each project, we design, finance, construct and install
the waste energy recycling projects for our customers, operate the projects for five to twenty years, and then transfer the projects
to the owners. The BOT model creates a win-win solution for both our customers and us. We provide the capital expenditure financing
in exchange for attractive returns on each project; our customers can focus their capital resources on their core businesses,
do not need to invest additional capitals to comply with government environmental regulations, reduce noise and emissions and
reduce their energy costs. We in turn efficiently recapture our costs through the stream of lease payments.
In
response to strong trends in the domestic and international markets, the Company intends to transform itself into an energy storage
integrated solution provider. The Company anticipates cooperating with strategic partners, including domestic storage companies
and research institutions, to leverage its existing expertise in the energy industry for engagement in the developing energy storage
markets.
Our
History
The
Company was incorporated on May 8, 1980 as Boulder Brewing Company under the laws of the State of Colorado. On September 6, 2001,
the Company changed its state of incorporation to the State of Nevada. In 2004, the Company changed its name from Boulder Brewing
Company to China Digital Wireless, Inc. and on March 8, 2007, again changed its name from China Digital Wireless, Inc. to its
current name, China Recycling Energy Corporation. The Company, through its subsidiaries, provides energy saving solutions and
services, including selling and leasing energy saving systems and equipment to customers, project investment, investment management,
economic information consulting, technical services, financial leasing, purchase of financial leasing assets, disposal and repair
of financial leasing assets, consulting and ensuring of financial leasing transactions in the Peoples Republic of China (“PRC”).
Our
business is primarily conducted through our wholly-owned subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. (“Yinghua”)
and Sifang Holdings Co., Ltd. (“Sifeng”), Sifeng’s wholly-owned subsidiaries, Huahong New Energy Technology
Co., Ltd. (“Huahong”) and Shanghai TCH Energy Technology Company, Ltd. (“Shanghai TCH”), Shanghai TCH’s
wholly-owned subsidiaries, Xi’an TCH Energy Technology Company, Ltd. (“Xi’an TCH”), Xi’an TCH’s
wholly-owned subsidiary Erdos TCH Energy Saving Development Co., Ltd. (“Erdos TCH”) and Xi’an TCH’s 90%
owned subsidiary Xi’an Zhonghong New Energy Technology Co., Ltd., and wholly owned subsidiary Zhongxun Energy Investment
(Beijing) Co., Ltd (“Zhongxun”). Shanghai TCH was established as a foreign investment enterprise in Shanghai under
the laws of the PRC on May 25, 2004, currently with registered capital of $29.80 million. Xi’an TCH was incorporated in
Xi’an, Shaanxi Province under the laws of the PRC on November 8, 2007. Erdos TCH was incorporated in April 2009. Huahong
was incorporated in February 2009. Xi’an Zhonghong New Energy Technology Co., Ltd. was incorporated in July, 2013. Xi’an
TCH paid RMB 27 million ($4.37 million) and owns 90% of Zhonghong. Zhonghong is engaged to provide energy saving solutions and
services, including constructing, selling and leasing energy saving systems and equipment to customers. Zhongxun was incorporated
in March 2014, and is a wholly-owned subsidiary of Xi’an TCH.
On
May 24, 2016, the Company filed a Certificate of Change with the Secretary of State of Nevada with an effective date of May 25,
2016 (the “Effective Date”), at which time the Company effected a 1-for-10 reverse stock split of the Company’s
authorized shares of common stock, par value $0.001 (the “Common Stock”), accompanied by a corresponding decrease
in the Company’s issued and outstanding shares of Common Stock (the “Reverse Stock Split”). The Company rounded
up to the next full share of the Company’s Common Stock any fractional shares resulting from the Reverse Stock Split.
Our
Projects
We
design, finance, construct, operate and eventually transfer waste energy recycling projects to meet the energy saving and recovery
needs of our customers. Our waste energy recycling projects use the pressure, heat or gas, which is generated as a byproduct of
a variety of industrial processes to create electricity. The residual energy from industrial processes, which was traditionally
wasted, may be captured in a recovery process and utilized by our waste energy recycling projects to generate electricity burning
additional fuel and additional emissions. Among a wide variety of waste-to-energy technologies and solutions, we primarily focus
on waste pressure to energy systems, waste heat to energy systems and waste gas power generation systems. We do not manufacture
the equipment and materials that are used in the construction of our waste energy recycling projects. Rather, we incorporate standard
power generating equipment into a fully integrated onsite project for our customers.
Erdos
TCH – Joint Venture
On
April 14, 2009, the Company formed a joint venture (the “JV”) with Erdos Metallurgy Co., Ltd. (“Erdos”)
to recycle waste heat from Erdos’ metal refining plants to generate power and steam to be sold back to Erdos. The name of
the JV was Inner Mongolia Erdos TCH Energy Saving Development Co., Ltd. (“Erdos TCH”) with a term of 20 years. Total
investment for the project was estimated at $79 million (RMB 500 million) with an initial investment of $17.55 million (RMB 120
million). Erdos contributed 7% of the total investment of the project, and Xi’an TCH Energy Technology Co., Ltd. (“Xi’an
TCH”) contributed 93%. According to the parties’ agreement on profit distribution, Xi’an TCH and Erdos will
receive 80% and 20%, respectively, of the profit from the JV until Xi’an TCH receives the complete return of its investment.
Xi’an TCH and Erdos will then receive 60% and 40%, respectively, of the profit from the JV. On June 15, 2013, Xi’an
TCH and Erdos entered into a share transfer agreement, pursuant to which Erdos sold its 7% ownership interest in the JV to Xi’an
TCH for $1.29 million (RMB 8 million), plus certain accumulated profits as described below. Xi’an TCH paid the $1.29 million
in July 2013 and, as a result, became the sole stockholder of the JV. In addition, Xi’an TCH paid Erdos accumulated profits
from inception up to June 30, 2013 in accordance with a supplementary agreement entered on August 6, 2013. In August 2013, Xi’an
TCH paid 20% of the accumulated profit (calculated under PRC GAAP) of $226,000 to Erdos. Erdos TCH currently has two power generation
systems in Phase I with a total of 18 MW power capacity, and three power generation systems in Phase II with a total of 27 MW
power capacity. On April 28, 2016, Erdos TCH and Erdos entered into a supplemental agreement, effective May 1, 2016, whereby Erdos
TCH cancelled monthly minimum lease payments from Erdos, and charges Erdos based on actual electricity sold at RMB 0.30 / KWH.
The selling price of each KWH will be determined annually based on prevailing market conditions.
Pucheng
Biomass Power Generation Projects
On
June 29, 2010, Xi’an TCH entered into a Biomass Power Generation (“BMPG”) Project Lease Agreement with Pucheng
XinHengYuan Biomass Power Generation Co., Ltd. (“Pucheng”), a limited liability company incorporated in China. Under
this lease agreement, Xi’an TCH leased a set of 12 MW BMPG systems to Pucheng at a minimum of $279,400 (RMB 1,900,000) per
month for 15 years.
On
September 11, 2013, Xi’an TCH entered into a BMPG Asset Transfer Agreement (the “Pucheng Transfer Agreement”)
with Pucheng. The Pucheng Transfer Agreement provided for the sale by Pucheng to Xi’an TCH of a set of 12 MW BMPG systems
with completion of system transformation for RMB 100 million ($16.48 million) in the form of 8,766,547 shares of common stock
of the Company at $1.87 per share. These shares were issued to Pucheng on October 29, 2013. Also on September 11, 2013, Xi’an
TCH entered into a BMPG Project Lease Agreement with Pucheng (the “Pucheng Lease”). Under the Pucheng Lease, Xi’an
TCH leases this same set of 12 MW BMPG system to Pucheng, and combined this lease with the lease for the 12 MW BMPG station of
Pucheng Phase I project, under a single lease to Pucheng for RMB 3.8 million ($0.63 million) per month (the “Pucheng Phase
II Project”). The term for the combined lease is from September 2013 to June 2025. The lease agreement for the 12 MW station
from Pucheng Phase I project terminated upon the effective date of the Pucheng Lease. The ownership of two 12 MW BMPG systems
will transfer to Pucheng at no additional charge when the Pucheng Lease expires.
Shenqiu
Yuneng Biomass Power Generation Projects
On
May 25, 2011, Xi’an TCH entered into a Letter of Intent with Shenqiu YuNeng Thermal Power Co., Ltd. (“Shenqiu”)
to reconstruct and transform a Thermal Power Generation System owned by Shenqiu into a 75T/H BMPG System for $3.57 million (RMB
22.5 million). The project commenced in June 2011 and was completed in the third quarter of 2011. On September 28, 2011, Xi’an
TCH entered into a BMPG Asset Transfer Agreement with Shenqiu (the “Shenqiu Transfer Agreement”). Pursuant to the
Shenqiu Transfer Agreement, Shenqiu sold Xi’an TCH a set of 12 MW BMPG systems (after Xi’an TCH converted the system
for BMPG purposes). As consideration for the BMPG systems, Xi’an TCH agreed to pay Shenqiu $10,937,500 (RMB 70 million)
in cash in three installments within six months upon the transfer of ownership of the systems. By the end of 2012, all the consideration
was paid. On September 28, 2011, Xi’an TCH and Shenqiu also entered into a BMPG Project Lease Agreement (the “2011
Shenqiu Lease”). Under the 2011 Shenqiu Lease, Xi’an TCH agreed to lease a set of 12 MW BMPG systems to Shenqiu at
a monthly rental rate of $286,000 (RMB 1,800,000) for 11 years. Upon expiration of the 2011 Shenqiu Lease, ownership of this system
will transfer from Xi’an TCH to Shenqiu at no additional cost. In connection with the 2011 Shenqiu Lease, Shenqiu paid one
month’s rent as a security deposit to Xi’an TCH, in addition to providing personal guarantees.
On
October 8, 2012, Xi’an TCH entered into a Letter of Intent for technical reformation of Shenqiu Project Phase II with Shenqiu
for technical reformation to enlarge the capacity of the Shenqiu Project Phase I (the “Shenqiu Phase II Project”).
The technical reformation involved the construction of another 12 MW BMPG system. After the reformation, the generation capacity
of the power plant increased to 24 MW. The project commenced on October 25, 2012 and was completed during the first quarter of
2013. The total cost of the project was $11.1 million (RMB 68 million). On March 30, 2013, Xi’an TCH and Shenqiu entered
into a BMPG Project Lease Agreement (the “2013 Shenqiu Lease”). Under the 2013 Shenqiu Lease, Xi’an TCH agreed
to lease the second set of 12 MW BMPG systems to Shenqiu for $239,000 (RMB 1.5 million) per month for 9.5 years. When the 2013
Shenqiu Lease expires, ownership of this system will transfer from Xi’an TCH to Shenqiu at no additional cost.
Yida
Coke Oven Gas Power Generation Projects
On
June 28, 2014, Xi’an TCH entered into an Asset Transfer Agreement (the “Transfer Agreement”) with Qitaihe City
Boli Yida Coal Selection Co., Ltd. (“Yida”), a limited liability company incorporated in China. The Transfer Agreement
provided for the sale to Xi’an TCH of a 15 MW coke oven gas power generation station, which had been converted from a 15
MW coal gangue power generation station from Yida. As consideration for the Transfer Asset, Xi’an TCH was to pay to Yida
RMB 115 million ($18.69 million) in the form of the common stock shares of the Company at the average closing price per share
of the Stock for the 10 trading days prior to the closing date of the transaction ($2.27 per share). The exchange rate between
the US Dollar and Chinese RMB in connection with the stock issuance is the rate equal to the middle rate published by the People’s
Bank of China on the closing date of the assets transfer. Accordingly, the Company issued 8,233,779 shares (the “Shares”)
for the Yida 15 MW coke oven gas power generation station, the fair value of 8,233,779 shares was $14.49 million based on the
stock price at the agreement date ($1.76 per share), and was the cost of the power generation station.
On
June 28, 2014, Xi’an TCH also entered into a Coke Oven Gas Power Generation Project Lease Agreement (the “Lease Agreement”)
with Yida. Under the Lease Agreement, Xi’an TCH leased the Transfer Asset to Yida for RMB 3 million ($0.49 million) per
month, and the term of the lease is from June 28, 2014 to June 27, 2029. Yida provided an RMB 3 million ($0.49 million) security
deposit (without interest) for the lease. Xi’an TCH will transfer the Transfer Asset back to Yida at no cost at the end
of the lease term.
On
June 22, 2016, Xi’an TCH entered into a Coal Oven Gas Power Generation Project Repurchase Agreement (the “Repurchase
Agreement”) with Yida. Under the Repurchase Agreement, Xi’an TCH agreed to transfer to Yida all the project assets
for RMB 112,000,000 ($16.89 million) (the “Transfer Price”) with Yida’s retention of ownership of the Shares.
Yida agreed to make the following payments: (i) the outstanding monthly leasing fees for April and May 2016 in total of RMB 6,000,000
($0.90 million) to Xi’an TCH within 5 business days from the execution of the Repurchase Agreement; (ii) a payment of RMB
50,000,000 ($7.54 million) of the Transfer Price to Xi’an TCH within 5 business days from the execution of the Repurchase
Agreement; and (iii) a payment of the remaining RMB 62,000,000 ($9.35 million) of the Transfer Price to Xi’an TCH within
15 business days from the execution of the Repurchase Agreement. Under the Repurchase Agreement, ownership of the project assets
will transfer from Xi’an TCH to Yida within 3 business days after Xi’an TCH receives the full Transfer Price and the
outstanding monthly leasing fees. In July 2016, the Company received the full payment of the Transfer Price and title to the system
was transferred at that time. The Company recorded a $0.42 million loss from this transaction in 2016.
The
Fund Management Company
On
June 25, 2013, Xi’an TCH and HongyuanHuifu Venture Capital Co. Ltd. (“HongyuanHuifu”) jointly established Hongyuan
Recycling Energy Investment Management Beijing Co., Ltd. (the “Fund Management Company”) with registered capital of
RMB 10 million ($1.45 million). Xi’an TCH made an initial capital contribution of RMB 4 million ($650,000) and has a 40%
ownership interest in the Fund Management Company. With respect to the Fund Management Company, voting rights and dividend rights
are allocated 80% and 20% between HongyuanHuifu and Xi’an TCH, respectively.
The
Fund Management Company is the general partner of Beijing Hongyuan Recycling Energy Investment Center, LLP (the “HYREF Fund”),
a limited liability partnership established on July 18, 2013 in Beijing. The Fund Management Company made an initial capital contribution
of RMB 5 million ($830,000) to the HYREF Fund. An initial total of RMB 460 million ($77 million) was fully subscribed by all partners
for the HYREF Fund. The HYREF Fund has three limited partners: (1) China Orient Asset Management Co., Ltd., which made an initial
capital contribution of RMB 280 million ($46.67 million) to the HYREF Fund and is a preferred limited partner; (2) HongyuanHuifu,
which made an initial capital contribution of RMB 100 million ($16.67 million) to the HYREF Fund and is an ordinary limited partner;
and (3) the Company’s wholly-owned subsidiary, Xi’an TCH, which made an initial capital contribution of RMB 75 million
($12.5 million) to the HYREF Fund and is a secondary limited partner. The term of the HYREF Fund’s partnership is six years
from the date of its establishment, expiring July 18, 2019. The term is four years from the date of contribution for the preferred
limited partner, and four years from the date of contribution for the ordinary limited partner. The total size of the HYREF Fund
is RMB 460 million ($76.66 million). The HYREF Fund was formed for the purpose of investing in Xi’an Zhonghong New Energy
Technology Co., Ltd., a 90% owned subsidiary of Xi’an TCH, for the construction of two coke dry quenching (“CDQ”)
WHPG stations with Jiangsu Tianyu Energy and Chemical Group Co., Ltd. (“Tianyu”) and one CDQ WHPG station with Boxing
County Chengli Gas Supply Co., Ltd. (“Chengli”).
Chengli
Waste Heat Power Generation Projects
On
July 19, 2013, Xi’an TCH formed a new company, “Xi’an Zhonghong New Energy Technology Co., Ltd.” (“Zhonghong”),
with registered capital of RMB 30 million ($4.85 million). Xi’an TCH paid RMB 27 million ($4.37 million) and owns 90% of
Zhonghong. Zhonghong is engaged to provide energy saving solution and services, including constructing, selling and leasing energy
saving systems and equipment to customers. waste heat power generation
On
July 24, 2013, Zhonghong entered into a Cooperative Agreement of Coke Dry Quenching (“CDQ”) and CDQ WHPG (Waste Heat
Power Generation) Project with Boxing County Chengli Gas Supply Co., Ltd. (“Chengli”). The parties entered into a
supplement agreement on July 26, 2013. Pursuant to these agreements, Zhonghong will design, build and maintain a 25 MW CDQ system
and a CDQ WHPG system to supply power to Chengli, and Chengli will pay energy saving fees (the “Chengli Project”).
Chengli will contract the operation of the system to a third-party contractor that is mutually agreed to by Zhonghong. In addition,
Chengli will provide the land for the CDQ system and CDQ WHPG system at no cost to Zhonghong. The term of the Agreements is for
20 years. The first 800 million watt hours generated by the Chengli Project will be charged at RMB 0.42 ($0.068) per kilowatt
hour (excluding tax); thereafter, the energy saving fee will be RMB 0.20 ($0.036) per kilowatt hour (excluding tax). The operating
time shall be based upon an average 8,000 hours annually. If the operating time is less than 8,000 hours per year due to a reason
attributable to Chengli, then time charged shall be 8,000 hours a year, and if it is less than 8,000 hours due to a reason attributable
to Zhonghong, then it shall be charged at actual operating hours. The construction of the Chengli Project was completed in the
second quarter of 2015 and the project successfully completed commissioning tests in the first quarter of 2017. The Chengli Project
is now functional, but will not begin operations until the Company receives the required power generating license, which the Company
anticipates receiving in the fourth quarter of 2017. When operations begin, Chengli shall ensure its coking production line works
properly and that working hours for the CDQ system are at least 8,000 hours per year, and Zhonghong shall ensure that working
hours for the CDQ WHPG system are at least 7,200 hours per year.
On
July 22, 2013, Zhonghong entered into an Engineering, Procurement and Construction (“EPC”) General Contractor Agreement
for the Boxing County Chengli Gas Supply Co., Ltd. CDQ Power Generation Project (the “Chengli Project”) with Xi’an
Huaxin New Energy Co., Ltd. (“Huaxin”). Zhonghong, as the owner of the Chengli Project, contracted EPC services for
a CDQ system and a 25 MW CDQ WHPG system for Chengli from Huaxin. Huaxin shall provide construction, equipment procurement, transportation,
installation and adjustment, test run, construction engineering management and other necessary services to complete the Huaxin
Project and ensure the CDQ system and CDQ WHPG system for Chengli meet the inspection and acceptance requirements and work normally.
The Chengli Project is a turn-key project where Huaxin is responsible for monitoring the quality, safety, duration and cost of
the Chengli Project. The total contract price is RMB 200 million ($33.34 million), which includes all the materials, equipment,
labor, transportation, electricity, water, waste disposal, machinery and safety costs.
Tianyu
Waste Heat Power Generation Project
On
July 19, 2013, Zhonghong entered into a Cooperative Agreement (the “Tianyu Agreement”) for Energy Management of CDQ
and CDQ WHPG Project with Jiangsu Tianyu Energy and Chemical Group Co., Ltd. (“Tianyu”). Pursuant to the Tianyu Agreement,
Zhonghong will design, build, operate and maintain two sets of 25 MW CDQ systems and CDQ WHPG systems for two subsidiaries of
Tianyu – Xuzhou Tian’an Chemical Co., Ltd. (“Xuzhou Tian’an”) and Xuzhou Huayu Coking Co., Ltd.
(“Xuzhou Huayu”) – to be located at Xuzhou Tian’an and Xuzhou Huayu’s respective locations (the
“Tianyu Project”). Upon completion of the Tianyu Project, Zhonghong will charge Tianyu an energy saving fee of RMB
0.534 ($0.087) per kilowatt hour (excluding tax). The operating time will be based upon an average 8,000 hours annually for each
of Xuzhou Tian’an and Xuzhou Huayu. If the operating time is less than 8,000 hours per year due to a reason attributable
to Tianyu, then time charged will be 8,000 hours a year. The term of the Tianyu Agreement is 20 years. The construction of the
Xuzhou Tian’an Project is anticipated to be completed by the second quarter of 2018. Xuzhou Tian’an will provide the
land for the CDQ and CDQ WHPG systems for free. Xuzhou Tian’an also guarantees that it will purchase all the power generated
by the CDQ WHPG systems. The Xuzhou Huayu Project is currently on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd.
and local residents on certain pollution-related issues. The local government has acted in its capacity to coordinate the resolution
of this issue. The local residents were requested to move from the hygienic buffer zone of the project location with compensatory
payments from the government. Xuzhou Huayu was required to stop production and implement technical innovations to mitigate pollution
discharge including sewage treatment, dust collection, noise control, and recycling of coal gas. Currently, some local residents
have moved. Xuzhou Huayu has completed the implementation of the technical innovations of sewage treatment, dust collection, and
noise control, and the Company is waiting for local governmental agencies to approve these technical innovations so that we can
resume construction. We expect to complete the recycling of coal gas in the second quarter of 2018. Once Huayu obtains the government’s
acceptance and approval of the technical innovations, the project will resume.
On
July 22, 2013, Zhonghong entered into an EPC General Contractor Agreement for the Tianyu Project with Xi’an Huaxin New Energy
Co., Ltd. (“Huaxin”). Zhonghong, as the owner of the Tianyu Project, contracted EPC services for two CDQ systems and
two 25 MW CDQ WHPG systems for Tianyu to Huaxin. Huaxin shall provide construction, equipment procurement, transportation, installation
and adjustment, test run, construction engineering management and other necessary services to complete the Tianyu Project and
ensure the CDQ and CDQ WHPG systems for Tianyu meet the inspection and acceptance requirements and work normally. The Tianyu Project
is a turn-key project where Huaxin is responsible for monitoring the quality, safety, duration and cost of the project. The total
contract price is RMB 400 million ($66.68 million), which includes all the materials, equipment, labor, transportation, electricity,
water, waste disposal, machinery and safety costs.
Zhongtai
Waste Heat Power Generation Energy Management Cooperative Agreement
On
December 6, 2013, Xi’an entered into a CDQ and WHPG Energy Management Cooperative Agreement (the “Zhongtai Agreement”)
with Xuzhou Zhongtai Energy Technology Co., Ltd. (“Zhongtai”), a limited liability company incorporated in Jiangsu
Province, China.
Pursuant
to the Zhongtai Agreement, Xi’an TCH will design, build and maintain a 150 ton per hour CDQ system and a 25 MW CDQ WHPG
system and sell the power to Zhongtai, and Xi’an TCH will also build a furnace to generate steam from the waste heat of
the smoke pipeline and sell the steam to Zhongtai.
The
construction period of the Project is expected to be 18 months from the date when conditions are ready for construction to begin.
Zhongtai will start to pay an energy saving service fee from the date when the WHPG station passes the required 72-hour test run.
The payment term is 20 years. For the first 10 years, Zhongtai shall pay an energy saving fee at RMB 0.534 ($0.089) per kilowatt
hour (KWH) (including value added tax) for the power generated from the system. For the second 10 years, Zhongtai shall pay an
energy saving fee at RMB 0.402 ($0.067) per KWH (including value added tax). During the term of the contract the energy saving
fee shall be adjusted at the same percentage as the change of local grid electricity price. Zhongtai shall also pay an energy
saving fee for the steam supplied by Xi’an TCH at RMB 100 ($16.67) per ton (including value added tax). Zhongtai and its
parent company will provide guarantees to ensure Zhongtai will fulfill its obligations under the Agreement. Upon the completion
of the term, Xi’an TCH will transfer the systems to Zhongtai at RMB 1 ($0.16). Zhongtai shall provide waste heat to the
systems for no less than 8,000 hours per year and waste gas volume no less than 150,000 Normal Meter Cubed (Nm3) per hour with
a temperature no less than 950°C. If these requirements are not met, the term of the Agreement will be extended accordingly.
If Zhongtai wants to terminate the Zhongtai Agreement early, it shall provide Xi’an TCH a 60 day notice and pay the termination
fee and compensation for the damages to Xi’an TCH according to the following formula: (1) if it is less than five years
into the term when Zhongtai requests termination, Zhongtai shall pay: Xi’an TCH’s total investment amount plus Xi’an
TCH’s annual investment return times five years minus the years in which the system has already operated; or 2) if it is
more than five years into the term when Zhongtai requests the termination, Zhongtai shall pay: Xi’an TCH’s total investment
amount minus total amortization cost (the amortization period is 10 years).
In
March 2016, Xi’an TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Zhongtai and Xi’an Huaxin
(the “Transfer Agreement”). Under the Transfer Agreement, Xi’an TCH agreed to transfer to Zhongtai all of the
assets associated with the CDQ Waste Heat Power Generation Project (the “Project”), which is under construction pursuant
to the Zhongtai Agreement. Additionally, Xi’an TCH agreed to transfer to Zhongtai the Engineering, Procurement and Construction
(“EPC”) Contract for the CDQ Waste Heat Power Generation Project which Xi’an TCH had entered into with Xi’an
Huaxin in connection with the Project. Xi’an Huaxin will continue to construct and complete the Project and Xi’an
TCH agreed to transfer all its rights and obligation under the EPC Contract to Zhongtai. As consideration for the transfer of
the Project, Zhongtai agreed to pay to Xi’an TCH an aggregate transfer price of RMB 167,360,000 ($25.77 million) including
payments of: (i) RMB 152,360,000 ($23.46 million) for the construction of the Project; and (ii) RMB 15,000,000 ($2.31 million)
as payment for partial loan interest accrued during the construction period. Those amounts have been, or will be, paid by Zhongtai
to Xi’an TCH according to the following schedule: (a) RMB 50,000,000 ($7.70 million) was paid within 20 business days after
the Transfer Agreement was signed; (b) RMB 30,000,000 ($4.32 million) was paid within 20 business days after the Project is completed,
but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) will be paid no later than July 30, 2017. Xuzhou Taifa
Special Steel Technology Co., Ltd. (“Xuzhou Taifa”) guaranteed the payments from Zhongtai to Xi’an TCH. The
ownership of the Project was conditionally transferred to Zhongtai following the initial payment of RMB 50,000,000 ($7.70 million)
by Zhongtai to Xi’an TCH and the full ownership of the Project will be officially transferred to Zhongtai after it completes
all payments pursuant to the Transfer Agreement. As of September 30, 2017, Xi’an TCH had received the first payment of $7.70
million and the second payment of $4.32 million. The Company recorded a $2.82 million loss from this transaction in 2016. As of
the date of this prospectus, the Company has not yet received the remaining payment of RMB 87,360,000 ($13.45 million). The Company
expects to collect part of the remaining balance during the fourth quarter of 2017.
Rongfeng
CDQ Power Generation Energy Management Cooperative Agreement
On
December 12, 2013, Xi’an TCH entered into a CDQ Power Generation Energy Management Cooperative Agreement with Tangshan Rongfeng
Iron & Steel Co., Ltd. (the “Rongfeng Agreement”), a limited liability company incorporated in Hebei Province,
China.
Pursuant
to the Rongfeng Agreement, Xi’an TCH will design, build and maintain a CDQ and a CDQ WHPG system and sell the power to Rongfeng.
The construction period of the Project is expected to be 18 months after the Agreement takes effect and from the date when conditions
are ready for construction to begin.
Rongfeng
will pay an energy saving fee from the date when the WHPG station passes the required 72-hour test run. The payment term is 20
years. For the first 10 years, Rongfeng shall pay an energy saving fee at RMB 0.582 ($0.095) per KWH (including tax) for the power
generated from the system. For the second 10 years, Rongfeng shall pay an energy saving fee at RMB 0.432 ($0.071) per KWH (including
tax). During the term of the contract the energy saving fee shall be adjusted at the same percentage as the change of local grid
electricity price. Rongfeng and its parent company will provide guarantees to ensure Rongfeng will fulfill its obligations under
the Rongfeng Agreement. Upon the completion of the term, Xi’an TCH will transfer the systems to Rongfeng at RMB 1. Rongfeng
shall provide waste heat to the systems for no less than 8,000 hours per year with a temperature no less than 950°C. If these
requirements are not met, the term of the Agreement will be extended accordingly. If Rongfeng wants to terminate the Agreement
early, it shall provide Xi’an TCH a 60 day notice and pay the termination fee and compensation for the damages to Xi’an
TCH according to the following formula: 1) if it is less than five years (including five years) into the term when Rongfeng requests
termination, Rongfeng shall pay: Xi’an TCH’s total investment amount plus Xi’an TCH’s average annual investment
return times (five years minus the years of which the system has already operated); 2) if it is more than five years into the
term when Rongfeng requests the termination, Rongfeng shall pay: Xi’an TCH’s total investment amount minus total amortization
cost (the amortization period is 10 years). On November 16, 2015, Xi’an TCH entered into a Transfer Agreement of CDQ and
a CDQ WHPG system with Rongfeng and Xi’an Huaxin New Energy Co., Ltd., a limited liability company incorporated in China
(“Xi’an Huaxin”). The Transfer Agreement provided for the sale to Rongfeng of the CDQ Waste Heat Power Generation
Project (the “Project”) from Xi’an TCH. Additionally, Xi’an TCH would transfer to Rongfeng the Engineering,
Procurement and Construction (“EPC”) Contract for the CDQ Waste Heat Power Generation Project which Xi’an TCH
had entered into with Xi’an Huaxin in connection with the Project. As consideration for the transfer of the Project, Rongfeng
is to pay to Xi’an TCH an aggregate purchase price of RMB 165,200, 000 ($25.45 million), whereby (a) RMB 65,200,000 ($10.05
million) was to be paid by Rongfeng to Xi’an TCH within 20 business days after signing the Transfer Agreement, (b) RMB 50,000,000
($7.70 million) was paid by Rongfeng to Xi’an TCH within 20 business days after the Project is completed, but no later than
March 31, 2016 and (c) RMB 50,000,000 ($7.70 million) was to be paid by Rongfeng to Xi’an TCH no later than September 30,
2016. Mr. Cheng Li, the largest stockholder of Rongfeng, has personally guaranteed the payments. The ownership of the Project
was conditionally transferred to Rongfeng within 3 business days following the initial payment of RMB 65,200,000 ($10.05 million)
by Rongfeng to Xi’an TCH and the full ownership of the Project will be officially transferred to Rongfeng after it completes
the entire payment pursuant to the Transfer Agreement. The Company recorded a $3.78 million loss from this transaction in 2015.
As of December 31, 2016, the Company had received full payment of $25.45 million.
Formation
of Zhongxun
On
March 24, 2014, Xi’an TCH incorporated a new subsidiary, Zhongxun Energy Investment (Beijing) Co., Ltd (“Zhongxun”)
with registered capital of $5,695,502 (RMB 35,000,000), which must be contributed before October 1, 2028. Zhongxun is 100% owned
by Xi’an TCH and will be mainly engaged in project investment, investment management, economic information consulting, and
technical services. Zhongxun has not yet commenced operations as of the date of this prospectus.
Formation
of Yinghua
On
February 11, 2015, the Company incorporated a new subsidiary, Shanghai Yinghua Financial Leasing Co., Ltd (“Yinghua”)
with registered capital of $30,000,000, to be paid within 10 years from the date the business license is issued. Yinghua is 100%
owned by the Company and will be mainly engaged in financial leasing, purchase of financial leasing assets, disposal and repair
of financial leasing assets, consulting and ensuring of financial leasing transactions, and related factoring business. Yinghua
has not yet commenced operations as of the date of this prospectus.
Summary
of Sales-Type Lease at September 30, 2017
As
of September 30, 2017, Xi’an TCH leases the following systems: (i) BMPG systems to Pucheng Phase I and II (15 and 11 year
terms, respectively); (ii) BMPG systems to Shenqiu Phase I (11-year term); and (iii) Shenqiu Phase II (9.5-year term). In addition,
as of September 30, 2017, Erdos TCH leased power and steam generating systems for recycling waste heat from metal refining to
Erdos (five systems) for a term of 20 years.
Asset
Repurchase Agreement
During
the nine months ended September 30, 2017 and the year ended December 31, 2016, the Company entered into the following Asset Repurchase
Agreements:
In
March 2016, Xi’an TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Zhongtai and Xi’an Huaxin
(the “Transfer Agreement”). Under the Transfer Agreement, Xi’an TCH agreed to transfer to Zhongtai all of the
assets associated with the CDQ Waste Heat Power Generation Project (the “Project”), which is under construction pursuant
to the Zhongtai Agreement. Additionally, Xi’an TCH agreed to transfer to Zhongtai the Engineering, Procurement and Construction
(“EPC”) Contract for the CDQ Waste Heat Power Generation Project which Xi’an TCH had entered into with Xi’an
Huaxin in connection with the Project. Xi’an Huaxin will continue to construct and complete the Project and Xi’an
TCH agreed to transfer all its rights and obligation under the “EPC” Contract to Zhongtai. As consideration for the
transfer of the Project, Zhongtai agreed to pay to Xi’an TCH an aggregate transfer price of RMB 167,360,000 ($25.77 million)
including payments of: (i) RMB 152,360,000 ($23.46 million) for the construction of the Project; and (ii) RMB 15,000,000 ($2.31
million) as payment for partial loan interest accrued during the construction period. Those amounts have been, or will be, paid
by Zhongtai to Xi’an TCH according to the following schedule: (a) RMB 50,000,000 ($7.70 million) was paid within 20 business
days after the Transfer Agreement was signed; (b) RMB 30,000,000 ($4.32 million) was paid within 20 business days after the Project
is completed, but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) will be paid no later than July 30, 2017.
Xuzhou Taifa Special Steel Technology Co., Ltd. (“Xuzhou Taifa”) has guaranteed the payments from Zhongtai to Xi’an
TCH. The ownership of the Project was conditionally transferred to Zhongtai following the initial payment of RMB 50,000,000 ($7.70
million) by Zhongtai to Xi’an TCH and the full ownership of the Project will be officially transferred to Zhongtai after
it completes all payments pursuant to the Transfer Agreement. As of September 30, 2017, Xi’an TCH had received the first
payment of $7.70 million and the second payment of $4.32 million. The Company recorded a $2.82 million loss from this transaction
in 2016. As of this report date, the Company has not yet received the remaining payment of RMB 87,360,000 ($13.45 million) due
to the tight cash flow of Zhongtai, the Company expects to collect part of the remaining balance during the fourth quarter of
2017.
On
June 22, 2016, Xi’an TCH entered into a Coal Oven Gas Power Generation Project Repurchase Agreement (the “Repurchase
Agreement”) with Yida. Under the Repurchase Agreement, Xi’an TCH agreed to transfer to Yida all the project assets
for RMB 112,000,000 ($16.89 million) (the “Transfer Price”) with Yida’s retention of ownership of the Shares.
Yida agreed to make the following payments: (i) the outstanding monthly leasing fees for April and May 2016 in total of RMB 6,000,000
($0.90 million) to Xi’an TCH within 5 business days from the execution of the Repurchase Agreement; (ii) a payment of RMB
50,000,000 ($7.54 million) of the Transfer Price to Xi’an TCH within 5 business days from the execution of the Repurchase
Agreement; and (iii) a payment of the remaining RMB 62,000,000 ($9.35 million) of the Transfer Price to Xi’an TCH within
15 business days from the execution of the Repurchase Agreement. Under the Repurchase Agreement, ownership of the project assets
will be transferred from Xi’an TCH to Yida within 3 business days after Xi’an TCH receives the full Transfer Price
and the outstanding monthly leasing fees. In July 2016, the Company had received the full payment of the Transfer Price and title
to the system was transferred at that time. The Company recorded a $0.42 million loss from this transaction in 2016.
Corporate
Information
We
are headquartered in China. Our principal executive offices are located at 12/F, Tower A, Chang An International Building, No.
88 Nan Guan Zheng Jie, Xi’an City, Shaanxi Province, China, and our telephone number at this location is +86-29-8765-1098.
Our website address is www.creg-cn.com. Information contained on our website is not incorporated by reference into this prospectus
and you should not consider information on our website to be part of this prospectus.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before making any investment decision, you should carefully consider
the risk factors set forth below, under the caption “Risk Factors” in any applicable prospectus supplement and under
the caption “Risk Factors” in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form
10-Q, which are incorporated by reference in this prospectus, as well as in any applicable prospectus supplement, as updated by
our subsequent filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
These
risks could materially affect our business, results of operation or financial condition and affect the value of our securities.
Additional risks and uncertainties that are not yet identified may also materially harm our business, operating results and financial
condition and could result in a complete loss of your investment. You could lose all or part of your investment. For more information,
see “Where You Can Find More Information.”
Risks
Related to Our Securities and the Offering
Future
sales or other dilution of our equity could depress the market price of our Common Stock.
Sales
of our Common Stock, preferred stock, warrants, units or any combination of the foregoing in the public market, or the perception
that such sales could occur, could negatively impact the price of our Common Stock. If one or more of our shareholders were to
sell large portions of their holdings in a relatively short time, for liquidity or other reasons, the prevailing market price
of our Common Stock could be negatively affected.
In
addition, the issuance of additional shares of our Common Stock, securities convertible into or exercisable for our Common Stock,
other equity-linked securities, including preferred stock or warrants or any combination of the securities pursuant to this prospectus
will dilute the ownership interest of our common shareholders and could depress the market price of our Common Stock and impair
our ability to raise capital through the sale of additional equity securities.
We
may need to seek additional capital. If this additional financing is obtained through the issuance of equity securities or warrants
to acquire equity securities, our existing shareholders could experience significant dilution upon the issuance, conversion or
exercise of such securities.
Our
management will have broad discretion over the use of the proceeds we receive from the sale of our securities pursuant to this
prospectus and might not apply the proceeds in ways that increase the value of your investment.
Our
management will have broad discretion to use the net proceeds from any offerings under this prospectus, and you will be relying
on the judgment of our management regarding the application of these proceeds. Except as described in any prospectus supplement
or in any related free writing prospectus that we may authorize to be provided to you, the net proceeds received by us from our
sale of the securities described in this prospectus will be added to our general funds and will be used for general corporate
purposes. Our management might not apply the net proceeds from offerings of our securities in ways that increase the value of
your investment and might not be able to yield a significant return, if any, on any investment of such net proceeds. You may not
have the opportunity to influence our decisions on how to use such proceeds.
FORWARD-LOOKING
STATEMENTS
Some
of the statements contained or incorporated by reference in this prospectus may be “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E
of the Exchange Act and may involve material risks, assumptions and uncertainties. Forward-looking statements typically are identified
by the use of terms such as “may,” “will,” “should,” “believe,” “might,”
“expect,” “anticipate,” “intend,” “plan,” “estimate” and similar words,
although some forward-looking statements are expressed differently.
Although
we believe that the expectations reflected in such forward-looking statements are reasonable, these statements are not guarantees
of future performance and involve certain risks and uncertainties that are difficult to predict and which may cause actual outcomes
and results to differ materially from what is expressed or forecasted in such forward-looking statements. These forward-looking
statements speak only as of the date on which they are made and except as required by law, we undertake no obligation to publicly
release the results of any revision or update of these forward-looking statements, whether as a result of new information, future
events or otherwise. If we do update or correct one or more forward-looking statements, you should not conclude that we will make
additional updates or corrections with respect thereto or with respect to other forward-looking statements. A detailed discussion
of risks and uncertainties that could cause actual results and events to differ materially from our forward-looking statements
is included in our periodic reports filed with the SEC and in the “Risk Factors” section of this prospectus.
USE
OF PROCEEDS
Except
as may be stated in the applicable prospectus supplement, we intend to use the net proceeds we receive from the sale of the securities
offered by this prospectus for general corporate purposes, which may include, among other things, repayment of debt, repurchases
of common stock, capital expenditures, the financing of possible acquisitions or business expansions, increasing our working capital
and the financing of ongoing operating expenses and overhead.
DESCRIPTION
OF CAPITAL STOCK
The
following is a summary of our capital stock and certain provisions of our certificate of incorporation and bylaws. This summary
does not purport to be complete and is qualified in its entirety by the provisions of our Articles of Incorporation, as amended,
our Fourth Amended and Restated Bylaws (“Bylaws”), and applicable provisions of the Nevada Revised Statutes (the “NRS”).
See
“Where You Can Find More Information” elsewhere in this prospectus for information on where you can obtain copies
of our Certificate of Incorporation and Amended and Restated Bylaws, which have been filed with and are publicly available from
the SEC.
Our
authorized capital stock consists of 20,000,000 shares of Common Stock, par value $0.001 per share. Currently, we have
no other authorized class of stock.
DESCRIPTION
OF COMMON STOCK
As
of November 30, 2017, there were 8,310,198 shares of our Common Stock outstanding, held by approximately 2,720 stockholders of
record. There are no warrants to purchase shares of our Common Stock outstanding as of the date of this prospectus
Our
Common Stock is currently traded on the NASDAQ Capital Market under the symbol “CREG.”
The
holders of our Common Stock are entitled to one vote per share. Our Articles of Incorporation do not provide for cumulative voting.
The holders of our Common Stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors
out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations
and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all
assets that are legally available for distribution. The holders of our Common Stock have no preemptive, subscription, redemption
or conversion rights.
All
issued and outstanding shares of Common Stock are fully paid and nonassessable. Shares of our Common Stock that may be offered
for resale, from time to time, under this prospectus will be fully paid and nonassessable.
Anti-Takeover
Effects of Certain Provisions of Nevada Law
As
a Nevada corporation, we are also subject to certain provisions of the Nevada Revised Statutes (the “NRS”) that have
anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to
encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection
with such a transaction. However, certain of these provisions may discourage a future acquisition of us, including an acquisition
in which the stockholders might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate
in such a transaction may not have the opportunity to do so.
The
NRS provides that specified persons who, with or through their affiliates or associates, own, or affiliates and associates of
the subject corporation at any time within two years own or did own, 10% or more of the outstanding voting stock of a corporation
cannot engage in specified business combinations with the corporation for a period of two years after the date on which the person
became an interested stockholder, unless the combination meets all of the requirements of the articles of incorporation of the
company, and: (i) the combination or transaction by which such person first became an interested stockholder was approved by the
board of directors before they first became an interested stockholder; or (ii) such combination is approved by: (x) the board
of directors; and (y) at an annual or special meeting of the stockholders (not by written consent), the affirmative vote of stockholders
representing at least 60% of the outstanding voting power not beneficially owned by such interested stockholder. The law defines
the term “business combination” to encompass a wide variety of transactions with or caused by an interested stockholder,
including mergers, asset sales and other transactions in which the interested stockholder receives or could receive a benefit
on other than a pro rata basis with other stockholders.
The
Control Share Acquisition Statute generally applies only to Nevada corporations with at least 200 stockholders of record, including
at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada. This
statute generally provides that any person that acquires a “controlling interest” acquires voting rights in the control
shares, as defined, only as conferred by the disinterested stockholders of the corporation at a special or annual meeting. A person
acquires a “controlling interest” whenever a person acquires shares of a subject corporation that, but for the application
of these provisions of the NRS, would enable that person to exercise (1) one-fifth or more, but less than one-third, (2) one-third
or more, but less than a majority or (3) a majority or more, of all of the voting power of the corporation in the election of
directors. Once an acquirer crosses one of these thresholds, shares which it acquired in the transaction taking it over the threshold
and within the 90 days immediately preceding the date when the acquiring person acquired or offered to acquire a controlling interest
become “control shares.” In the event control shares are accorded full voting rights and the acquiring person has
acquired at least a majority of all of the voting power, any stockholder of record who has not voted in favor of authorizing voting
rights for the control shares is entitled to demand payment for the fair value of its shares.
These
laws may have a chilling effect on certain transactions if our Articles of Incorporation or Bylaws are not amended to provide
that these provisions do not apply to us or to an acquisition of a controlling interest, or if our disinterested stockholders
do not confer voting rights in the control shares.
DESCRIPTION
OF PREFERRED STOCK
As
of November 30, 2017, no shares of preferred stock had been issued or were outstanding and we are not authorized to issue any
shares of preferred stock; however, it is possible that we could amend our Articles of Incorporation to authorize the issuance
of shares of preferred stock.
We
will file as an exhibit to the Registration Statement of which this prospectus is a part, or will incorporate by reference from
reports that we file with the SEC, the form of any certificate of designation or amendment to our Articles of Incorporation that
describes the terms of any series of preferred stock we are offering before the issuance of that series of preferred stock. This
description will include, but not be limited to, the following: (i) the title and stated value; (ii) the number of shares we are
offering; (iii) the liquidation preference per share; (iv) the purchase price; (v) the dividend rate, period and payment date
and method of calculation for dividends; (vi) whether dividends will be cumulative or non-cumulative and, if cumulative, the date
from which dividends will accumulate; (vii) the provisions for a sinking fund, if any; (viii) the provisions for redemption or
repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights; (ix) whether
the preferred stock will be convertible into our Common Stock, and, if applicable, the conversion price, or how it will be calculated,
and the conversion period; (x) whether the preferred stock will be exchangeable into debt securities, and, if applicable, the
exchange price, or how it will be calculated, and the exchange period; (xi) voting rights, if any, of the preferred stock; (x)
preemptive rights, if any; (xi) restrictions on transfer, sale or other assignment, if any; (xii) a discussion of any material
United States federal income tax considerations applicable to the preferred stock; (xiii) the relative ranking and preferences
of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; (xiv) any limitations
on the issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock
as to dividend rights and rights if we liquidate, dissolve or wind up our affairs and (xv) any other specific terms, preferences,
rights or limitations of, or restrictions on, the preferred stock.
DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of Common Stock and/or preferred stock in one or more series. We may issue warrants independently
or together with Common Stock and/or preferred stock and the warrants may be attached to or separate from these securities. While
the terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any
series of warrants in more detail in the applicable prospectus supplement. The terms of any warrants offered under a prospectus
supplement may differ from the terms described below.
We
will file as exhibits to the Registration Statement of which this prospectus is a part, or will incorporate by reference from
reports that we file with the SEC, the form of warrant agreement, including a form of warrant certificate, that describes the
terms of the particular series of warrants we are offering before the issuance of the related series of warrants. The following
summaries of material provisions of the warrants and the warrant agreements are subject to, and qualified in their entirety by
reference to, all the provisions of the warrant agreement and warrant certificate applicable to the particular series of warrants
that we may offer under this prospectus. We urge you to read the applicable prospectus supplements related to the particular series
of warrants that we may offer under this prospectus, as well as any related free writing prospectuses, and the complete warrant
agreements and warrant certificates that contain the terms of the warrants.
General
We
will describe in the applicable prospectus supplement the terms of the series of warrants being offered, including:
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the
offering price and aggregate number of warrants offered;
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the
currency for which the warrants may be purchased;
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if
applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued
with each such security or each principal amount of such security;
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if
applicable, the date on and after which the warrants and the related securities will be separately transferable;
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in
the case of warrants to purchase Common Stock or preferred stock, the number of shares of Common Stock or preferred stock,
as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon
such exercise;
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the
effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants;
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the
terms of any rights to redeem or call the warrants;
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any
provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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the
dates on which the right to exercise the warrants will commence and expire;
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the
manner in which the warrant agreements and warrants may be modified;
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a
discussion of any material or special United States federal income tax consequences of holding or exercising the warrants;
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the
terms of the securities issuable upon exercise of the warrants; and
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any
other specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Before
exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such
exercise, including in the case of warrants to purchase Common Stock or preferred stock, the right to receive dividends, if any,
or payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any.
Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise
price that we describe in the applicable prospectus supplement. Holders of the warrants may exercise the warrants at any time
up to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of
business on the expiration date, unexercised warrants will become void.
Holders
of the warrants may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together
with specified information, and paying the required amount to the warrant agent in immediately available funds, as provided in
the applicable prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus
supplement the information that the holder of the warrant will be required to deliver to the warrant agent.
If
fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate
for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender
securities as all or part of the exercise price for warrants.
DESCRIPTION
OF UNITS
As
specified in the applicable prospectus supplement, we may issue, in one more series, units consisting of Common Stock, preferred
stock and/or warrants for the purchase of Common Stock and/or preferred stock in any combination. The applicable prospectus supplement
will describe:
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the
securities comprising the units, including whether and under what circumstances the securities comprising the units may be
separately traded;
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the
terms and conditions applicable to the units, including a description of the terms of any applicable unit agreement governing
the units; and
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a
description of the provisions for the payment, settlement, transfer or exchange of the units.
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PLAN OF
DISTRIBUTION
The
securities covered by this prospectus may be offered and sold from time to time pursuant to one or more of the following methods:
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to
or through underwriters;
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to
or through broker-dealers (acting as agent or principal);
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in
“at the market offerings” within the meaning of Rule 415(a)(4) of the Securities Act, to or through a market
maker or into an existing trading market, on an exchange, or otherwise;
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directly
to purchasers, through a specific bidding or auction process or otherwise; or
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through
a combination of any such methods of sale.
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Agents,
underwriters or broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the
form of discounts, concessions or commissions to be received from us, from the purchasers of the securities or from both us and
the purchasers. Any underwriters, dealers, agents or other investors participating in the distribution of the securities may be
deemed to be “underwriters,” as that term is defined in the Securities Act, and compensation and profits received
by them on sale of the securities may be deemed to be underwriting commissions, as that term is defined in the rules promulgated
under the Securities Act.
Each
time securities are offered by this prospectus, the prospectus supplement, if required, will set forth:
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the
name of any underwriter, dealer or agent involved in the offer and sale of the securities;
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the
terms of the offering;
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any
discounts concessions or commissions and other items constituting compensation received by the underwriters, broker-dealers
or agents;
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any
over-allotment option under which any underwriters may purchase additional securities from us; and
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any
initial public offering price.
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The
securities may be sold at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices
relating to the prevailing market prices or at negotiated prices. The distribution of securities may be effected from time to
time in one or more transactions, by means of one or more of the following transactions, which may include cross or block trades:
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transactions
on the NASDAQ Capital Market or any other organized market where the securities may be traded;
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in
the over-the-counter market;
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in
negotiated transactions;
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under
delayed delivery contracts or other contractual commitments; or
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a
combination of such methods of sale.
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If
underwriters are used in a sale, securities will be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions. Our securities may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter or underwriters
are used in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters at the time
an agreement for the sale is reached. This prospectus and the prospectus supplement will be used by the underwriters to resell
the shares of our securities.
In
compliance with the guidelines of the Financial Industry Regulatory Authority, or “FINRA,” the aggregate maximum discount,
commission or agency fees or other items constituting underwriting compensation to be received by any FINRA member or independent
broker-dealer will not exceed 8% of the offering proceeds from any offering pursuant to this prospectus and any applicable prospectus
supplement.
If
5% or more of the net proceeds of any offering of our securities made under this prospectus will be received by a FINRA member
participating in the offering or affiliates or associated persons of such FINRA member, the offering will be conducted in accordance
with FINRA Rule 5121.
To
comply with the securities laws of certain states, if applicable, the securities offered by this prospectus will be offered and
sold in those states only through registered or licensed brokers or dealers.
Agents,
underwriters and dealers may be entitled under agreements entered into with us to indemnification by us against specified liabilities,
including liabilities incurred under the Securities Act, or to contribution by us to payments they may be required to make in
respect of such liabilities. The prospectus supplement will describe the terms and conditions of such indemnification or contribution.
Some of the agents, underwriters or dealers, or their respective affiliates may be customers of, engage in transactions with or
perform services for us in the ordinary course of business. We will describe in the prospectus supplement naming the underwriter
the nature of any such relationship.
Certain
persons participating in the offering may engage in over-allotment, stabilizing transactions, short-covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act. We make no representation or prediction as to the direction
or magnitude of any effect that such transactions may have on the price of the securities. For a description of these activities,
see the information under the heading “Underwriting” in the applicable prospectus supplement.
LEGAL
MATTERS
The
validity of the securities offered in this prospectus will be passed upon for us by Garvey Schubert Barer.
EXPERTS
Our
consolidated financial statements for the years ended December 31, 2016 and 2015, incorporated by reference into this prospectus
and Registration Statement, have been audited by the independent registered public accounting firm MJF & Associates, APC,
as set forth in its report thereon, and are included in reliance upon such report given on the authority of such firm as experts
in accounting and auditing.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we file with them into this prospectus. This means that
we can disclose important information about us and our financial condition to you by referring you to another document filed separately
with the SEC instead of having to repeat the information in this prospectus. The information incorporated by reference is considered
to be part of this prospectus and later information that we file with the SEC will automatically update and supersede this information.
This prospectus incorporates by reference any future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act, between the date of the initial registration statement and prior to effectiveness of the registration statement
and the documents listed below that we have previously filed with the SEC:
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our
Annual Report on Form 10-K for the year ended December 31, 2016;
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our
Quarterly Reports on Form 10-Q for the three-month periods ended March 31, 2017, June 30, 2017 and September 30, 2017;
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our
Current Reports on Form 8-K filed on April 28, 2017 and July 3, 2017; and
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the
description of our Common Stock contained in the Registration Statement on Form SB-2, filed with the Commission on July 29,
2005, and any amendment or report filed for the purpose of updating such description.
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We
also incorporate by reference all documents that we file with the SEC on or after the effective time of this prospectus pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the sale of all the securities registered hereunder
or the termination of the registration statement. Nothing in this prospectus shall be deemed to incorporate information furnished
but not filed with the SEC.
Any
statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus
shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or
in the applicable prospectus supplement or in any other subsequently filed document which also is or is deemed to be incorporated
by reference modifies or supersedes the statement. Any statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
You
may request a copy of the filings incorporated herein by reference, including exhibits to such documents that are specifically
incorporated by reference, at no cost, by writing or calling us at the following address or telephone number:
China
Recycling Energy Corporation
12/F,
Tower A
Chang
An International Building
No.
88 Nan Guan Zheng Jie,
Xi’an
City, Shaanxi Province, China
Attn:
Adeline Gu, Chief Financial Officer and Corporate Secretary
+86-29-8765-1098
Statements
contained in this prospectus as to the contents of any contract or other documents are not necessarily complete, and in each instance
you are referred to the copy of the contract or other document filed as an exhibit to the registration statement or incorporated
herein, each such statement being qualified in all respects by such reference and the exhibits and schedules thereto.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a registration statement on Form S-3 that we filed with the SEC registering the securities that may be offered
and sold hereunder. The registration statement, including exhibits thereto, contains additional relevant information about us
and these securities that, as permitted by the rules and regulations of the SEC, we have not included in this prospectus. A copy
of the Registration Statement can be obtained at the address set forth below or at the SEC’s website as noted below. You
should read the registration statement, including any applicable prospectus supplement, for further information about us and these
securities.
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available
to the public over the Internet at the SEC's website at http:/www.sec.gov. You may also read and copy any document we file at
the SEC's public reference room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Because our Common Stock is listed on the NASDAQ Capital Market, you
may also inspect reports, proxy statements and other information at the offices of the NASDAQ Capital Market.
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other Expenses of Issuance and Distribution.
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The
following table sets forth all expenses payable by us in connection with the offering of our securities being registered hereby.
All amounts shown are estimates except the SEC registration fee.
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Registration fee
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$
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6,225
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Legal fees and expenses
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*
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Accounting fees and expenses
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*
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Printing and miscellaneous expenses
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*
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Total expenses
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$
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*
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Estimated expenses are presently not known and cannot be estimated.
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Item 15.
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Indemnification of Directors and Officers.
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Section
78.138 of the NRS provides that a director or officer is not individually liable to the corporation or its shareholders or creditors
for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that
(1) the director’s or officer’s act or failure to act constituted a breach of his fiduciary duties as a director or
officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law.
This
provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages
resulting from suits alleging a breach of the duty of care by a director or officer. As a consequence of this provision, shareholders
of our Company will be unable to recover monetary damages against directors or officers for action taken by them that may constitute
negligence or gross negligence in performance of their duties unless such conduct falls within one of the foregoing exceptions.
The provision, however, does not alter the applicable standards governing a director’s or officer’s fiduciary duty
and does not eliminate or limit the right of our company or any shareholder to obtain an injunction or any other type of non-monetary
relief in the event of a breach of fiduciary duty.
Our
Articles of Incorporation, as amended, and Fourth Amended and Restated Bylaws provide, among other things, that a director, officer,
employee or agent of the corporation may be indemnified against expenses (including attorneys’ fees inclusive of any appeal),
judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such claim,
action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed
to the best of our interests, and with respect to any criminal action or proceeding, such person had no reasonable cause to believe
that such person’s conduct was unlawful.
Insofar
as indemnification for liabilities arising under the Securities Act may be provided for directors, officers, employees, agents
or persons controlling an issuer pursuant to the foregoing provisions, the opinion of the SEC is that such indemnification is against
public policy as expressed in the Securities Act, and is therefore unenforceable. In the event that a claim for indemnification
by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by
such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
At
the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any threatened litigation or proceeding, which may result
in a claim for such indemnification.
See the Exhibit Index
attached to this registration statement and incorporated herein by reference.
The
undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
to include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii)
to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)
to include any material information with respect to the plan of distribution not previously disclosed in this registration statement
or any material change to such information in this registration statement;
provided,
however
, that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this registration statement,
or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement.
(2)
That, for the purposes of determining any liability under the Securities Act, each post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall
be deemed to be the initial
bona fide
offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
(i) Each
prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as
of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing
the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract
of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That,
for the purpose of determining liability of a Registrant under the Securities Act to any purchaser in the initial distribution
of the securities:
The
undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications the undersigned Registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
(i)
any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to
Rule 424;
(ii)
any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred
to by the undersigned Registrant;
(iii)
the portion of any other free writing prospectus relating to the offering containing material information about the undersigned
Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv)
any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(6) The
undersigned Registrant hereby undertakes that:
(i)
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(ii)
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
The
Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide
offering thereof.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the indemnification provisions described herein, or otherwise, the Registrant has been advised that
in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Xi’an China, on December 1, 2017.
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CHINA RECYCLING ENERGY CORPORATION
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|
|
|
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By:
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/s/ Guohua Ku
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Guohua Ku
|
|
|
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Chairman of the Board of Directors
and
Chief Executive Officer
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|
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(Principal Executive Officer)
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SIGNATURES AND POWER OF ATTORNEY
Each person whose signature
appears below constitutes and appoints Guohua Ku and Adeline Gu as his/her true and lawful attorneys-in-fact and agents, each acting
alone, with full power of substitution and resubstitution, for him/her and in his/her name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this registration statement on Form S-3 and any subsequent
registration statement the Registrant may hereafter file with the Securities and Exchange Commission pursuant to Rule 462 under
the Securities Act to register additional securities in connection with this registration statement, and to file this registration
statement, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in order to effectuate the same as fully, to all intents and purposes, as he or she
might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the
dates indicated.
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Signature
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Title
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|
Date
|
|
|
|
|
|
|
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/s/
Guohua Ku
|
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Chairman of the Board
of Directors and
|
|
|
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Gouhua
Ku
|
|
Chief Executive Officer (Principal
Executive Officer)
|
|
December
1, 2017
|
|
|
|
|
|
|
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/s/
Binfeng (Adeline) Gu
|
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Chief Financial Officer
|
|
|
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Binfeng
(Adeline) Gu
|
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(Principal Financial
Officer), Principal Accounting Officer and Secretary
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|
December
1, 2017
|
|
|
|
|
|
|
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/s/
Xiaoping Guo
|
|
Director
|
|
|
|
Xiaoping Guo
|
|
|
|
December 1, 2017
|
|
|
|
|
|
|
|
/s/
Geyun Wang
|
|
Director, Vice President
|
|
|
|
Geyun Wang
|
|
|
|
December 1, 2017
|
|
|
|
|
|
|
|
/s/
Xiaogang Zhu
|
|
Director
|
|
|
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Xiaogang Zhu
|
|
|
|
December 1, 2017
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|
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/s/
LuLu Sun
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Director
|
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LuLu Sun
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|
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December 1, 2017
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EXHIBIT INDEX
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*
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To be filed by amendment or as an exhibit to a report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended and incorporated herein by reference.
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II-5
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