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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>As
filed with the U.S. Securities and Exchange Commission on July 28, 2021</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Registration
No. 333-</B></FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>UNITED
STATES</B></FONT></P>

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AND EXCHANGE COMMISSION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Washington,
D.C. 20549</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FORM
S-1 </B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>REGISTRATION
STATEMENT</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>UNDER</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THE
SECURITIES ACT OF 1933</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 14pt"><B>China
Recycling Energy Corporation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Exact
name of registrant as specified in its charter)</FONT></P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Nevada</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2870</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>90-1137640</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(State
    or other jurisdiction of<BR>
    incorporation or organization)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Primary
    Standard Industrial <BR>
    Classification Code Number)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(I.R.S.
    Employer <BR>
    Identification Number)</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4/F,
Tower C<BR>
Rong Cheng Yun Gu Building Keji 3rd&nbsp;Road, Yanta District<BR>
Xi An City, Shaan Xi Province, China</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(86)
29-8765-1098</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address,
including zip code, and telephone number, including area code, of registrant&rsquo;s principal executive offices)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>National
Registered Agents, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>701
S Carson St., Ste 200</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Carson
City, NV 89701, USA</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Name,
address, including zip code, and telephone number, including area code, of agent for service)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Copies
to:</I></FONT></P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 49%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>William
                                            S. Rosenstadt, Esq.</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Mengyi
    &ldquo;Jason&rdquo; Ye, Esq.</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Ortoli
    Rosenstadt LLP</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>366
    Madison Avenue, 3<SUP>rd </SUP>Floor</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>New
    York, NY 10017</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Telephone:
    +1-212-588-0022 </B></FONT></P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 49%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Ying
                                            Li, Esq. </B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Guillaume
    de Sampigny, Esq.</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Lisa
    Forcht, Esq.</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Hunter
    Taubman Fischer &amp; Li LLC</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>800
    Third Avenue, Suite 2800</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>New
    York, NY 10022</B></FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Telephone:
    +1-212-530-2206</B></FONT></P></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Approximate
date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 check the following box: &#9746;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. &#9744;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. &#9744;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this Form is a post-effective amendment filed pursuant to Rule 462(d) 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. &#9744;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo;
in Rule 12b2 of the Exchange Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; width: 22%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
    accelerated filer </FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; width: 35%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; width: 25%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated
    filer </FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; width: 18%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-accelerated
    filer </FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller
    reporting company </FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD COLSPAN="2" STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging
    growth company </FONT></TD>
    <TD STYLE="white-space: nowrap; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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&dagger; provided
pursuant to Section 7(a)(2)(B) of the Securities Act. &#9744;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CALCULATION
OF REGISTRATION FEE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Title
    of Class of Securities to be Registered </B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="text-align: center; margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Proposed</B></FONT></P>
                                                                                <P STYLE="text-align: center; margin-top: 0; margin-bottom: 0"><B>Maximum<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;<BR>
                                            Aggregate <BR> Offering<BR> Price<SUP>(1)</SUP></FONT></B></P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Amount
    of <BR>
    Registration <BR>
    Fee </B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.25in; width: 76%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common
    stock, par value $0.001 per share<SUP>(2)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">11,500,000</P><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">1254.65</P><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants
    to purchase shares of common stock<SUP>(3)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;
    </FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;
    </FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common
    stock, par value $0.001 per share, issuable upon exercise of Warrants<SUP>(4)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">11,500,000</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">1264.65</P><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underwriter
    Warrants<SUP>(3)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;
    </FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;
    </FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common
    stock, par value $0.001 per share, issuable upon exercise of Underwriter Warrants<SUP>(5)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$
    </FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">575,000</P><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">62.73</P><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    </FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; border-bottom: black 4.5pt double; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$
    </FONT></TD>
    <TD STYLE="border-bottom: black 4.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">23,575,000</P><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; border-bottom: black 4.5pt double; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$
    </FONT></TD>
    <TD STYLE="border-bottom: black 4.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">2572.03</P></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

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<P STYLE="margin-top: 0; margin-bottom: 0"></P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    registration fee for securities is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, assuming
    the sale of the maximum number of shares at the highest expected offering price, and such estimate is solely for the purpose of calculating
    the registration fee pursuant to Rule 457(o). Includes the offering price attributable to additional shares that the Underwriter
    has the option to purchase to cover over-allotments, if any. </FONT></TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
    accordance with Rule 416(a), the Registrant is also registering an indeterminate number of additional shares of common stock that
    shall be issuable pursuant to Rule 416 to prevent dilution resulting from share splits, share dividends or similar transactions.
    </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
    to Rule 457(g) under the Securities Act, no separate registration fee is required for the Warrants registered hereby.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
    on a per share exercise price for the Warrants of not less than 100% of the public offering price per share of common stock in this
    offering.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Registrant will issue to the Underwriter warrants to purchase that number of shares of common stock equal to an aggregate of five
    percent (5%) of the shares of common stock (the &ldquo;Underwriter Warrants&rdquo;) sold in the offering. The exercise price of the
    Underwriter Warrants is equal to 100% of the offering price of the shares of common stock offered hereby. The Underwriter Warrants
    are exercisable commencing six months from the closing date of the offering at any time, and from time to time, in whole or in part,
    for a period of five years from the date of commencement of sales of the offering</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>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 of 1933 or until the registration statement shall become effective on such date
as the Commission, acting pursuant to said Section 8(a), may determine.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><P STYLE="font: normal 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P></DIV>
    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B>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.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; white-space: nowrap; width: 49%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B>PRELIMINARY
    PROSPECTUS</B></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 49%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B>SUBJECT
    TO COMPLETION, DATED JULY 28, 2021</B></FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 14pt"><B>CHINA
RECYCLING ENERGY CORPORATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Shares
of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Warrants
to purchase up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
Recycling Energy Corporation is offering up to an aggregate of shares of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; common stock, par
value $0.001 per share, and warrants to purchase up to an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock
(the &ldquo;Warrants&rdquo;), at an aggregate assumed offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of common
stock and Warrant which is based on the last reported closing trading price of our common stock on Nasdaq on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
, 2021.&nbsp;The shares of common stock and Warrants will be separately issued, but the shares of common stock and Warrants will be issued
and sold in a combination of [one] share of common stock and [one] Warrant to purchase [one] share of common stock for a combined offering
price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . Each Warrant will be immediately exercisable for one share of common stock at
an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share (not less than 100% of the public offering price of per share
of common stock and Warrant sold in this offering) and expire &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; years after the issuance date.
The offering is being made on a &ldquo;firm commitment&rdquo; basis by the underwriter. See &ldquo;Underwriting.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Our common stock is currently
traded on the Nasdaq Capital Market under the symbol &ldquo;CREG.&rdquo; On July 27, 2021, the last reported sales price for our common
stock was $7.07 per share. As of July 27, 2021, there were 6,583,327 shares of our common stock outstanding. We do not intend to apply
to list the Warrants on any security exchange.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT>&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Investing
in our securities involves a high degree of risks See &ldquo;Risk Factors&rdquo; beginning on page 6.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Per&nbsp;Share<BR>
 of <BR>
Common <BR>
Stock <BR>
and <BR>
related <BR>
Warrant</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Total <BR>
Without<BR>
 Over-Allotment<BR>
 Option</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Total <BR>
With Full<FONT STYLE="font-family: Times New Roman, Times, Serif"><BR> Over-Allotment<BR> Option</FONT></B></P></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assumed public offering price<SUP>(2)</SUP></FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">10,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">11,500,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underwriting discounts<SUP>(2)(3)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</Font></TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">800,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">920,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Proceeds to us, before expenses<SUP>(4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</Font></TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,580,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT>&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

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<P STYLE="margin-top: 0; margin-bottom: 0"></P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assumes
    that the Underwriter does not exercise any portion of its over-allotment option. </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    public offering price and underwriting discount in respect of each share of common stock and accompanying Warrant corresponds to
    a public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
    the underwriting agreement, upon the closing of the IPO, we will pay Univest Securities, LLC (the &ldquo;Underwriter&rdquo; or &ldquo;Univest&rdquo;)
    a discount equal to eight percent (8%) of the gross proceeds raised in the offering, a non-accountable expense allowance equal
    to one percent (1%) of the gross proceeds of the offering, as well as underwriter warrants to purchase that number of shares of common
    stock and accompanying Warrants equal to five percent (5%) of the shares of common stock and Warrants sold in the offering, including
    upon exercise by the Underwriter of its over-allotment option (&ldquo;Underwriter Warrants&rdquo;). The Underwriter Warrants shall
    be exercisable at any time, and from time to time, in whole or in part, during the period commencing 180 days from the date of commencement
    of sales of the offering, which period shall not extend further than five years from the date of commencement of sales of the offering
    in compliance with FINRA Rule 5110(g)(8)(A). The Underwriter Warrants are exercisable at a per share price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    which is 100% of the public offering price. See &ldquo;underwriting&rdquo; in this prospectus for more information regarding our
    arrangements with the underwriter.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    total estimated expenses related to this offering are set forth in the section entitled &ldquo;Expenses Relating to This Offering&rdquo;.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
offering is being underwritten on a firm commitment basis. We have granted the Underwriter an option exercisable within 45 days from
the date of this prospectus to purchase up to an additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common
stock and/or Warrants from us at a price of $ per share and/or up to an additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Warrants at a price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per Warrant, less, in each case, underwriting discounts.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Neither
the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.</B>&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Underwriter expects to deliver the shares of common stock and accompanying Warrants against payment as set forth under &ldquo;Underwriting&rdquo;,
on or about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2021.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_001.jpg" ALT="" STYLE="height: 79px; width: 250px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
date of this prospectus is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2021</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>TABLE
OF CONTENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Page</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_001">Prospectus
    Summary</A></FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_002">Risk
    Factors</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">6</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_003">Special
    Note Regarding Forward-Looking Statements</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">22</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_004">Use
    of Proceeds</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">23</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_005">Dividend
    Policy</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">24</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_006">Capitalization</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">25</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_007">Dilution</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">26</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_008">Management&rsquo;s
    Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">27</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_009">Business</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">36</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_010">Management</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">63</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_011">Executive
    Compensation</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">67</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_012">Principal
    Shareholders</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">70</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_013">Related
    Party Transactions</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">71</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_014">Description
    of Securities</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">72</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_015">Market
    Price and Dividend on Our Common Stock and Related Stockholder Matters</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">73</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_016">Shares
    Eligible for Future Sale</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">74</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_017">Underwriting</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">76</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_018">Legal
    Matters</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">81</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_019">Experts</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">81</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_021">Where
    You Can Find Additional Information</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">81</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_022">Index
    to Financial Statements</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-1</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>You
should rely only on the information contained in this prospectus. Neither we, nor the Underwriter, have authorized anyone to provide
you with any information other than that contained in this prospectus, and neither we, nor the Underwriter, take responsibility for any
other information others may give you. We are offering to sell, and seeking offers to buy, shares of common stock and Warrants only in
jurisdictions where such offers and sales are permitted. The information in this prospectus is accurate only as of its date, regardless
of its time of delivery or the time of any sale of shares of common stock and Warrants. Our business, financial condition, results of
operations and prospects may have changed since that date.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Conventions
that Apply to this Prospectus</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise indicated or the context requires otherwise, references in this prospectus to, references to:</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Affiliated
                                            Entities&rdquo; are to our wholly-owned subsidiaries, Yinghua. Sifeng, Sifeng&rsquo;s wholly-owned
                                            subsidiaries, Huahong and Shanghai TCH, Shanghai TCH&rsquo;s wholly-owned subsidiary Xi&rsquo;an
                                            TCH, Xi&rsquo;an TCH&rsquo;s wholly-owned subsidiary, Erdos TCH, Xi&rsquo;an TCH&rsquo;s
                                            90% owned and Shanghai TCH&rsquo;s 10% owned subsidiary, Xi&rsquo;an Zhonghong New Energy
                                            Technology Co., Ltd., and Xi&rsquo;an TCH&rsquo; wholly-owned subsidiary, Zhongxun;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;China&rdquo;
                                            or the &ldquo;PRC&rdquo; are to the People&rsquo;s Republic of China, excluding Taiwan and
                                            the special administrative regions of Hong Kong and Macau for the purposes of this prospectus
                                            only;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Erdos
                                            TCH&rdquo; are to Erdos TCH Energy Saving Development Co., Ltd., a PRC company and wholly-
                                            owned subsidiary of Xi&rsquo;an TCH;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Huahong&rdquo;
                                            are to Shanghai TCH Energy Technology Co., Ltd., a PRC company and wholly- owned subsidiary
                                            of Sifeng;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Shanghai
                                            TCH&rdquo; are to Huahong New Energy Technology Co., Ltd., a PRC company and wholly- owned
                                            subsidiary of Sifeng;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Sifeng&rdquo;
                                            are to Sifeng Holdings Co., Ltd., a limited liability company organized under the laws of
                                            the PRC, which is wholly-owned by the Company;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;we,&rdquo;
                                            &ldquo;us,&rdquo; or &ldquo;the Company&rdquo; are to one or more of China Recycling Energy
                                            Corporation and its subsidiaries, as the case may be;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Xi&rsquo;an
                                            TCH&rdquo; are to Xi&rsquo;an TCH Energy Technology Co., Ltd., a PRC company and wholly-
                                            owned subsidiary of Shanghai TCH;</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Yinghua&rdquo;
                                            are to Shanghai Yinghua Financial Leasing Co., LTD., a limited liability company organized
                                            under the laws of PRC; and</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;Zhongxun&rdquo;
                                            are to Zhongxun Energy Investment (Beijing) Co., Ltd., a PRC company and wholly- owned subsidiary
                                            of Xi&rsquo;an TCH.</FONT></TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is conducted by our subsidiaries, using Renminbi, or RMB, the official currency of China. Our consolidated financial statements
are presented in United States dollars. In this prospectus, we refer to assets, obligations, commitments and liabilities in our consolidated
financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars
(&ldquo;$&rdquo; or &ldquo;US$&rdquo;), determined as of a specific date or for a specific period. Changes in the exchange rate will
affect the amount of our obligations and the value of our assets in terms of United States dollars, which may result in an increase or
decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed
in dollars).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>
<DIV STYLE="padding: 5pt; border: Black 1.5pt solid; width: 98%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_001"></A>PROSPECTUS
SUMMARY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>This
summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain
all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before
making an investment in our shares of common stock. You should carefully consider, among other things, our consolidated financial statements
and the related notes and the sections entitled &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations&rdquo; included elsewhere in this prospectus.</I>&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Overview</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a pioneer in waste energy recycling and a developer of energy efficiency solutions for various energy intensive industries in China.
We use Build-Operate-Transfer (&ldquo;BOT&rdquo;) model to provide energy saving and recovery facilities for multiple energy intensive
industries in China. Our waste energy recycling projects allow customers which 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 nonferrous metal plants. We construct our projects at our customer&rsquo;s facility and the electricity
produced is used on-site by the customer.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
develop fully customized projects across several verticals to better meet customer&rsquo;s energy recovery needs. 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 by 5% to 20%, lower their
operating costs, and in optimal circumstances, extend the life of primary manufacturing equipment, while still complying with government
regulations on emissions. Specifically, our power generation systems use the waste heat and pressure of flue gas generated during customers&rsquo;
daily course of energy usage, such as manufacturing, and carry out necessary dust removal and desulfurization process afterwards, before
putting the renewed energy back into use. The purified flue gas can reduce the wear and corrosion of pipes, valves and fans on the original
production line, so as to improve the service life of these equipment.&nbsp;In addition, our waste energy recycling projects allow our
industrial customers to reduce their reliance on China&rsquo;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 designed to be more environmentally friendly than other forms of power generation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 20 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 provide the
initial capital investment for customers in exchange for a long-term production agreement with attractive returns on investment. We in
turn efficiently recapture our costs through the stream of lease payments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are headquartered in China. Our principal executive offices are located at 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd&nbsp;Road,
Yanta District, Xi&rsquo;an City, Shaanxi Province, China, and our telephone number at this location is +86-29-8765-1098.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Corporate
History</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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, in the Peoples Republic
of China (&ldquo;PRC&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>
</DIV>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

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<DIV STYLE="padding: 5pt; border: Black 1.5pt solid; width: 98%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is primarily conducted through our wholly-owned subsidiaries, Yinghua and Sifang, Sifang&rsquo;s wholly-owned subsidiaries,
Huahong and Shanghai TCH, Shanghai TCH&rsquo;s wholly-owned subsidiaries, Xi&rsquo;an TCH, Xi&rsquo;an TCH&rsquo;s wholly-owned subsidiary,
Erdos TCH and Xi&rsquo;an TCH&rsquo;s 90% owned and Shanghai TCH&rsquo;s 10% owned subsidiary, Xi&rsquo;an Zhonghong New Energy Technology
Co., Ltd., and Zhongxun. Shanghai TCH was established as a foreign investment enterprise in Shanghai under the laws of the PRC on May
25, 2004, and currently has registered capital of $29.80 million. Xi&rsquo;an TCH was incorporated in Xi&rsquo;an, Shaanxi Province under
the laws of the PRC in November 2007. Erdos TCH was incorporated in April 2009. Huahong was incorporated in February 2009. Xi&rsquo;an
Zhonghong New Energy Technology Co., Ltd. was incorporated in July 2013. Xi&rsquo;an TCH owns 90% and Shanghai TCH owns 10% of Zhonghong.
Zhonghong provides 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&rsquo;an TCH.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to its existing power supply business, the Company is in the process of transforming and expanding into an energy storage integrated
solution provider. We plan to pursue disciplined and targeted expansion strategies for market areas we currently do not serve by acquiring
certain target energy storage companies. We actively seek and explore opportunities to apply energy storage technologies to new industries
or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations,&nbsp;remote
islands without electricity,&nbsp;and cities with multi-energy supplies. We intend to commence these acquisitions upon obtaining approval
from Nasdaq and completion of this offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s organizational chart as of the date of this prospectus is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_002.jpg" ALT="" STYLE="height: 383px; width: 550px"></P>

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</DIV>
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<DIV STYLE="padding: 5pt; border: Black 1.5pt solid; width: 98%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Risk
Factor Summary</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investing
in our securities involves a high degree of risk. Below is a summary of material factors that make an investment in our securities speculative
or risky. Importantly, this summary does not address all of the risks that we face. Please refer to the information contained in and
incorporated by reference under the heading &ldquo;Risk Factors&rdquo; on page 6 of this prospectus for additional discussion of the
risks summarized in this&nbsp;risk factor summary&nbsp;as well as other risks that we face. These risks include, but are not limited
to, the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    economic, financial, and other impacts of the&nbsp;COVID-19&nbsp;pandemic;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">increased
    competition in the business and industry that we are involved in;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">reliance
    on a limited number of customers;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">technology
    and cyber security risk;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    ability to successfully expand in our existing market segments and penetrate new market segments;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    financial performance, including our revenues, cost of revenues, operating expenses, and our ability to attain and sustain profitability</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    ability to generate and sustain positive cash flow;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    ability to attract and retain qualified employees and key personnel;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">general
    business, economic conditions in China where all of our operations are located;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    uncertainty of the political and regulatory development in China;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    occurrence of natural and unnatural catastrophic events and claims resulting from such events;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">volatility
    in our common stock price;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">dilution
    to existing holders of our common stock;</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Implications
of Being a Smaller Reporting Company</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
qualify as an &ldquo;smaller reporting company&rdquo; as defined in Rule 405 of the Securities Act and Item 10 of Regulation S-K. A smaller
reporting company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public
companies. These provisions include:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    ability to include only two&nbsp;years of audited financial statements and only two&nbsp;years of related management&rsquo;s discussion
    and analysis of financial condition and results of operations disclosure;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the&nbsp;reduced
    disclosure obligation regarding executive compensation under Item&nbsp;402 of Regulation&nbsp;S-K;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">an
    exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to
    the Sarbanes-Oxley Act of 2002.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may take advantage of these provisions for so long as we remain a&nbsp;smaller reporting company. We may continue to be a&nbsp;smaller
reporting company&nbsp;if either (i)&nbsp;the market value of our stock held by&nbsp;non-affiliates&nbsp;is less than $250&nbsp;million
or (ii)&nbsp;our annual revenue was less than $100&nbsp;million during the most recently completed fiscal year and the market value of
our stock held by&nbsp;non-affiliates&nbsp;is less than $700&nbsp;million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Corporate
Information</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
principal executive office is located at 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd Road, Yanta District, Xi&rsquo;an City, Shaanxi
Province, China. The telephone number of our principal executive offices is (86) 29-8769-1097. Investors should submit any inquiries
to the address and telephone number of our principal executive offices. Our corporate website is www.creg-cn.com. The information contained
on our websites is not a part of this prospectus. Our agent for service of process in the United States is National Registered Agents,
Inc., located at 701 S Carson St., Suite 200, Carson City, NV 89701, USA.</FONT></P>

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</DIV>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

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<DIV STYLE="padding: 5pt; border: Black 1.5pt solid; width: 98%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
Offering</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares
    Offered by us: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of common stock (excluding the over-allotment option) </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares
    of Common Stock Outstanding Prior to Completion of Offering: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">6,583,327 shares of common stock*</P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares
    of Common Stock to be Outstanding after Offering: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of common stock, excluding shares of common stock underlying the Warrants and the Underwriter Warrants. </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">Over-Allotment
                                            Option:</P></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">We have granted to the underwriter the option, exercisable for 45 days
from the date of closing of this offering, to purchase up to an additional 15% of the total number of shares of common stock to be offered
by the Company in this offering.</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top; width: 27%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants
    Offered by us:</FONT></TD>
    <TD STYLE="text-align: left; width: 3%; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 70%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants
    to purchase&nbsp;&nbsp;&nbsp;&nbsp;of our shares of common stock (or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock if the underwriter
    exercises its option to purchase such additional Warrants in full). Each Warrant will have an exercise price of US$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share of common stock, exercisable commencing on the date of issuance and will expire in five years from the date of issuance. The
    terms of the Warrants will be governed by a warrant agent agreement, dated as of the closing date of this offering, that we expect
    to be entered into among us and American Stock Transfer &amp; Trust Company LLC, or the Warrant Agent. This prospectus also relates
    to the offering of the shares of common stock issuable upon exercise of the Warrants. For additional information regarding the Warrants,
    see &ldquo;Description of Share Capital.&rdquo;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    shares of common stock and Warrants will be separately issued, but the shares of common stock and Warrants will be issued and sold
    to purchasers in a combination of one share of common stock and one Warrant to purchase one share of common stock for a combined
    offering price of US$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assumed
    Offering Price per Share and related Warrant: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share of common stock and Warrant</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
    Proceeds to us Before Expenses: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">approximately
    $10,000,000, or $11,500,000&nbsp;if the underwriter exercises its over-allotment
option in full, less underwriter discounts and estimated offering expenses. See &ldquo;Underwriting.&rdquo;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 27%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trading
    Symbol:</FONT></TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 70%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&ldquo;CREG&rdquo;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Transfer
    Agent:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities
                                            Transfer Corporation</FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2901
    Dallas Pkwy Suite 380</FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Plano,
    TX 75093</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk
    Factors:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investing
    in these securities involves a high degree of risk. As an investor, you should be able to bear a complete loss of your investment.
    You should carefully consider the information set forth in the &ldquo;Risk Factors&rdquo; section of this prospectus before deciding
    to invest in our shares of common stock.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Use
    of Proceeds: </FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    expect to receive net proceeds of approximately US$&nbsp;&nbsp;&nbsp;&nbsp;from this offering, based on an assumed public offering
    price of US$&nbsp;&nbsp;&nbsp;&nbsp;per or share of common stock and Warrant and assuming the underwriter(s) do not exercise their
    option to purchase additional shares of common stock or Warrants and excluding the shares of common stock issuable upon the exercise
    of the Warrants or other outstanding warrants, after deducting underwriting discounts  and estimated offering expenses
    payable by us.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lock-up</FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We,
                                            our directors and executive officers, and our existing beneficial owners of 5% or more of
                                            our outstanding shares of common stock have agreed with the Underwriter, subject to certain
                                            exceptions, not to sell, transfer or otherwise dispose of any shares of common stock for
                                            a period ending 6 months after the closing of the offering. See &ldquo;Underwriting&rdquo;
                                            for more information.</FONT></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
                                            including 30,411 shares of common stock issuable upon exercise of issued and outstanding
                                            warrants.</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>
</DIV>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>
<DIV STYLE="padding: 5pt; border: Black 1.5pt solid; width: 98%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Summary
Financial Information</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the table below, we provide you with historical selected financial data for the fiscal years ended December, 31, 2020 and December 31,
2019 and for the three months ended March 31, 2021 and 2020. This information is derived from our consolidated financial statements included
elsewhere in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period.
When you read this historically selected financial data, it is important that you read it along with the historical financial statements
and related notes and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; included
elsewhere in this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the&nbsp;Fiscal Years Ended<BR> December&nbsp;31,</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">US$</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">US$</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">Statement of operation data:</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-indent: -9pt; padding-left: 9pt">Revenues</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">867,431</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Operating (income) expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(5,827,019</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,974,519</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Income/(Loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,827,019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(9,107,088</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Income Tax Benefit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(3,024,807</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Net income/(Loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,050,824</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(8,772,757</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Earnings per share, basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.58</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(5.61</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">Weighted average shares of common stock outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,564,373</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,564,940</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Balance sheet data</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">108,203,797</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">64,619,204</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">137,137,520</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">123,845,141</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">39,042,407</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">36,250,800</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">44,983,327</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">45,215,595</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Total equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">92,154,193</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">78,629,546</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT>&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">For the Three
    Months Ended<BR> December&nbsp;31,</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">US$</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">US$</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; font-weight: bold; text-align: left">Statement of operation
    data:</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">$</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">$</TD>
    <TD STYLE="text-align: right">-</TD><TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 76%; text-align: left">Operating (income) expenses</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">273,092</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">154,178</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Income/(Loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(273,092</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(154,178</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Income Tax Payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Net income/(Loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(277,224</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(598,551</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Earnings per share, basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.09</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.28</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Weighted average shares of common
    stock outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,177,050</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,135,340</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; font-weight: bold; text-align: left">Balance sheet
    data</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">144,646,517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">108,203,797</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">173,549,441</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">137,137,520</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">38,563,684</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">39,042,407</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">44,559,594</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">44,983,327</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Total equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">128,989,847</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">92,154,193</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

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</DIV>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_002"></A>RISK
FACTORS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>An
investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider
carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled
&ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operation&rdquo; and our consolidated financial
statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash
flow could be materially and adversely affected, which could cause the trading price of our shares of common stock to decline, resulting
in a loss of all or part of your investment. The risks described below and in the sections referenced above are not the only ones that
we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only
consider investing in our shares of common stock if you can bear the risk of loss of your entire investment.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Risks
Related to Our Business Operations</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>In
recent years, the growth of Chinese economy has experienced slowdown, and if the growth of the economy continues to slow or if the economy
contracts, our financial condition may be materially and adversely affected.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
rapid growth of the PRC economy has historically resulted in widespread growth opportunities in industries across China. As a result
of the global financial crisis and the inability of enterprises to gain comparable access to the same amounts of capital available in
past years, the business climate has changed and growth of private enterprise in the PRC have slowed down. An economic slowdown could
have an adverse effect on our financial condition. Further, if economic growth slows, and if, in conjunction, inflation is allowed to
proceed unchecked, our costs would likely increase, and there can be no assurance that we would be able to increase our prices to an
extent that would offset the increase in our expenses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
depend on the waste energy of our customers to generate electricity</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
acquire waste pressure, heat and gases from steelworks, cement, coking or metallurgy plants and use these to generate power. Therefore,
our power generating capacity depends on the availability of an adequate supply of our &ldquo;raw materials&rdquo; from our customers.
If we do not have enough supply, power generated for those customers will be impeded. Since our contracts are often structured so that
we receive compensation based on the amount of energy we supply, a reduction in production may negatively affect our revenues and results
of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
revenue depends on gaining new customers and project contracts and purchase commitments from customers</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently
and historically, we have only had a limited number of projects in process at any time. Thus, our revenues have historically resulted,
and are expected to continue in the immediate future to result, primarily from the sale and operation of our waste energy recycling projects
that, once completed, typically produce ongoing revenues from energy production. Customers may change or delay orders for any number
of reasons, such as force majeure or government approval factors that are unrelated to us. As a result, in order to maintain and expand
our business, we must continue to develop and obtain new orders. However, it is difficult to predict whether and when we will receive
such orders or project contracts, due to the lengthy process, which may be affected by factors that we do not control, such as market
and economic conditions, financing arrangements, commodity prices, environmental issues and government approvals.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may require additional funds to run our business and may be required to raise these funds on terms which are not favorable to us or which
reduce our stock price.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may need to complete additional equity or debt financings to fund our operations. Our inability to obtain additional financing could
adversely affect our business. Financings may not be available at all or on terms favorable to us. In addition, these financings, if
completed, may not meet our capital needs and could result in substantial dilution to our stockholders.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Adverse
changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth
of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Substantially
all of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects
are subject to economic, political and legal developments in China. Although the Chinese economy is no longer a planned economy, the
PRC government continues to exercise significant control over China&rsquo;s economic growth through direct allocation of resources, monetary
and tax policies, and a host of other government policies such as those that encourage or restrict investment in certain industries by
foreign investors, control the exchange between RMB and foreign currencies, and regulate the growth of the general or specific market.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
government involvements have been instrumental in China&rsquo;s significant growth in the past 30 years. In response to the recent global
and Chinese economic downturn, the PRC government has adopted policy measures aimed at stimulating the economic growth in China. If the
PRC government&rsquo;s current or future policies fail to help the Chinese economy achieve further growth or if any aspect of the PRC
government&rsquo;s policies limits the growth of our industry or otherwise negatively affects our business, our growth rate or strategy,
our results of operations could be adversely affected as a result.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
the slow growth of global economy has also resulted in tighter credit conditions, which may lead to higher financing costs. Although
poor market conditions can act as an incentive for our customers to reduce their energy costs, if the global economic slowdown persists
and has material adverse effects on our customers&rsquo; business, our customers may delay or cancel their plan of installing waste energy
recycling projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Decreases
in the price of coal, oil and gas or a decline in support for &ldquo;green&rdquo; energy technologies could reduce demand for our waste
energy recycling projects, which could materially harm our ability to grow our business</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Higher
coal, oil and gas prices provide incentives for customers to invest in &ldquo;green&rdquo; energy technologies such as our waste energy
recycling projects that reduce their need for fossil fuels. Conversely, lower coal, oil and gas prices would tend to reduce the incentive
for customers to invest in capital equipment to produce electric power or seek out alternative energy sources. Demand for our projects
and services depends in part on the current and future commodity prices of coal, oil and gas. We have no control over the current or
future prices of these commodities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, support by governments, corporations and individuals for &ldquo;green&rdquo; energy technologies may change. Because of the
ongoing development of, and the possible change in support for, &ldquo;green&rdquo; energy technologies, we cannot assure you that negative
changes to this industry will not occur. Changes in government or popular support for &ldquo;green&rdquo; energy technologies could have
a material adverse effect on our business, prospects and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Changes
in the growth of demand for or pricing of electricity could reduce demand for our waste energy recycling projects, which could materially
harm our ability to grow our business</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
revenues are dependent on the ability to provide savings on energy costs for our clients. According to the National Bureau of Statistics
of the PRC, China&rsquo;s total electricity consumption in 2020 was 7.511 trillion kilowatt-hours, up 3.1 percent year on year. Electricity
consumption increases due to the continued development of the Chinese economy. However, such growth is unpredictable and depends on general
economic conditions and consumer demand, both of which are beyond our control. Furthermore, pricing of electricity in the PRC is set
in advance by the state or local electricity administration and may be artificially depressed by governmental regulation or influenced
by supply and demand imbalances. If these changes reduce the cost of electricity from traditional sources of supply, the demand for our
waste energy recycling projects could be reduced, and therefore, could materially harm our ability to grow our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
are not enrolled in the PRC&rsquo;s employee&rsquo;s housing funds program, and as a result, Xi&rsquo;an Erdos and its subsidiary may
be subject to future additional requirements should local government regulations on housing funds change.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Social Security Law of the PRC, or the Social Security Law, which was promulgated by the SCNPC on October 28, 2010 and amended
on December 29, 2018, employers shall pay the basic pension insurance, medical insurance, work-related injury insurance, unemployment
insurance and maternity insurance for employees. We have been complying with local regulations regarding social security and employee
insurance. We have not received any notification or warning from PRC authorities. We have not provided employees with housing funds.
Additionally, the central government promulgated rules regarding employees housing funds. For example, in accordance with the Regulations
on Management of Housing Provident Fund (the &ldquo;Regulations of HPF&rdquo;), which were promulgated by the PRC State Council on April
3, 1999, and last amended on March 24, 2002, employers must register at the designated administrative centers and open bank accounts
for employees&rsquo; housing funds deposits. Employers and employees are also required to pay and deposit housing funds in an amount
no less than 5% of the monthly average salary of each of the employees in the preceding year in full and on time. Our operating subsidiaries
had not opened such bank accounts or deposited its employees&rsquo; housing funds. We believe that we are currently not in violation
of the housing funds. However, if local government adopts new rules requiring employers to provide housing funds to employees in the
future, we will be required to provide housing funds to our employees, failing which we may be subject to administrative and monetary
penalties.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>A
lack of insurance coverage could expose us to significant costs and business disruption.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not acquired insurance to cover assets, property and potential liability of our business. The lack of insurance could leave our
business inadequately protected from loss. If we were to incur substantial losses or liabilities due to fire, explosions, floods, other
natural disasters or accidents or business interruption, our results of operations could be materially and adversely affected.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>A
downturn in the Chinese economy may slow down our growth and profitability</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
growth of the Chinese economy has been uneven across geographic regions and economic sectors. There is no assurance that growth of the
Chinese economy will be steady or that any downturn will not have a negative effect on our business. Our profitability will decrease
if less energy is consumed due to a downturn in the Chinese economy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
heavy reliance on the experience and expertise of our management may cause adverse impacts on us if a management member departs</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
depend on key personnel for the success of our business. Our business may be severely disrupted if we lose the services of our key executives
and employees or fail to add new senior and middle managers to our management. We do not maintain key person life insurance policies
on any of our employees. The loss of one or more of our key employees or groups could seriously harm our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
future success is heavily dependent upon the continued service of our key executives. We also rely on a number of key technology staff
for the operation of our company. Our future success is also dependent upon our ability to attract and retain qualified senior and middle
managers to our management team. If one or more of our current or future key executives or employees are unable or unwilling to continue
in their present positions, we may not be able to easily replace them, and our business may be severely disrupted. In addition, if any
of these key executives or employees joins a competitor or forms a competing company, we could lose customers and suppliers and incur
additional expenses to recruit and train personnel. We do not maintain key-man life insurance for any of our key executives.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may need more capital for the operation and failure to raise capital we need may delay the development plan and reduce the profits</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we do not have adequate income or capital to meet our needs for expansion of our operations, we will need to seek financing to continue
our business development. If we fail to acquire adequate financial resources at acceptable terms, we might have to postpone our proposed
business development plans and reduce projections of our future incomes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
use of a &ldquo;Build-Operate-Transfer&rdquo; model requires us to invest substantial financial and technical resources in a project
before we deliver a waste energy recycling project</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
use a &ldquo;Build-Operate-Transfer&rdquo; model to provide our waste energy recycling projects to our customers. This process requires
us to provide significant capital at the beginning of each project. The design, construction and completion of a waste energy recycling
project is highly technical and the time necessary to complete a project can take anywhere from three to 12 months without any delays,
including delays outside our control such as from the result of customer&rsquo;s operations, and we incur significant expenses as part
of this process. Our initial cash outlay and the length of the delivery time makes us particularly vulnerable to the loss of a significant
customer or contract because we may be unable to quickly replace the lost cash flow.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
BOT model and the accounting for our projects as sales-type leases could result in a difference between our revenue recognition and our
cash flows</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we recognize a large portion of the revenue from each project when it goes on-line, all of the cash flow from the project is received
in even monthly payments across the term of the lease. Specifically, upon the completion of a project construction, a one-time sale is
recorded with approximately 30% margin and income is recognized from the recurring cash lease payments over the course of the lease term
at a constant periodic rate. On the other hand, contingent rental income is recognized when the actual electricity production is in excess
of the minimum lease payments. Although our revenues may be high, the initial cash outlay required for each project is substantial and
even with the recovery of this cost in the early years of each lease, we may need to raise additional capital resulting in a dilution
in your holdings. This discrepancy between revenue recognition and cash flow could also contribute to volatility in our stock price.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>There
is collection risk associated with payments to be received over the terms of agreements with customers of our waste energy recycling
projects</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are dependent in part on the viability of our customers for collections under our BOT model. Customers may experience financial difficulties
that could cause them to be unable to fulfill their contractual payment obligations to us. Although our customers are required to provide
deposits or other guarantees to secure their obligations to provide us the minimum payments from leasing our waste energy recycling apparatuses,
there is no guarantee that such collateral will be sufficient to meet all obligations under the respective contract. As a result, our
future revenues and cash flows could be adversely affected.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may not be able to assemble and deliver our waste energy recycling projects as quickly as customers may require which could cause us
to lose sales and could harm our reputation</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may not be able to assemble our waste energy recycling projects and deliver them to our customers at the times they require.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Manufacturing
delays and interruptions can occur for many reasons, including, but not limited to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    failure of a supplier to deliver needed components on a timely basis or of acceptable quality;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">equipment
    failures;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">personnel
    shortage;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">labor
    disputes; or</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">transportation
    disruptions.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assembly
of our waste energy recycling projects is complex. If we fail to assemble and deliver our waste energy recycling projects in a timely
fashion, our reputation may be harmed, we may jeopardize existing orders and lose potential future sales, and we may be forced to pay
penalties to our customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
operate in an emerging competitive industry and if we are unable to compete successfully our revenue and profitability will be adversely
affected</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
the PRC waste energy recycling market is fragmented but competitive. As the industry evolves, we anticipate that competition will increase.
We currently face competition primarily from companies that focus on one type of waste energy recycling project or one industry in the
waste energy recycling market, some of which may have more expertise in their area of focus than we do. We also compete against companies
that have substantial competitive advantages because of longer operating histories and larger marketing budgets, as well as substantially
greater financial and other resources than us. Our largest potential clients may choose to build their own systems. National or global
competitors could enter the market with more substantial financial and workforce resources, stronger existing customer relationships,
and greater name recognition or could choose to target medium to small companies in our traditional markets. Competitors could focus
their substantial resources on developing a more attractive solution set than ours or products with technologies that reduce demand for
energy beyond what our solutions can provide and at cheaper prices. Competition also places downward pressure on our contract prices
and profit margins, which presents us with significant challenges in our ability to maintain strong growth rates and acceptable profit
margins. If we are unable to meet these competitive challenges, we could lose market share to our competitors and experience an overall
reduction in our profits.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>If
we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages and compelled to defend against
litigation</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
our waste energy recycling projects, methods, processes and other technologies infringe proprietary rights of other parties, we may have
to obtain licenses (which may not be available on commercially reasonable terms, if at all), redesign our waste energy recycling projects
or processes, stop using the subject matter claimed in the asserted patents, pay damages, or defend litigation or administrative proceedings,
which may be costly whether we win or lose. All of the above could result in a substantial diversion of valuable management resources
and we could incur substantial costs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe we have taken reasonable steps, including prior patent searches, to ensure we have the freedom to operate under our intellectual
property rights, and that our development and commercialization efforts can be carried out as planned without infringing others&rsquo;
proprietary rights. However, a third-party patent may have been filed or will be filed that may contain subject matter of relevance to
our development, causing a third-party patent holder to claim infringement. Resolution of such issues sometimes results in lengthy and
costly legal proceedings, the outcome of which we cannot predict accurately.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may not be able to adequately respond to changes in technology affecting the waste energy recycling industry</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
industry could experience rapid technological changes and new product introductions. Current competitors or new market entrants could
introduce new or enhanced products with features which render the systems used in our projects obsolete or less marketable. Our future
success will depend, in part, on our ability to respond to changing technology and industry standards in a timely and cost-effective
manner. We may not be successful in effectively using new technologies, developing new systems or enhancing our existing systems and
technology on a timely basis. Our new technologies or enhancements may not achieve market acceptance. Our pursuit of new technologies
may require substantial time and expense. We may need to license new technologies to respond to technological change. These licenses
may not be available to us on terms that we can accept. Finally, we may not succeed in adapting our projects to new technologies as they
emerge.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
are dependent on third parties for manufacturing key components and delays by third parties may cause delays in assembly and increased
costs to us</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely upon third parties for the manufacture of key components. Delays and difficulties in the manufacturing of our waste energy recycling
projects could substantially harm our revenues. There are limited sources of supply for some key waste energy recycling project components.
Business disruptions, financial difficulties of the manufacturers or suppliers of these components, or raw material shortages could increase
our costs, reduce the availability of these components or delay our delivery of projects to customers. To date, we have been able to
obtain adequate supplies of these key components. If we are unable to obtain a sufficient supply of required components, we could experience
significant delays in construction, which could result in the loss of orders and customers, and could materially and adversely affect
our business, financial condition and results of operations. If the cost of components increases, we may not be able to pass on price
increases to our customers if we are to remain competitively priced. This would reduce profit, which in turn would reduce the value of
your investment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Increases
in income tax rates, changes in income tax laws or disagreements with tax authorities could adversely affect our business, financial
condition or results of operations.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to income taxes in the United States and in certain foreign jurisdictions in which we operate. Increases in income tax rates
or other changes in income tax laws that apply to our business could reduce our after-tax income from such jurisdiction and could adversely
affect our business, financial condition or results of operations. Our operations outside the United States generate a significant portion
of our income. In addition, the United States and many of the other countries in which our products are distributed or sold, including
countries in which we have significant operations, have recently made or are actively considering changes to existing tax laws. For example,
the Tax Cuts and Jobs Act (the &ldquo;TCJ Act&rdquo;) was signed into law in the United States in 2017. The changes in the TCJ Act are
broad and complex and we are continuing to examine the impact the TCJ Act may have on our business and financial results. This provisional
expense is subject to change, possibly materially, due to, among other things, changes in estimates, interpretations and assumptions
we have made, changes in Internal Revenue Service (IRS) interpretations, the issuance of new guidance, legislative actions, changes in
accounting standards or related interpretations in response to the TCJ Act and future actions by states within the United States that
have not yet adopted state-level laws similar to the TCJ Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additional
changes in the U.S. tax regime or in how U.S. multinational corporations are taxed on foreign earnings, including changes in how existing
tax laws are interpreted or enforced, could adversely affect our business, financial condition or results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are also subject to regular reviews, examinations and audits by the IRS and other taxing authorities with respect to income and non-income
based taxes both within and outside the United States. Economic and political pressures to increase tax revenues in jurisdictions in
which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and
the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in
an adverse impact on our business, financial condition or results of operations. In addition, in connection with the Organization for
Economic Co-operation and Development Base Erosion and Profit Shifting project, companies are required to disclose more information to
tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Risks
Related to the People&rsquo;s Republic of China</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Impact
of Current Coronavirus (COVID-19) Pandemic on the Company</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2019, a novel strain of coronavirus (COVID-19) was reported and the World Health Organization has declared the outbreak to constitute
a &ldquo;Public Health Emergency of International Concern.&rdquo; This contagious disease outbreak, which continues to spread to additional
countries, and is disrupting supply chains and affecting production and sales across a range of industries as a result of quarantines,
facility closures, and travel and logistics restrictions in connection with the outbreak. As to the Company, there was a significant
stagnation of the accounts receivable in 2020 because businesses were mandated by the federal and local government to halt operation.
Although the accounts receivable as of 2021 have been restored to normal, we cannot guarantee that our operations will be not be similarly
impacted in the future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Adverse
changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth
of China, which could materially and adversely affect the demand for our projects and our business</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
all of our operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are
affected significantly by economic, political and legal developments in China. The PRC economy differs from the economies of most developed
countries in many respects, including:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    amount of government involvement;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    level of development;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    growth rate;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    control of foreign exchange; and</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    allocation of resources.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the PRC economy has grown significantly since the late 1970s, the growth has been uneven, both geographically and among various sectors
of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures benefit the overall PRC economy, but may also have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that
are applicable to us.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has in recent
years implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in
China is still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC
government could materially and adversely affect our business. The PRC government also exercises significant control over economic growth
in China through the allocation of resources, controlling payment of foreign currency- denominated obligations, setting monetary policy
and providing preferential treatment to particular industries or companies. Efforts by the PRC government to slow the pace of growth
of the PRC economy could result in decreased capital expenditure by energy users, which in turn could reduce demand for our products.
In addition, the PRC government, which regulates the power industry in China, has adopted laws related to renewable energy, and has adopted
policies for the accelerated development of renewable energy as part of a Development Plan promulgated on August 31, 2007.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
adverse change in the economic conditions or government policies in China could have a material adverse effect on the overall economic
growth and the level of energy investments and expenditures in China, which in turn could lead to a reduction in demand for our products
and consequently have a material adverse effect on our business and prospects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Restrictions
under PRC law on our subsidiaries&rsquo; ability to make dividends and other distributions could materially and adversely affect our
ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct
our business</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
conduct all of our business through our consolidated subsidiaries and affiliated companies operating in the PRC. We rely on dividends
paid by these consolidated subsidiaries for our cash needs, including the funds necessary to pay any dividends and other cash distributions
to our stockholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities established
in the PRC is subject to limitations imposed by government regulations. Regulations in the PRC currently permit payment of dividends
only out of accumulated profits as determined in accordance with accounting standards and regulations in the PRC, subject to certain
statutory procedural requirements and these may not be calculated in the same manner as US GAAP. In addition, each of our subsidiaries
in China is required to set aside a certain amount of its after-tax profits each year, if any, to fund certain statutory reserves. These
reserves are not distributable as cash dividends. Furthermore, if our subsidiaries in China incur debt on their own behalf in the future,
the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitations on the ability
of our PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions
that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Fluctuation
in the value of the Renminbi may have a material adverse effect on your investment</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
value of the Renminbi (&ldquo;RMB&rdquo;) against the US Dollar and other currencies may fluctuate and is affected by, among other things,
changes in China&rsquo;s political and economic conditions. The conversion of RMB into foreign currencies, including US Dollars, has
historically been set by the People&rsquo;s Bank of China. On March 17, 2014, the PRC government changed its policy of pegging the value
of the RMB to the US Dollar. Under the new policy, the RMB is permitted to fluctuate within a band against a basket of certain foreign
currencies, determined by the Bank of China, against which it can rise or fall by as much as 2% each day. Since the adoption of this
new policy, the value of the RMB against the US Dollar has fluctuated on a daily basis within narrow ranges, but overall has strengthened
against the US Dollar. There remains significant international pressure on the PRC government to further liberalize its currency policy,
which could result in a further and more significant appreciation in the value of the RMB against the US Dollar. Appreciation or depreciation
in the value of the RMB relative to the US Dollar would affect our financial results reported in US Dollar terms even if there is no
underlying change in our business or results of operations. In addition, if we decide to convert our RMB into US Dollars for the purpose
of making payments for dividends on our common stock or for other business purposes, appreciation of the US Dollar against the RMB would
have a negative effect on the US Dollar amount available to us.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>The
PRC currency is not a freely convertible currency, which could limit our ability to obtain sufficient foreign currency to support our
business operations in the future. In addition, changes in foreign exchange regulations in the PRC may affect our ability to pay dividends
in foreign currency or conduct other foreign exchange business</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency
out of the PRC. We receive substantially all of our revenues in RMB, which is currently not a freely convertible currency. Shortages
in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise
satisfy foreign currency-denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items,
including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior
approval from the PRC State Administration of Foreign Exchange, or the SAFE, by complying with certain procedural requirements. However,
approval from appropriate governmental authorities is required where RMB are to be converted into foreign currency and remitted out of
China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the
foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be
able to pay certain of our expenses as they come due.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>There
are significant uncertainties under the Enterprise Income Tax Law regarding our PRC enterprise income tax liabilities, such as tax on
dividends paid to us by our PRC subsidiaries and tax on any dividends we pay to our non-PRC stockholders</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Enterprise Income Tax Law, also known as the EIT Law, provides that enterprises established outside of the PRC whose &ldquo;de facto
management bodies&rdquo; are located in the PRC are considered as a &ldquo;tax-resident enterprise&rdquo; and are generally subject to
the uniform 25.0% enterprise income tax rate on global income. Under the implementation regulations to EIT Law, &ldquo;de facto management
body&rdquo; refers to a managing body that in practice exercises overall management control over the production and business, personnel,
accounting and assets of an enterprise. In addition, on April 22, 2009, the State Administration of Taxation of the PRC issued the&nbsp;<I>Notice
on the Issues Regarding Recognition of Overseas Incorporated Enterprises that are Domestically Controlled as PRC Resident Enterprises
Based on the De Facto Management Body Criteria</I>, which was retroactively effective as of January 1, 2008. This notice provides that
an overseas incorporated enterprise that is controlled domestically will be recognized as a &ldquo;tax-resident enterprise&rdquo; if
it satisfies all of the following conditions: (i) the senior management responsible for daily production/business operations are primarily
located in the PRC, and the location(s) where such senior management execute their responsibilities are primarily in the PRC; (ii) strategic
financial and personnel decisions are made or approved by organizations or personnel located in the PRC; (iii) major properties, accounting
ledgers, company seals and minutes of board meetings and stockholder meetings, etc., are maintained in the PRC; and (iv) 50.0% or more
of the board members with voting rights or senior management habitually reside in the PRC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, dividends paid by us to our non-PRC stockholders as well as gains realized by such stockholders from the sale or transfer of
our stock may be subject to a PRC tax under the EIT Law, and we may be required to withhold PRC tax on dividends paid to our non-PRC
stockholders.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>PRC
regulation of loans to and direct investment by offshore holding companies in PRC entities may delay or prevent us from making loans
or additional capital contributions to our PRC operating companies, which could materially and adversely affect our liquidity and ability
to fund and expand our business</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
an offshore holding company of PRC operating companies, we may make loans or additional capital contributions to our PRC operating companies.
Any loans to our PRC operating companies are subject to PRC regulations. For example, loans to our operating companies in China to finance
their activities may not exceed statutory limits and must be registered with SAFE. If we decide to make capital contributions to our
operating entities in the PRC, the PRC Ministry of Commerce, or MOFCOM, (or MOFCOM&rsquo;s local counterpart, depending on the amount
involved) may need to approve these capital contributions. We cannot assure you that we will be able to obtain these government approvals
on a timely basis, if at all, with respect to any such capital contributions. If we fail to receive such approvals, our ability to capitalize
our PRC operations may be negatively affected, which could adversely affect our ability to fund and expand our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may face PRC regulatory risks relating to our equity incentive plan</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 28, 2007, the SAFE promulgated a notice requiring PRC individuals who are granted stock options and other types of stock-based
awards by an overseas publicly-listed company to obtain approval from the local SAFE branch through an agent of the overseas publicly-listed
company (generally its PRC subsidiary or a financial institution).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
urged our PRC management personnel, directors, employees and consultants who were granted stock options under our Incentive Plan to register
them with the local SAFE pursuant to the said regulation. However, we cannot ensure that each of these individuals have carried out all
of the required registration procedures.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we, or any of these persons, fail to comply with the relevant rules or requirements, we may be subject to penalties, and may become subject
to more stringent review and approval processes with respect to our foreign exchange activities, such as our PRC subsidiaries&rsquo;
dividend payment to us or borrowing foreign currency loans, all of which may adversely affect our business and financial condition.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures
and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular
regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">For example, the Chinese cybersecurity
regulator announced on July 2 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the
company&rsquo;s app be removed from smartphone app stores.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As such, the Company&rsquo;s
business segments may be subject to various government and regulatory interference in the provinces in which they operate. The Company
could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government
sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties
for any failure to comply. The Company&rsquo;s operations could be adversely affected, directly or indirectly, by existing or future laws
and regulations relating to its business or industry.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Uncertainties
with respect to the PRC legal system could adversely affect us and we may have limited legal recourse under PRC law if disputes arise
under our contracts with third parties</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in
China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently
cover all aspects of economic activities in China in particular, because these laws and regulations are relatively new, and because of
the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations
involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are
not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these
policies and rules until some time after violation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign
investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations
is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. The resolution of these
matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the
legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance, or
to seek an injunction under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the
Chinese legal system, we may be unable to prevent others from violating our rights. The occurrence of any such events could have a material
adverse effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
must comply with the Foreign Corrupt Practices Act and Chinese anti-corruption laws</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are required to comply with the United States Foreign Corrupt Practices Act, or FCPA, which prohibits US companies from engaging in bribery
or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some
of our competitors, are not subject to these prohibitions. The PRC also strictly prohibits bribery of government officials. Certain of
our suppliers are owned by the PRC government and our dealings with them are likely to be considered to be with government officials
for these purposes. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in China.
It is our policy to prohibit our employees, and to discourage our agents, representatives and consultants, from engaging in such practices.
If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors
an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put
us at a disadvantage. Our employees, agents, representatives and consultants may not always be subject to our control. If any of them
violates FCPA or other anti-corruption law, we might be held responsible. We could suffer severe penalties in that event. In addition,
the US government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or which
we acquire.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may have difficulty maintaining adequate management, legal and financial controls in the PRC</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC historically has been deficient in western style management and financial reporting concepts and practices, as well as in modern
banking, and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work
in the PRC. As a result of these factors, and especially since we are a publicly listed company in the US and subject to regulation as
such, we may experience difficulty in maintaining management, legal and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business practices that meet western standards. We may have difficulty
establishing adequate management, legal and financial controls in the PRC. Therefore, we may, in turn, experience difficulties in implementing
and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, and other applicable
laws, rules and regulations. This may result in significant deficiencies or material weaknesses in our internal controls which could
impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements
of the Sarbanes-Oxley Act of 2002. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on
our business and the market price of our stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>If
we fail to maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our
financial results or prevent fraud may be adversely affected and investor confidence and the market price of our common stock may be
adversely impacted</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
directed by SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company&rsquo;s internal
controls over financial reporting in their annual reports. Our management may conclude that our internal controls over our financial
reporting are not effective, which could result in an adverse reaction in the financial marketplace due to a loss of investor confidence
in the reliability of our reporting processes, which could adversely impact the market price of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Your
ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, will be limited
because we conduct substantially all of our operations in the PRC and because the majority of our directors and officers reside outside
of the United States</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a Nevada corporation but nearly all of our assets are located outside of the US. Most of our current operations are conducted in
the PRC. In addition, most of our directors and officers are nationals and residents of the PRC. A substantial portion of the assets
of these persons is located outside the US. As a result, it may be difficult for you to effect service of process within the United States
upon these persons. It may also be difficult for you to enforce in US courts judgments on the civil liability provisions of the US federal
securities laws against us and our officers and directors. In addition, there is uncertainty as to whether the courts of the PRC would
recognize or enforce judgments of US courts. The recognition and enforcement of foreign judgments are provided for under the&nbsp;<I>PRC
Civil Procedures Law</I>. Courts in the PRC may recognize and enforce foreign judgments in accordance with the requirements of the&nbsp;<I>PRC
Civil Procedures Law&nbsp;</I>based on treaties between the PRC and the country where the judgment is made or on reciprocity between
jurisdictions. The PRC does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of
foreign judgments with the United States. In addition, according to the&nbsp;<I>PRC Civil Procedures Law</I>, courts in the PRC will
not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of
PRC law or national sovereignty, security or the public interest. So it is uncertain whether a PRC court would enforce a judgment rendered
by a court in the US.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>A
failure by our stockholders or beneficial owners who are PRC residents to comply with certain PRC foreign exchange regulations could
restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liability under
PRC laws, which could adversely affect our business and financial condition</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 21, 2005, the State Administration of Foreign Exchange (&ldquo;SAFE&rdquo;) issued the Notice on Relevant Issues Concerning Foreign
Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Offshore Special Purpose Vehicles, or State
Administration of Foreign Exchange of China Circular 75 (&ldquo;SAFE Circular 75&rdquo;). SAFE Circular 75 states that PRC residents
(including both legal persons and natural persons) must register with SAFE or its local branch in connection with their establishment
or control of an offshore entity established for the purpose of overseas equity financing involving a roundtrip investment whereby the
offshore entity acquires or controls onshore assets or equity interests held by the PRC residents. In addition, such PRC residents must
update their SAFE registrations when the offshore SPV undergoes material events relating to increases or decreases in investment amount,
transfers or exchanges of shares, mergers or divisions, long-term equity or debt investments, external guarantees, or other material
events that do not involve roundtrip investments. To further clarify the implementation of SAFE Circular 75, the General Affairs Department
of SAFE issued SAFE Circular 106 on May 29, 2007. Under SAFE Circular 106, PRC subsidiaries of an offshore company governed by SAFE Circular
75 are required to coordinate and supervise the filing of SAFE registrations in a timely manner by the offshore holding company&rsquo;s
shareholders who are PRC residents. If these shareholders fail to comply, the PRC subsidiaries are required to report to the local SAFE
authorities. If our shareholders who are PRC residents do not complete their registration with the local SAFE authorities, our PRC subsidiaries
will be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and
we may be restricted in our ability to contribute additional capital to our PRC subsidiaries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 14, 2014, SAFE promulgated the Circular Relating to Foreign Exchange Administration of Offshore Investment, Financing and Return
Investment by Domestic Residents Utilizing Special Purpose Vehicles (&ldquo;SAFE Circular 37&rdquo;). Replacing an earlier circular published
by SAFE in 2005 (Circular 75), SAFE Circular 37 further simplifies the registration process for Chinese residents seeking the round-trip
investment transactions where Chinese companies (Domestic Entities) are re-organized to create an offshore holding company (the SPV)
that will control the Domestic Entities and seek offshore financing. Also, for the first time overseas investments by Chinese individuals
are formally legalized under SAFE Circular 37.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are committed to complying with, and to ensuring that our shareholders who are PRC residents comply with, the SAFE Circular 37 requirements.
We believe that all of our PRC resident shareholders and beneficial owners have completed their required registrations with SAFE, or
are otherwise in the process of registering. However, we may not at all times be fully aware or informed of the identities of all our
beneficial owners who are PRC residents, and we may not always be able to compel our shareholders to comply with the SAFE Circular 37
requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents will at all times
comply with, or in the future make or obtain any applicable registrations or approvals required by, SAFE Circular 37 or other related
regulations. Failure by any such shareholders or beneficial owners to comply with SAFE Circular 37 could subject us to fines or legal
sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries&rsquo; ability to make distributions or
pay dividends or affect our ownership structure, which could adversely affect our business and prospects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>PRC
regulations involve complex procedures for acquisitions conducted by foreign investors that could make our restructuring or an offering
subject to government approval</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (&ldquo;M&amp;A Rule&rdquo;), effective as
of September 8, 2006 and revised as of June 22, 2009, additional procedures and requirements were established that are expected to make
merger and acquisition activities in China by foreign investors more time-consuming and complex, including requirements in some instances
that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise,
or that the approval from MOFCOM be obtained in circumstances where overseas companies established or controlled by PRC enterprises or
residents acquire affiliated domestic companies and special anti-monopoly submissions for parties meeting certain reporting thresholds.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
M&amp;A Rules require offshore companies formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled
by PRC companies or individuals to obtain the approval of MOFCOM prior to a cross-border share swap and the CSRC prior to the public
listing of their securities on an overseas stock exchange through share swap. On September 21, 2006, pursuant to the M&amp;A Rule and
other PRC Laws, the CSRC published on its official website relevant guidance with respect to the listing and trading of PRC domestic
enterprises&rsquo; securities on overseas stock exchanges (&ldquo;Related Clarifications&rdquo;), including a list of application materials
regarding the listing on overseas stock exchange by special purpose vehicles, however, the CSRC currently has not issued any definitive
rule concerning whether an offering, is subject to the M&amp;A Rule and Related Clarifications.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are substantial uncertainties regarding the interpretation and application of the above rules, and MOFCOM and CSRC have yet to promulgate
any written provisions or formally to declare or state whether the overseas listing of a PRC related company similar to us will be subject
to approvals from MOFCOM and CSRC with respect to any offering or a failure to maintain an offering. If MOFCOM and CSRC approvals are
required in connection with our previous restructuring, our failure to obtain or delay in obtaining such approval could result in penalties
imposed by MOFCOM, CSRC and other PRC regulatory agencies. These penalties could include fines and penalties on our operations in China,
restriction or limitation on remitting dividends outside of China, and other forms of sanctions that may cause a material and adverse
effect on our business, operations and financial conditions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notwithstanding
those provisions, we are advised by our PRC counsel, Shaanxi Yan Tan Law Firm, MOFCOM and CSRC approvals are not required in the context
of our previous restructuring, because our previous restructuring does not constitute a cross-border share swap contemplated by the M&amp;A
Rule. However, we cannot assure you that the relevant PRC government agencies, including MOFCOM and CSRC, would reach the same conclusion,
and we still cannot rule out the possibility that MOFCOM and CSRC may deem our listing structure as circumventing the M&amp;A Rule and
Related Clarifications, in particular in consideration of the fact that our restructuring was completed through several steps. Please
refer to the Company History section about our restructuring.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Recently, the General Office
of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe
and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July&nbsp;6, 2021. These opinions emphasized
the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based&nbsp;companies.
These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the
risks and incidents facing China-based&nbsp;overseas-listed&nbsp;companies and the demand for cybersecurity and data privacy protection.
Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective)
on July&nbsp;10, 2021, which requires operators with personal information of more than 1&nbsp;million users who want to list abroad to
file a cybersecurity review with the Office of Cybersecurity Review. The aforementioned policies and any related implementation rules
to be enacted may subject us to additional compliance requirement in the future. As these opinions were recently issued, official guidance
and interpretation of the opinions remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain
fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>PRC
regulations also involve complex procedures for acquisitions conducted by foreign investors that could make it more difficult for us
to grow through acquisitions</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may grow our business in part by acquiring other companies in the PRC. Complying with the requirements of the M&amp;A Rule to complete
such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit
our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
labor costs may increase due to the implementation of the PRC Labor Contract Law</I>.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Labor Contract Law was adopted by the Standing Committee of the National People&rsquo;s Congress of PRC in June 2007 and became effective
on January 1, 2008. The Implementation Rules of the PRC Labor Contract Law were passed by the PRC State Council in September 2008 and
became effective that same month. The implementation of the new law and its Implementation Rules, particularly the following provisions,
may increase our labor costs: (a) an employer shall make monetary compensation, which shall be based on the number of an employee&rsquo;s
working years with the employer at the rate of one month&rsquo;s wage for each year, to the employee upon termination of an employment
contract with certain exceptions (for example, in circumstances where the term of a fixed-term employment contract expires and the employee
does not agree to renew the contract even though the conditions offered by the employer are the same as or better than those stipulated
in the current contract); (b) the wages of an employee who is on probation may not be less than the lowest wage level for the same job
with the employer or less than 80% of the wage agreed upon in the employment contract, and may not be less than the local minimum wage
rate; (c) if an employee has been working for the employer for a consecutive period of not less than 10 years, or if a fixed-term employment
contract with an employee was entered into on two consecutive occasions, generally the employer should enter into an open-ended employment
contract with such employee, unless the employee requests a fixed-term employment contract; (d) if an employer fails, in violation of
the related provisions, to enter into an open-ended employment contract with an employee, it shall in each month pay to the employee
twice his/her wage, starting from the date on which an open-ended employment contract should have been entered into; (e) if an employer
fails to enter into a written employment contract with an employee more than one month but less than one year after the date on which
it started employing him/her, it shall in each month pay to the employee twice his/her wage; and (f) if an employer hires an employee
whose employment contract with another employer has not yet been terminated or ended, causing the other employer to suffer a loss, the
later hiring employer shall be jointly and severally liable with the employee for the compensation for such loss. Our labor costs may
increase due to the implementation of the PRC Labor Contract Law and the Implementation Rules of the PRC Labor Contract Law and our business
and results of operations may be materially and adversely affected.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><B><I>It is unclear whether we will be subject
to the oversight of the Cyberspace Administration of China (CAC) and how such oversight may impact us. Our business could be interrupted
or we could be subject to liabilities which may materially and adversely affect the results of our operation and the value of your investment.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Pursuant to the PRC Cybersecurity
Law and the Measures for Cybersecurity Censorship (the &ldquo;Cybersecurity Review Measures&rdquo;), if a critical information infrastructure
operator purchases internet products and services that affect or may affect national security, it should be subject to cybersecurity review
by the CAC. Any internet product or service that affects or may affect national security as deemed by the cybersecurity review authorities
may be subject to cybersecurity review. According to the Cybersecurity Review Measures, a critical information infrastructure operator
refers to any operator identified by an authority for the protection of critical information infrastructures. As of the date hereof, we
have not received any notice from such authorities identifying us as a critical information infrastructure operator or requiring us to
going through cybersecurity review by the CAC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On July&nbsp;10, 2021, the
CAC publicly issued the Measures for Cybersecurity Censorship (Revised Draft for Comments) (&ldquo;Draft Measures&rdquo;) to collect public
comments. The deadline for collecting comments was July&nbsp;25, 2021. According to the Draft Measures, the scope of cybersecurity reviews
is extended to data processing operators engaging in data processing activities that affect or may affect national security. The Draft
Measures further requires that any operator applying for listing on a foreign exchange must go through cybersecurity review if it possesses
personal information of more than one million users. According to the Draft Measures, a cybersecurity review assesses potential national
security risk that may be brought about by any procurement, data processing, or overseas listing. The review focuses on several factors,
including, among others, (i) the risk of theft, leakage, corruption, illegal use or export of any core or important data, or a large amount
of personal information, and (ii) the risk of any critical information infrastructure, core or important data, or a large amount of personal
information being affected, controlled or maliciously exploited by a foreign government after a company is listed overseas. While the
Draft Measures had been released for consultation purpose, there is still uncertainty regarding the Draft Measures as to its final content,
its adoption timeline or effective date, its final interpretation and implementation, and other aspects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">If the Draft Measures is enacted
as proposed, we believe we may not be subject to the cybersecurity review by the CAC for this offering, given that: (i) our products and
services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of
personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security
and thus may not be classified as core or important data by the authorities. However, there remains uncertainty as to how the Draft Measures
will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules,
or detailed implementation and interpretation related to the Draft Measures. If any such new laws, regulations, rules, or implementation
and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of
such laws on us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">We cannot assure you that PRC
regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply
with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC,
we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty,
we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and
adversely affect our business, financial condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I><U>Risks
Relating to Securities and This Offering</U></I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>The
market price for our common stock may be volatile</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
market price for our common stock is highly volatile and subject to wide fluctuations in response to factors including the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">actual
    or anticipated fluctuations in our quarterly operating results;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">announcements
    of new services by us or our competitors;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">announcements
    by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
    in financial estimates by securities analysts;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">conditions
    in the energy recycling market;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
    in the economic performance or market valuations of other companies involved in the same industry;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
    in accounting standards, policies, guidance, interpretation or principles;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">loss
    of external funding sources;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">failure
    to maintain compliance with Nasdaq listing rules;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">additions
    or departures of key personnel;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">potential
    litigation;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">conditions
    in the market; or</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">relatively
    small size of shares of our common stock available for purchase.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the securities markets from time to time experience significant price and volume fluctuations that are not related to the operating
performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common
stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>You
will experience immediate and substantial dilution in the net tangible book value per share of common stock you purchase.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
the public offering price per share of common stock and Warrant being offered is substantially higher than the net tangible book value
per share of our common stock, you will suffer substantial dilution in the net tangible book value of the shares of common stock you
purchase in this offering. If you purchase in this offering at an assumed public offering price of US$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share of common stock and Warrant, you will suffer immediate and substantial dilution of approximately US$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share of common stock in the net tangible book value of the Units. See &ldquo;Dilution.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>There
is no public market for the Warrants.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no established public trading market for the Warrants, and we do not expect a market to develop. In addition, we do not intend to
apply to list the Warrants on any national securities exchange or other nationally recognized trading system, including Nasdaq. Without
an active market, the liquidity of the Warrants will be limited.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>The
Warrants in this offering are speculative in nature.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Warrants in this offering do not confer any rights of common stock ownership on their holders, but rather merely represent the right
to acquire shares of common stock at a fixed price. In addition, following this offering, the market value of the warrants, if any, is
uncertain and there can be no assurance that the market value of the Warrants will equal or exceed their imputed offering price. The
Warrants will be not listed or quoted for trading on any market or exchange.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Holders
of the Warrants will not have rights of holders of our common stock until such Warrants are exercised.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Until
holders of Warrants acquire shares of common stock upon exercise of the Warrants, holders of Warrants will have no rights with respect
to the shares of common stock underlying such warrants.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
have no present intention to pay dividends</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not paid dividends or made other cash distributions on our common stock during any of the past three years, and we do not expect
to declare or pay any dividends in the foreseeable future. We intend to retain any future earnings for working capital and to finance
current operations and expansion of our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>A
large portion of our common stock is controlled by a small number of shareholders</I></B><I>.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
large portion of our common stock is held by a small number of shareholders. As a result, these shareholders are able to influence the
outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions, including
business combinations. In addition, the occurrence of sales of a large number of shares of our common stock, or the perception that these
sales could occur, may affect our stock price and could impair our ability to obtain capital through an offering of equity securities.
Furthermore, the current ratios of ownership of our common stock reduce the public float and liquidity of our common stock, which can
in turn affect the market price of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>We
may be unable to maintain compliance with Nasdaq Marketplace Rules which could cause our common stock to be delisted from the Nasdaq
Capital Market. This could result in the lack of a market for our common stock, cause a decrease in the value of our common stock, and
adversely affect our business, financial condition and results of operations.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Nasdaq Marketplace Rules our common stock must maintain a minimum price of $1.00 per share for continued inclusion on the Nasdaq
Capital Market. The per share price of our common stock has fluctuated significantly. We cannot guarantee that our stock price will remain
at or above $1.00 per share and if the price again drops below $1.00 per share, our common stock could become subject to delisting. If
our common stock is delisted, trading of the stock will most likely take place on an over-the-counter market established for unlisted
securities. An investor is likely to find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common
stock on an over-the-counter market, and many investors may not buy or sell our common stock due to difficulty in accessing over-the-counter
markets, or due to policies preventing them from trading in securities not listed on a national exchange or other reasons. For these
reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of
an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations by limiting
our ability to attract and retain qualified executives and employees and limiting our ability to raise capital.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 26, 2019, we received a written notification from the Nasdaq Stock Market Listing Qualifications Staff (the &ldquo;Staff&rdquo;)
indicating that the Company had been granted until May 25, 2020, to regain compliance with the $1.00 minimum closing bid price requirement
for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule (the &ldquo;Minimum Bid Price Requirement&rdquo;).
That notification provided that if at any time the closing bid price of the Company&rsquo;s securities is at least $1.00 per share for
a minimum of 10 consecutive business days, Nasdaq will provide written confirmation of compliance and this matter will be closed. On
April 29, 2020, the Company received a letter from Nasdaq confirming that the Company regained compliance with the Minimum Bid Price
Requirement. For ten consecutive business days, beginning from April 15, 2020 to April 28, 2020, the closing bid price of the Company&rsquo;s
common stock had been at $1.00 per share or greater, and therefore the Company regained compliance with the Minimum Bid Price Requirement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>The
offering price for our securities may not be indicative of prices that will prevail in the trading market and such market prices may
be volatile.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
offering price for our securities will be determined by negotiations between us and the Underwriter and does not bear any relationship
to our earnings, book value or any other indicia of value. We cannot assure you that the market price of our shares of common stock will
not decline significantly below the offering price. The financial markets in the United States and other countries have experienced significant
price and volume fluctuations in the last few years. Volatility in the price of our shares of common stock may be caused by factors outside
of our control and may be unrelated or disproportionate to changes in our results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance
our results of operations or the price of our shares of common stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
anticipate that we will use the net proceeds from this offering for working capital and other corporate purposes. Our management will
have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not
improve our results of operations or enhance the market price of our shares of common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Our
financial and opera</I></B><I>ting <B>performance may be adversely affected by general economic conditions, natural catastrophic events,
epidemics, public health crises.</B></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating results will be subject to fluctuations based on general economic conditions. Deterioration in economic conditions could cause
decreases in both volume and reduce and/or negatively impact our short-term ability to grow our revenues. Further, any decreased collectability
of accounts receivable or early termination of agreements due to deterioration in economic conditions could negatively impact our results
of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is subject to the impact of natural catastrophic events such as earthquakes, floods or power outages, political crises such
as terrorism or war, and public health crises, such as disease outbreaks, epidemics, or pandemics in the U.S. and global economies, our
markets and business locations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Similarly,
natural disasters, wars (including the potential of war), terrorist activity (including threats of terrorist activity), social unrest
and heightened travel security measures instituted in response, and travel-related accidents, as well as geopolitical uncertainty and
international conflict, will affect travel volume and may in turn have a material adverse effect on our business and results of operations.
In addition, we may not be adequately prepared in contingency planning or recovery capability in relation to a major incident or crisis,
and as a result, our operational continuity may be adversely and materially affected, which in turn may harm our reputation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_003"></A>CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>This
prospectus contains forward looking statements that involve risks and uncertainties, principally in the sections entitled &ldquo;Description
of Business,&rdquo; &ldquo;Risk Factors,&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results
of Operations.&rdquo; All statements other than statements of historical fact contained in this prospectus, including statements regarding
future events, our future financial performance, business strategy and plans and objectives of management for future operations, are
forward-looking statements. We have attempted to identify forward-looking statements by terminology including &ldquo;anticipates,&rdquo;
&ldquo;believes,&rdquo; &ldquo;can,&rdquo; &ldquo;continue,&rdquo; &ldquo;could,&rdquo; &ldquo;estimates,&rdquo; &ldquo;expects,&rdquo;
&ldquo;intends,&rdquo; &ldquo;may,&rdquo; &ldquo;plans,&rdquo; &ldquo;potential,&rdquo; &ldquo;predicts,&rdquo; &ldquo;should,&rdquo;
or &ldquo;will&rdquo; or the negative of these terms or other comparable terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including the risks outlined under &ldquo;Risk Factors&rdquo; or
elsewhere in this prospectus, which may cause our or our industry&rsquo;s actual results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment.
New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors
on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from
those contained in any forward-looking statements. All forward-looking statements included in this document are based on information
available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>You
should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus. Before
you invest in our securities, you should be aware that the occurrence of the events described in the section entitled &ldquo;Risk Factors&rdquo;
and elsewhere in this prospectus could negatively affect our business, operating results, financial condition and stock price. Except
as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this
prospectus to conform our statements to actual results or changed expectations.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_004"></A>USE
OF PROCEEDS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
deducting the estimated underwriting discounts, non-accountable expense allowance and other offering expenses payable by us, we expect
to receive net proceeds of approximately $10,000,000 from this offering. The net proceeds from this offering must be remitted to China
before we will be able to use the funds to grow our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
plan to use the net proceeds of this offering for working capital needs, including devoting further resources to the below use of proceeds,
which may include investment in product development, sales and marketing activities, acquisition of other companies, technology infrastructure,
team development, capital expenditures, improvement of corporate facilities and other general and administrative matters. The foregoing
represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering.
Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen
event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
intend to use the net proceeds of this offering as follows after we complete the remittance process, and we have ordered the specific
uses of proceeds in order of priority.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Description of Use</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Estimated<BR> Amount of<BR> Net<BR>
    Proceeds</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 88%; text-align: left">Research and development of energy storage
    technologies, such as large scale photovoltaic and wind power stations</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">30</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Working Capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total</TD><TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">100</TD><TD STYLE="text-align: left">%</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pending
other uses, we intend to invest the proceeds to us in investment-grade, interest-bearing securities such as money market funds, certificates
of deposit, or direct or guaranteed obligations of the U.S. government, or hold as cash. We cannot predict whether the proceeds invested
will yield a favorable return. Our management will have broad discretion in the application of the net proceeds we receive from this
offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
using the proceeds of this offering, we are permitted under PRC laws and regulations as an offshore holding company to provide funding
to our wholly foreign-owned subsidiary in China only through loans or capital contributions and to our consolidated variable interest
entity only through loans, subject to the filings with government authorities and limitations on the amount of capital contributions
and loans. Subject to completion of applicable government filing and registration requirements, we may extend inter-company loans to
our wholly foreign-owned subsidiary in China or make additional capital contributions to our wholly-foreign-owned subsidiary to fund
its capital expenditures or working capital. If we provide funding to our wholly foreign-owned subsidiary through loans, the total amount
of such loans may not exceed the difference between the entity&rsquo;s total investment as approved by the foreign investment authorities
and its registered capital. Such loans must be registered with SAFE or its local branches, which usually takes up to 20 working days
to complete. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at
all.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_005"></A>DIVIDEND
POLICY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
plan to retain any earnings for the foreseeable future for our operations. We have never paid any dividends on our common stock and do
not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion
of our Board of Directors and will depend on our financial condition, operating results, capital requirements and such other factors
as our Board of Directors deems relevant.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we determine to pay dividends on our common stock in the future, as a holding company, we will be dependent on receipt of funds from
our subsidiaries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current
PRC regulations permit our indirect PRC subsidiaries to pay dividends only out of their accumulated profits, if any, determined in accordance
with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10%
of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each
of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although
the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be
used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective
companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
value of the Renminbi fluctuates and is affected by, among other things, changes in China&rsquo;s political and economic conditions.
The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the
PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency
for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their
own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our
subsidiaries are unable to receive all of the revenue from our operations through the current contractual arrangements, we may be unable
to pay dividends on our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
dividends, if any, on our common stock, will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes,
any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding
tax at a rate of up to 10.0%. See &ldquo;Taxation &mdash; People&rsquo;s Republic of China Taxation.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_006"></A>CAPITALIZATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following tables set forth our capitalization as of March 31, 2021 on a pro forma as adjusted basis giving effect to the completion of
the firm commitment offering at an assumed public offering price of $ per share of common stock and Warrant and to reflect the application
of the proceeds after deducting the estimated underwriting discounts, non-accountable expense allowance and other estimated offering
expenses. You should read this table in conjunction with our financial statements and related notes appearing elsewhere in this prospectus
and &ldquo;Use of Proceeds&rdquo; and &ldquo;Description of Securities.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
                                            an actual basis;</FONT></TD>
</TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
                                            a pro forma basis to give effect to the issuance and sale of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
                                            of common stock and Warrants offered hereby, based on an assumed offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
                                            share of common stock and related Warrant (assuming the sale of all of the shares of common
                                            stock and related Warrants we are offering, and assuming the Underwriter does not exercise
                                            its option to purchase additional shares or Warrants and excluding the shares of common stock
                                            issuable upon the exercise of the Warrants and Underwriter Warrants), and (2) the application
                                            of the net proceeds after deducting the estimated 8.0% underwriting discounts, the Underwriter&rsquo;s
                                            1.0% non-accountable expense allowance, and approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
                                            of estimated offering expenses payable by us.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
should read this capitalization table together with our consolidated financial statements and the related notes appearing elsewhere in
this prospectus and the &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; section
and other financial information included elsewhere in this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of March&nbsp;31, 2021</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Actual</TD><TD STYLE="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Pro
    forma <SUP>(1)</SUP></B></FONT></TD><TD STYLE="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Assets:</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; width: 76%; text-align: left">Current Assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Right of use assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Intangible assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Property</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Goodwill</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Current Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Other Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Shareholder&rsquo;s Equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Common stock, $0.001 par value, 10,000,000 shares authorized,
    6,437,050 and shares issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additional
    paid-in capital<SUP>(2)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Accumulated other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Noncontrolling interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total shareholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Total Liabilities and Shareholders&rsquo;
    Equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gives
    effect to the completion of the firm commitment offering at an assumed public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    share of common stock and Warrant, and reflects the application of the proceeds after deducting the estimated underwriting discounts,
    the non accountable expense allowance and our estimated offering expenses. </FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pro
    forma adjusted for the offering additional paid in capital reflects the net proceeds we expect to receive, after deducting underwriting
    discounts, underwriter non-accountable expense allowance and approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in other expenses. We expect
    to receive net proceeds of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($10,000,000 offering, less underwriting discount of $800,000,
    non-accountable expense allowance equal to 1% of the gross proceeds and accountable expense allowance of up to $150,000, as well
    as $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in other offering expenses). </FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_007"></A>DILUTION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
you invest in our shares of common stock, your interest will be diluted to the extent of the difference between the offering price per
share and the pro forma net tangible book value per share after the offering. Dilution results from the fact that the per share offering
price is substantially in excess of the book value per share attributable to the existing shareholders for our presently outstanding
shares of common stock. Our net tangible book value attributable to shareholders at March 31, 2021 was $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or
approximately $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. Net tangible book value per share as of March 31, 2021 represents the amount
of total assets less intangible assets (but includes land use right) and total liabilities, divided by the number of shares outstanding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
the firm commitment offering is completed, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock outstanding upon completion
of the offering. Our post offering pro forma net tangible book value, which gives effect to receipt of the net proceeds from the offering
and issuance of additional shares in the offering, but does not take into consideration any other changes in our net tangible book value
after March 31, 2021, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; or approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share.
This would result in dilution to investors in this offering of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share or approximately
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% from the assumed offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. Net tangible book value
per share would increase to the benefit of present shareholders by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share attributable to the purchase
of the shares by investors in this offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the estimated net tangible book value per share after the offering and the dilution to persons purchasing
shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Firm Commitment<BR> Offering</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; width: 88%; text-align: left">Assumed offering price
    per share</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Net tangible book value per share
    as of March 31, 2021</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Increase in net tangible book value
    per share after this offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Net tangible book value per share
    after the offering</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Dilution per share to new investors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_008"></A>MANAGEMENT&rsquo;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>
AND RESULTS OF OPERATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>This
prospectus contains or may contain forward-looking statements and information that are based upon beliefs of, and information currently
available to, Company&rsquo;s management as well as estimates and assumptions made by Company&rsquo;s management. Readers are cautioned
not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When
used in the filings, the words &ldquo;may&rdquo;, &ldquo;will&rdquo;, &ldquo;should&rdquo;, &ldquo;would&rdquo;, &ldquo;anticipate&rdquo;,
&ldquo;believe&rdquo;, &ldquo;estimate&rdquo;, &ldquo;expect&rdquo;, &ldquo;future&rdquo;, &ldquo;intend&rdquo;, &ldquo;plan&rdquo;,
or the negative of these terms and similar expressions as they relate to Company or Company&rsquo;s management identify forward-looking
statements. Such statements reflect the current view of Company with respect to future events and are subject to risks, uncertainties,
assumptions, and other factors (including the statements in the section &ldquo;results of operations&rdquo; below), and any businesses
that Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove
incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Although
the Company believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, the Company cannot
guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities
laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to
actual results. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of annual report,
which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations,
and prospects.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Our
financial statements are prepared in US Dollars and in accordance with accounting principles generally accepted in the United States.
See &ldquo;Foreign Currency Translation and Comprehensive Income (Loss)&rdquo; below for information concerning the exchange rates at
which Renminbi (&ldquo;RMB&rdquo;) were translated into US Dollars (&ldquo;USD&rdquo;) at various pertinent dates and for pertinent periods.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OVERVIEW</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
Recycling Energy Corporation (the &ldquo;Company&rdquo; or &ldquo;CREG&rdquo;) was incorporated on May 8, 1980. On March 8, 2007, the
Company changed its name from China Digital Wireless, Inc. to its current name, China Recycling Energy Corporation. The Company, through
its subsidiaries, sells and leases energy saving systems and equipment to its customers in the People&rsquo;s Republic of China (&ldquo;PRC&rdquo;).
Typically, the Company transfers ownership of the waste energy recycling power generating projects to its customers at the end of each
sales-type lease and provides financing to its customers for the cost of the projects as described below.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is in the process of transforming and expanding into an energy storage integrated solution provider. We plan to pursue disciplined
and targeted expansion strategies for market areas we currently do not serve. We actively seek and explore opportunities to apply energy
storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale
photovoltaic (PV) and wind power stations,&nbsp;remote islands without electricity,&nbsp;and smart energy cities with multi-energy supplies.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2019, a novel strain of coronavirus (COVID-19) was reported and the World Health Organization has declared the outbreak to constitute
a &ldquo;Public Health Emergency of International Concern.&rdquo; This pandemic, which continues to spread to additional countries, and
is disrupting supply chains and affecting production and sales across a range of industries as a result of quarantines, facility closures,
and travel and logistics restrictions in connection with the outbreak. However, as a result of PRC government&rsquo;s effort on disease
control, the outbreak in China is under the control. As of the date of this prospectus, there are some new Covid-19 cases discovered
in a few provinces of China, however, the number of new cases is not significant due to the PRC government&rsquo;s strict control.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended March 31, 2021 and 2020, the Company had a net loss of $277,224 and $598,551, respectively. The Company has an
accumulated deficit of $43.31 million as of March 31, 2021.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
historical operating results indicate substantial doubt exists related to the Company&rsquo;s ability to continue as a going concern.
However, the Company had $144.07 million cash on hand at March 31, 2021, as a result of collection of the full payment from all the projects
that were disposed earlier. This is expected to satisfy the Company&rsquo;s estimated liquidity needs 12 months from the issuance of
the financial statements. The Company believes that the actions discussed above are probable of occurring and the occurrence, as well
as the cash flow discussed, mitigate the substantial doubt raised by its historical operating results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others. While the
Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable
terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent
upon the Company&rsquo;s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional
funds by way of a public or private offering, or debt financing including bank loans.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CRITICAL
ACCOUNTING POLICIES AND ESTIMATES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management&rsquo;s discussion and analysis of our financial condition and results of operations are based on our consolidated financial
statements (&ldquo;CFS&rdquo;), which were prepared in accordance with accounting principles generally accepted in the United States
of America (&ldquo;US GAAP&rdquo;). The preparation of these financial statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates
and assumptions. We base our estimates on historical experience and various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
our significant accounting policies are more fully described in Note 2 to our CFS, we believe the following accounting policies are the
most critical to assist you in fully understanding and evaluating this management discussion and analysis.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Basis
of Presentation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
accompanying CFS were prepared in accordance with US GAAP and pursuant to the rules and regulations of the SEC for financial statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Basis
of Consolidation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
CFS include the accounts of CREG and, its subsidiary, Sifang Holdings and Yinghua; Sifang Holdings&rsquo; wholly-owned subsidiaries,
Huahong and Shanghai TCH; Shanghai TCH&rsquo;s wholly-owned subsidiary Xi&rsquo;an TCH; and Xi&rsquo;an TCH&rsquo;s subsidiaries, Erdos
TCH, Zhonghong, and Zhongxun. Substantially all of the Company&rsquo;s revenues are derived from the operations of Shanghai TCH and its
subsidiaries, which represent substantially all of the Company&rsquo;s consolidated assets and liabilities as of March 31, 2021. All
significant inter-company accounts and transactions were eliminated in consolidation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Use
of Estimates</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
preparing the CFS, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance
sheets as well as revenues and expenses during the year reported. Actual results may differ from these estimates.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Concentration
of Credit Risk</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
includes cash on hand and demand deposits in accounts maintained within China. Balances at financial institutions within China are not
covered by insurance. The Company has not experienced any losses in such accounts.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The
Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers&rsquo;
financial condition and customer payment practices to minimize collection risk on accounts receivable; however, there is no assurance
that the insolvency of one or more customers of the Company would not have a material adverse effect on our business, financial condition
or results of operation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
operations of the Company are located in the PRC. Accordingly, the Company&rsquo;s business, financial condition and results of operations
may be influenced by the political, economic and legal environments in the PRC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Accounts
Receivable</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021, the Company had gross accounts receivable of $340,553 from Erdos TCH for the electricity sold,&nbsp;and had bad debt
allowance of $34,055 for Erdos TCH due to its failure to make payments as scheduled.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2020, the Company had gross accounts receivable of $342,974 of Erdos TCH for the electricity sold.&nbsp;As of December
31, 2020, the Company had bad debt allowance of $34,297 for Erdos TCH due to its failure to make payments as scheduled.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Investment
in sales-type leases, net&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company maintains reserves for potential credit losses on receivables. Management reviews the composition of receivables and analyzes
historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns
to evaluate the adequacy of these reserves. Based on an evaluation of the collectability of such receivables, as of December 31, 2020
and March 31, 2021, the Company had bad debt allowance for net investment receivable on sales-type leases of $0.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Revenue
Recognition</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Sales-type
Leasing and Related Revenue Recognition&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 1, 2019, the Company adopted Financial Accounting Standards Board (&ldquo;FASB&rdquo;) Accounting Standards Codification (&ldquo;ASC&rdquo;)
Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial
application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC Topic
842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under
Topic 840. (See Operating lease below as relates to the Company as a lessee). The Company&rsquo;s sales type lease contracts for revenue
recognition fall under ASC 842. During the three months ended March 31, 2021 and 2020, the Company did not sell any new power generating
projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company constructs and leases waste energy recycling power generating projects to its customers. The Company typically transfers ownership
of the waste energy recycling power generating projects to its customers at the end of the lease. Prior to January 1, 2019, the investment
in these projects was recorded as investment in sales-type leases in accordance with ASC Topic 840<I>, &ldquo;Lease</I>s<I>,&rdquo;</I>&nbsp;and
its various amendments and interpretations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company finances construction of waste energy recycling power generating projects. The sales and cost of sales are recognized at the
inception of the lease, which is when the control is transferred to the lessee. The Company accounts for the transfer of control as a
sales type lease in accordance with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of
payments is probable. This is in accordance with the revenue recognition principle in ASC 606 -Revenue from contracts with customers.
The investment in sales-type leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated
executory cost. Minimum lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee).
The discount rate implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments
consist of the gross lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over
the lease term to produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception
of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction
of receivables. Revenue is recognized net of sales tax.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Contingent
Rental Income</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company records the income from actual electricity usage in addition to minimum lease payment of each project as contingent rental income
in the period earned. Contingent rent is not part of minimum lease payments.<B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Foreign
Currency Translation and Comprehensive Income (Loss)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s functional currency is RMB. For financial reporting purposes, RMB figures were translated into USD as the reporting currency.
Assets and liabilities are translated at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated
at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange
rates from period to period are included as a component of stockholders&rsquo; equity as &ldquo;Accumulated other comprehensive income.&rdquo;
Gains and losses from foreign currency transactions are included in income. There has been no significant fluctuation in exchange rate
for the conversion of RMB to USD after the balance sheet date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company uses &ldquo;Reporting Comprehensive Income&rdquo; (codified in FASB ASC Topic 220). Comprehensive income is comprised of net
income and all changes to the statements of stockholders&rsquo; equity, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>RESULTS
OF OPERATIONS</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Comparison
of years ended December 31, 2020 and 2019</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the results of our operations for the periods indicated as a percentage of net sales. Certain columns may
not add due to rounding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">% of Sales</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">% of Sales</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; width: 52%; text-align: left">Sales - contingent rental
    income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">697,028</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">100</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Cost of sales</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Gross profit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">697,028</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Interest income
    on sales-type leases</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">170,403</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">24</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Total operating income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">867,431</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">124</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Total operating
    income (expenses)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">5,827,019</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(9,974,519</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,431</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Income (loss) from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,827,019</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9,107,088</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,307</TD><TD STYLE="text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Total non-operating
    expenses, net</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,776,195</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(2,690,476</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(386</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Income (loss) before income tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,050,824</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(11,797,564</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,693</TD><TD STYLE="text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Income tax benefit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,024,807</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(434</TD><TD STYLE="text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Net income (loss)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">4,050,824</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">%</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(8,772,757</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(1,259</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)%</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>SALES</I>.&nbsp;Total
sales for the years ended December 31, 2020 and 2019 were $0 and $697,028, respectively.&nbsp;The sales in 2019 were from the contingent
rental income of Erdos TCH, which is recognized when the actual electricity production is in excess of the minimum lease payments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>COST
OF SALES.&nbsp;</I>Cost of sales (&ldquo;COS&rdquo;) for the years ended December 31, 2020 and 2019 were $0.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>GROSS
PROFIT</I>. Gross income for the years ended December 31, 2020 and 2019 were $0 and $697,028, respectively, a gross margin of 0% and
100%.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>INTEREST
INCOME ON SALES-TYPE LEASES.&nbsp;</I>Interest income on sales-type leases for the years ended December 31, 2020 and 2019 was $0 and
$170,403, respectively. The Company disposed all of its systems and currently holds only five power generating systems through Erdos
TCH. Erdos TCH&rsquo;s operations ceased due to renovation and furnace safety upgrade; the Company originally expected to resume production
of these five power generating systems in July 2020, but the resumption of operations was further delayed due to government&rsquo;s request
for Erdos TCH&rsquo;s production line rectification for lowering its energy consumption per unit of GDP. The Company expects to resume
production in July 2021.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>OPERATING
(INCOME) EXPENSES</I>.&nbsp;Operating (income) expenses consisted of general and administrative expenses, and bad debts expense (reversal)
totaling $(5,827,019) for the year ended December 31, 2020, compared to $9,974,519 operating expenses for the year ended December 31,
2019, a decrease of $15,801,538 or 158%. The decrease was mainly due to decreased bad debt expense by $11,417,061, decreased loss on
disposal of systems of $1,242,694, decreased impairment loss on fixed assets and construction in progress of $876,660, decreased operating
expenses of $1,402,969 of Erdos TCH due to cease of operation and social insurance expense adjustment of $508,887 of Xian TCH during
the year ended December 31, 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>NET
NON-OPERATING EXPENSES.&nbsp;</I>Net non-operating expenses consisted of loss on note conversion, interest income, interest expenses
and miscellaneous expenses. For the year ended December 31, 2020, net non-operating expenses was $1,776,195 compared to $2,690,476 for
the year ended December 31, 2019. For the year ended December 31, 2020, we had $185,527 interest income but the amount was offset by
$1,463,721 of interest expense on entrusted loan and note payable, and a $502,393 loss on note conversion. For the year ended December
31, 2019, we had $159,183 interest income, but the amounts were offset by a $2.99 million interest expense on entrusted loan and note
payable and a $173,886 loss on note conversion.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>INCOME
TAX EXPENSE.&nbsp;</I>Income tax expense was $0 for the year ended December 31, 2020, compared with $3,024,807 income tax benefit for
the year ended December 31, 2019. The consolidated effective income tax rates for the years ended December 31, 2020 and 2019 were 0%
and (26.9)%, respectively. We had non-taxable income of $6.03 million due to reversal of bad debts in 2020, which resulted in $0 income
tax expense in the year ended December 31, 2020. The income tax benefit for year ended December 31, 2019 was mainly due to tax-deductible
loss.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>NET
INCOME (LOSS)</I>.&nbsp;Net income for year ended December 31, 2020 was $4,050,824 compared to net loss of $8,772,757 for the year ended
December 31, 2019, a decrease of loss of $12,823,581. This decrease in net loss was mainly due to the decrease operating expenses and
decrease interest expense as described above.<B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Comparison
of three months ended March 31, 2021 and 2020</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the results of our operations for the periods indicated as a percentage of net sales. Certain columns may
not add due to rounding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: bottom; text-align: center; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="vertical-align: bottom; padding-bottom: 1.5pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>%
                                            of Sales</B></FONT></TD><TD STYLE="vertical-align: bottom; padding-bottom: 1.5pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="vertical-align: bottom; padding-bottom: 1.5pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>%
                                            of Sales</B></FONT></TD><TD STYLE="vertical-align: bottom; padding-bottom: 1.5pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Sales - contingent rental income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Cost of sales</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Gross profit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Interest income on sales-type leases</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Total operating income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 52%; text-align: left; padding-bottom: 1.5pt">Total operating expenses</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">273,092</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">154,178</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Loss from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(273,092</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(154,178</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Total non-operating income (expenses),
    net</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">993</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(444,373</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Loss before income tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(272,099</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(598,551</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">%</TD>
    <TD STYLE="text-align: left"></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Income tax expense</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">5,125</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Net loss</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(277,224</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">%</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(598,551</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">%</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>SALES</I>.&nbsp;Total
sales for the three months ended March 31, 2021 and 2020 were $0.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>COST
OF SALES.&nbsp;</I>Cost of sales (&ldquo;COS&rdquo;) for the three months ended March 31, 2021 and 2020 were $0.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>GROSS
PROFIT</I>. Gross income for the three months ended March 31, 2021 and 2020 were $0 with gross margin of 0%.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>OPERATING
EXPENSES</I>.&nbsp;Operating expenses consisted of general and administrative expenses, totaling $273,092 for the three months ended
March 31, 2021, compared to $154,178 for the three months ended March 31, 2020, an increase of $118,914 or 77%. The increase was mainly
due to increased payroll expense by $25,000, increased audit and related fee by $53,000 and other administrative expenses.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>NET
NON-OPERATING INCOME (EXPENSES).&nbsp;</I>Net non-operating income (expenses) consisted of loss on note conversion, interest income,
interest expenses and miscellaneous expenses. For the three months ended March 31, 2021, net non-operating income was $993 compared to
non-operating expense of $444,373 for the three months ended March 31, 2020. For the three months ended March 31, 2021, we had $83,696
interest income, but the amount was offset by $82,086 interest expense on entrusted loan and note payable, and other expense of $617.
For the three months ended March 31, 2020, we had $27,006 interest income, but the amounts were offset by a $355,244 interest expense
on entrusted loan and note payable, $103,167 loss on note conversion and other expense of $12,968.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>INCOME
TAX EXPENSE.&nbsp;</I>Income tax expense was $5,125 for the three months ended March 31, 2021, compared with $0 for the three months
ended March 31, 2020. The consolidated effective income tax rates for the three months ended March 31, 2021 and 2020 were 1.9% and 0%,
respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>NET
LOSS</I>.&nbsp;Net loss for three months ended March 31, 2021 was $277,224 compared to net loss of $598,551 for the three months ended
March 31, 2020, a decrease of loss of $321,327. This decrease in net loss was mainly due to decreased interest expense by $273,158, decreased
loss on note conversion by $103,167, and increased interest income by $56,690, despite we had increased operating expense by $118,914.<B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>LIQUIDITY
AND CAPITAL RESOURCES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Comparison
of years ended December 31, 2020 and 2019</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2020, the Company had cash and equivalents of $107.80 million, other current assets of $399,784, current liabilities
of $39.04 million, working capital of $69.16 million, a current ratio of 2.77:1 and a liability-to-equity ratio of 0.49:1.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2020
and 2019:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Cash provided by (used in):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left">Operating Activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">82,248,467</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(14,649,028</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Investing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,885</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,074</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,497,187</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(21,816,293</TD><TD STYLE="text-align: left">)</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by operating activities was $82.25 million during the year ended December 31, 2020, compared to $14.65 million cash used
in operating activities for the year ended December 31, 2019. The increase in net cash inflow for the year ended December 31, 2020 was
mainly due to increased cash inflow from collection of sales type leases of Pucheng systems by $14.15 million, and increased cash collection
of accounts receivable by $70.55 million for selling / disposing Huayu, Shenqiu, Zhongtai and Tian&rsquo;an systems and decreased cash
outflow on interest payable on entrusted loan by $10.39 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by (used in) investing activities was $(1,885) and $5,074, respectively, for the years ended December 31, 2020 and 2019.
For the year ended December 31, 2020, $1,885 was the purchase of the fixed assets. For the year ended December 31, 2019, $5,074 was the
proceeds from disposal of the fixed assets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by financing activities was $3,497,187 compared to net cash used in financing activities of $21.82 million during the years
ended December 31, 2020 and 2019, respectively. The cash inflow for the year ended December 31, 2020 was from the issuance of common
stock of $497,187 and issuance of notes of $3,000,000. The cash outflow for the year ended December 31, 2019 was from the issuance of
notes of $2.0 million and proceeds from issuance of common stock of $3.31 million, but was offset by repayment of entrusted loan of $27.13
million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not believe inflation has had or will have a significant negative impact on our results of operations in 2021; however, there is no
assurance that unanticipated economic events could lead to inflation that might materially adversely affect our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Comparison
of three months Ended March 31, 2021 and 2020</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021, the Company had cash and equivalents of $144.07 million, other current assets of $575,214, current liabilities of
$38.56 million, working capital of $106.08 million, a current ratio of 3.75:1 and a liability-to-equity ratio of 0.35:1.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended March 31,
2021 and 2020:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Cash provided by (used in):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left">Operating Activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(819,056</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">39,650,520</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Investing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,253,041</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in operating activities was $819,056 during the three months ended March 31, 2021, compared to $39.65 million cash provided
by operating activities for the three months ended March 31, 2020. The decrease in net cash inflow for the three months ended March 31,
2021 was mainly due to our cash collection of sales type leases of Pucheng systems by $13.98 million, and cash collection of accounts
receivable by $25.79 million for selling / disposing Huayu, Shenqiu, Zhongtai and Tian&rsquo;an systems that had been completed in the
three months ended March 31, 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by (used in) investing activities was $0 and $0, respectively, for the three months ended March 31, 2021 and 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by financing activities was $38,253,041 compared to net cash used in financing activities of $0 during the three months
ended March 31, 2021 and 2020, respectively. The cash inflow for the three months ended March 31, 2021 was the proceeds from a private
placement of $38,253,041.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors (the &ldquo;Purchasers&rdquo;),
pursuant to which the Company agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company,
at&nbsp;$11.522 per share, which is the five-day average closing price immediately prior to signing the Purchase Agreements.&nbsp;One
of the purchaser is the Company&rsquo;s CEO (also is the Company&rsquo;s Chairman), he purchased 1,000,000 common shares of the Company.
On March 11, 2021, the Company received approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities
purchase agreements, there was no any fees paid in connection with this financing. In April 2021, the Company&rsquo;s CEO amended the
number of shares that he would purchase from 1,000,000 shares to 940,000 shares; accordingly, total number of shares sold in this offering
became 3,260,000 shares. The Company returned $691,320 extra proceeds that were received earlier to the Company&rsquo;s CEO in April
2021.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not believe inflation has had or will have a significant negative impact on our results of operations in 2021; however, there is no
assurance that unanticipated economic events could lead to inflation that might materially adversely affect our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Transfers
of Cash to and from Our Subsidiaries</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC has currency and capital transfer regulations that require us to comply with certain requirements for the movement of capital. The
Company is able to transfer cash (US Dollars) to its PRC subsidiaries through: (i) an investment (by increasing the Company&rsquo;s registered
capital in a PRC subsidiary), or (ii) a stockholder loan. The Company&rsquo;s subsidiaries in the PRC have not transferred any earnings
or cash to the Company to date. The Company&rsquo;s business is primarily conducted through its subsidiaries. The Company is a holding
company and its material assets consist solely of the ownership interests held in its PRC subsidiaries. The Company relies on dividends
paid by its subsidiaries for its working capital and cash needs, including the funds necessary: (i) to pay dividends or cash distributions
to its stockholders, (ii) to service any debt obligations and (iii) to pay operating expenses. As a result of PRC laws and regulations
(noted below) that require annual appropriations of 10% of after-tax income to be set aside in a general reserve fund prior to payment
of dividends, the Company&rsquo;s PRC subsidiaries are restricted in that respect, as well as in others respects noted below, in their
ability to transfer a portion of their net assets to the Company as a dividend.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">With
respect to transferring cash from the Company to its subsidiaries, increasing the Company&rsquo;s registered capital in a PRC subsidiary
requires the filing of the local commerce department, while a stockholder loan requires a filing with the state administration of foreign
exchange or its local bureau.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">With
respect to the payment of dividends, we note the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
    regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting
    standards and PRC regulations (an in-depth description of the PRC regulations is set forth below);</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards,
    each year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Such
    reserves may not be distributed as cash dividends;</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the
    event of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare
    Fund;</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary&rsquo;s ability to pay stockholder
    dividends or make other cash distributions; and</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Company is subject to covenants and consent requirements.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">If,
for the reasons noted above, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company
when needed, the Company&rsquo;s ability to conduct operations, make investments, engage in acquisitions, or undertake other activities
requiring working capital may be materially and adversely affected. However, our operations and business, including investment and/or
acquisitions by our subsidiaries within China, will not be affected as long as the capital is not transferred in or out of the PRC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
Regulations</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with PRC regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise
(&ldquo;FIE&rdquo;) established in the PRC is required to provide statutory reserves, which are appropriated from net profit, as reported
in the FIE&rsquo;s PRC statutory accounts. A FIE is required to allocate at least 10% of its annual after-tax profit to the surplus reserve
until such reserve has reached 50% of its respective registered capital (based on the FIE&rsquo;s PRC statutory accounts). The aforementioned
reserves may only be used for specific purposes and may not be distributed as cash dividends. Until such contribution of capital is satisfied,
the FIE is not allowed to repatriate profits to its stockholders, unless approved by the State Administration of Foreign Exchange. After
satisfaction of this requirement, the remaining funds may be appropriated at the discretion of the FIE&rsquo;s board of directors. Our
subsidiary, Shanghai TCH, qualifies as a FIE and is therefore subject to the above-mandated regulations on distributable profits.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
in accordance with PRC corporate law, a domestic enterprise is required to maintain a surplus reserve of at least 10% of its annual after-tax
profit until such reserve has reached 50% of its respective registered capital based on the enterprise&rsquo;s PRC statutory accounts.
The aforementioned reserves can only be used for specific purposes and may not be distributed as cash dividends. Xi&rsquo;an TCH, Huahong,
Zhonghong and Erdos TCH were established as domestic enterprises; therefore, each is subject to the above-mentioned restrictions on distributable
profits.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of PRC laws and regulations that require annual appropriations of 10% of after-tax income to be set aside, prior to payment
of dividends, in a general reserve fund, the Company&rsquo;s PRC subsidiaries are restricted in their ability to transfer a portion of
their net assets to the Company as a dividend or otherwise.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chart
of the Company&rsquo;s Statutory Reserve</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to PRC corporate law, effective January 1, 2006, the Company is required to maintain a statutory reserve by appropriating from its after-tax
profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings. Our restricted and
unrestricted retained earnings under US GAAP are set forth below:</FONT></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&nbsp;31,<BR> 2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&nbsp;31,<BR> 2019</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left">Unrestricted retained earnings (accumulated
    deficit)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(43,026,465</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(46,447,959</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Restricted retained earnings (surplus
    reserve fund)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">15,155,042</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">14,525,712</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Total retained earnings (accumulated
    deficit)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(27,871,423</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(31,922,247</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March&nbsp;31,<BR> 2021</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&nbsp;31,<BR> 2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left">Unrestricted retained earnings (accumulated
    deficit)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(43,305,227</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(43,026,465</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Restricted retained earnings (surplus
    reserve fund)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">15,156,580</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">15,155,042</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Total retained earnings (accumulated
    deficit)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(28,148,647</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(27,871,423</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>OFF-BALANCE
SHEET ARRANGEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders&rsquo; equity or that
are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable
interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing,
hedging or research and development services with us.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CONTRACTUAL
OBLIGATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s contractual obligations as of December 31, 2020 were as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">1 year or</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">More than</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Contractual
    Obligation</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">less</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">1 year</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left; padding-bottom: 1.5pt">Notes payable including
    accrued interest of $18,968</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">3,024,613</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Entrusted loan including interest
    payable of $10,144,228</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">32,040,972</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">306,518</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">35,065,585</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">306,518</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company believes it had sufficient cash in bank of $107 million as of December 31, 2020, and a sufficient channel to commercial institutions
to obtain any loans that may be necessary to meet its working capital needs. Historically, we have been able to obtain loans or otherwise
achieve our financing objectives due to the Chinese government&rsquo;s support for energy-saving businesses with stable cash inflows,
good credit ratings and history. However, there is no assurance that we will be able to continue obtaining loans or otherwise achieve
our financial objectives in the future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s contractual obligations as of March 31, 2021 were as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">1 year or</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">More than</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Contractual
    Obligation</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">less</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">1 year</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left; padding-bottom: 1.5pt">Notes payable including
    accrued interest of $81,968, net of unamortized OID of $125,605</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">3,106,363</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Entrusted loan including interest
    payable of $10,072,599</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">31,814,730</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">304,354</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">34,921,093</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">304,354</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company believes it had sufficient cash in bank of $144 million as of March 31, 2021, and a sufficient channel to commercial institutions
to obtain any loans that may be necessary to meet its working capital needs. Historically, we have been able to obtain loans or otherwise
achieve our financing objectives due to the Chinese government&rsquo;s support for energy-saving businesses with stable cash inflows,
good credit ratings and history. However, there is no assurance that we will be able to continue obtaining loans or otherwise achieve
our financial objectives in the future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_009"></A>BUSINESS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Overview</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are currently engaged in the recycling energy business, providing energy savings and recycling products and services. We are a pioneer
in waste energy recycling and a developer of energy efficiency solutions for various energy intensive industrial enterprises in China.
We use Build-Operate-Transfer (&ldquo;BOT&rdquo;) model to provide energy saving and recovery facilities for multiple energy intensive
industries in China. Our waste energy recycling projects allow customers which 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 in nonferrous metal plants. We construct our projects at our customer&rsquo;s facility and the electricity produced
is used on-site by the customer.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
develop fully customized projects across several verticals to better meet customer&rsquo;s energy recovery needs. 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 by 5% to 20%, lower their
operating costs, extend the life of primary manufacturing equipment, while still complying with government regulations on emissions.
In addition, our waste energy recycling projects allow our industrial customers to reduce their reliance on China&rsquo;s centralized
national power grid, which is prone to black-outs or brown-outs or is completely inaccessible from certain remote areas. Since our power
generation system uses the waste energy produced by customers&rsquo; original production line, it does not need to utilize new energy
sources from fossil fuel, coal, oil and natural gas. Our power generation system reduces the original waste product emission by recycling
waste energy, which is then turned into usable new energy, while adding no new carbon dioxide emissions, soot, waste residue and other
pollutants after the energy production process completes. Any waste product produced is usually in the form of liquid in such a negligible
amount that it is generally discharged into the sewage treatment system of the customers&rsquo; plant. Therefore, our projects are designed
to be more environmentally friendly than other forms of power generation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 20 years, and then transfer the projects to the owners.
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 capital to comply with government environmental regulations, reduce
noise and emissions and reduce their energy costs. We provide the initial capital investment for customers in exchange for a long-term
production agreement with attractive returns on investment. We in turn efficiently recapture our costs through the stream of lease payments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are headquartered in China. Our principal executive offices are located at 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd&nbsp;Road,
Yanta District, Xi&rsquo;an City, Shaanxi Province, China, and our telephone number at this location is +86-29-8765-1098.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Corporate
History</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&ldquo;PRC&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is primarily conducted through our wholly-owned subsidiaries, Yinghua and Sifeng, Sifeng&rsquo;s wholly-owned subsidiaries,
Huahong and Shanghai TCH, Shanghai TCH&rsquo;s wholly-owned subsidiaries, Xi&rsquo;an TCH, Xi&rsquo;an TCH&rsquo;s wholly-owned subsidiary
Erdos TCH and Xi&rsquo;an TCH&rsquo;s 90% owned and Shanghai TCH&rsquo;s 10% owned subsidiary Xi&rsquo;an Zhonghong New Energy Technology
Co., Ltd., and Zhongxun. Shanghai TCH was established as a foreign investment enterprise in Shanghai under the laws of the PRC on May
25, 2004, and currently has registered capital of $29.80 million. Xi&rsquo;an TCH was incorporated in Xi&rsquo;an, Shaanxi Province under
the laws of the PRC in November 2007. Erdos TCH was incorporated in April 2009. Huahong was incorporated in February 2009. Xi&rsquo;an
Zhonghong New Energy Technology Co., Ltd. was incorporated in July 2013. Xi&rsquo;an TCH owns 90% and Shanghai TCH owns 10% of Zhonghong.
Zhonghong provides 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&rsquo;an TCH.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is in the process of transforming and expanding into an energy storage integrated solution provider. We plan to pursue disciplined
and targeted expansion strategies for market areas we currently do not serve. We actively seek and explore opportunities to apply energy
storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale
photovoltaic (PV) and wind power stations,&nbsp;remote islands without electricity,&nbsp;and cities with multi-energy supplies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2019, the four ministries of China, including the National Development and Reform Commission, the National Energy Administration,
Ministry of Industry and Information and Ministry of Science and Technology, jointly issued &ldquo;the Implementation of 2019-2020 Action
Plan of the &lsquo;Promotion of Development of Energy Storage Technology and Industry Guidance&rsquo;&rdquo; to not only promote the
development of the energy storage industry in the areas of technical research and development, intelligent manufacture, demonstration
of application, and power battery energy storage applications, but also made clear assignment of responsibilities for local governments
to implement the plan. Local governments and power grid companies have issued relevant policies and implementation rules thereafter.
Driven by national policies and local measures, the market space of energy storage is expanding. We believe the foregoing measures demonstrate
that the application technology of energy storage is an industry supported by Chinese government.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s organizational chart as of the date of this prospectus is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_003.jpg" ALT="" STYLE="height: 523px; width: 750px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Our
Projects</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
design, finance, construct, operate and eventually transfer waste energy recycling projects designed 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Waste
Heat to Energy Systems</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Waste
heat to energy systems utilize waste heat generated in industrial production to generate electricity. The waste heat is trapped to heat
a boiler to create steam and power a steam turbine. Our waste heat to energy systems have used waste heat from cement production and
from metal production.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Shanghai
TCH and its Subsidiaries</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shanghai
TCH was established as a foreign investment enterprise in Shanghai under the laws of the PRC on May 25, 2004 and has a registered capital
of $29.80 million. Xi&rsquo;an TCH was incorporated in Xi&rsquo;an, Shaanxi Province under the laws of the PRC on November 8, 2007. In
February 2009, Huahong was incorporated in Xi&rsquo;an, Shaanxi province. Erdos TCH was incorporated in April 2009 in Erdos, Inner Mongolia
Autonomous Region. On July 19, 2013, Xi&rsquo;an TCH formed Xi&rsquo;an Zhonghong New Energy Technology Co., Ltd (&ldquo;Zhonghong&rdquo;).
Xi&rsquo;an TCH owns 90% and Shanghai TCH owns 10% of Zhonghong, which provides energy saving solutions and services, including constructing,
selling and leasing energy saving systems and equipment to customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2020, Erdos TCH leased power and steam generating systems from waste heat from metal refining to Erdos (a total of five
systems) and charges Erdos a leasing fee based on actual electricity generated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Erdos
TCH</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 14, 2009, the Company formed Erdos TCH as a joint venture (the &ldquo;JV&rdquo; or &ldquo;Erdos TCH&rdquo;) with Erdos Metallurgy
Co., Ltd. (&ldquo;Erdos&rdquo;) to recycle waste heat from Erdos&rsquo; metal refining plants to generate power and steam to be sold
back to Erdos. The JV has a term of 20 years, with an initial investment of $17.55 million (RMB 120 million), and the total investment
for the project estimated at $79 million (RMB 500 million). Erdos contributed 7% of the total investment for the project, and Xi&rsquo;an
TCH contributed 93%. According to Xi&rsquo;an TCH and Erdos&rsquo; agreement on profit distribution, Xi&rsquo;an TCH and Erdos will receive
80% and 20%, respectively, of the profit from the JV until Xi&rsquo;an TCH receives the complete return of its investment. Xi&rsquo;an
TCH and Erdos will then receive 60% and 40%, respectively, of the profit from the JV. On June 15, 2013, Xi&rsquo;an TCH and Erdos entered
into a share transfer agreement, pursuant to which Erdos transferred and sold its 7% ownership interest in the JV to Xi&rsquo;an TCH
for $1.29 million (RMB 8 million), plus certain accumulated profits as described below. Xi&rsquo;an TCH paid the $1.29 million in July
2013 and, as a result, became the sole stockholder of Erdos TCH. In addition, Xi&rsquo;an TCH was required to pay Erdos accumulated profits
from inception up to June 30, 2013, in accordance with the supplementary agreement entered on August 6, 2013. In August 2013, Xi&rsquo;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.
The power generation systems were built in 2009, and are now 12 years old. The equipment is obsolete and the efficiency of the power
generation systems is declining year by year. The current power generation efficiency can only reach 30%, and the equipment needs to
be upgraded. The Company plans to upgrade these five power generation systems in the next six months, commencing third quarter of 2021.
The total project cost is about $40,000,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
considering certain economic challenges facing Erdos and maintaining the long-term cooperative relationship between the parties, which
we believe will continue to produce long-term benefits, on April 28, 2016, Erdos TCH and Erdos entered into a supplemental agreement,
effective May 1, 2016. Under the supplemental agreement, Erdos TCH cancelled monthly minimum lease payments from Erdos, and agreed to
charge Erdos based on actual electricity sold at RMB 0.30 / KWH, with such price to be adjusted annually based on prevailing market conditions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company evaluated the modified terms for payments based on actual electricity sold as minimum lease payments as defined in ASC 840-10-25-4,
since lease payments that depend on a factor directly related to the future use of the leased property are contingent rentals and, accordingly,
are excluded from minimum lease payments in their entirety. The Company wrote off the net investment receivables of these leases at the
lease modification date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Pucheng
Biomass Power Generation Projects</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 29, 2010, Xi&rsquo;an TCH entered into a Biomass Power Generation (&ldquo;BMPG&rdquo;) Project Lease Agreement with PuchengXinHeng
Yuan Biomass Power Generation Co., Ltd. (&ldquo;Pucheng&rdquo;), a limited liability company incorporated in China. Under this lease
agreement, Xi&rsquo;an TCH leased a set of 12MW BMPG systems to Pucheng for a minimum of $279,400 (RMB 1,900,000) per month for a term
of 15 years (&ldquo;Pucheng Phase I&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 11, 2013, Xi&rsquo;an TCH entered into a BMPG Asset Transfer Agreement (the &ldquo;Pucheng Transfer Agreement&rdquo;) with
Pucheng Xin Heng Yuan Biomass Power Generation Corporation (&ldquo;Pucheng&rdquo;), a limited liability company incorporated in China.
The Pucheng Transfer Agreement provided for the sale by Pucheng to Xi&rsquo;an TCH of a set of 12 MW BMPG systems with the completion
of system transformation for a purchase price of $16.48 million (RMB 100 million) in the form of 8,766,547 shares of common stock of
the Company at $1.87 per share (the share and per share numbers were not adjusted for the Reverse Stock Split). Also, on September 11,
2013, Xi&rsquo;an TCH entered into a BMPG Project Lease Agreement with Pucheng (the &ldquo;Pucheng Lease&rdquo;). Under the Pucheng Lease,
Xi&rsquo;an TCH leases this same set of 12 MW BMPG systems to Pucheng, and combines this lease with the lease for the 12 MW BMPG station
of Pucheng Phase I project, under a single lease to Pucheng for $0.63 million (RMB 3.8 million) per month (the &ldquo;Pucheng Phase II
Project&rdquo;). The term for the Pucheng Lease is from September 2013 to June 2025. The lease agreement for the 12 MW station from the
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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Shenqiu
Yuneng Biomass Power Generation Projects</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 25, 2011, Xi&rsquo;an TCH entered into a Letter of Intent with Shenqiu YuNeng Thermal Power Co., Ltd. (&ldquo;Shenqiu&rdquo;) 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&rsquo;an TCH entered into
a Biomass Power Generation Asset Transfer Agreement with Shenqiu (the &ldquo;Shenqiu Transfer Agreement&rdquo;). Pursuant to the Shenqiu
Transfer Agreement, Shenqiu sold Xi&rsquo;an TCH a set of 12 MW BMPG systems (after Xi&rsquo;an TCH converted the system for BMPG purposes).
As consideration for the BMPG systems, Xi&rsquo;an TCH paid Shenqiu $10.94 million (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&rsquo;an TCH and Shenqiu also entered into a Biomass Power Generation Project Lease Agreement (the &ldquo;2011 Shenqiu Lease&rdquo;).
Under the 2011 Shenqiu Lease, Xi&rsquo;an TCH agreed to lease a set of 12 MW BMPG systems to Shenqiu at a monthly rental rate of $286,000
(RMB 1.8 million) for 11 years. Upon expiration of the 2011 Shenqiu Lease, ownership of this system will transfer from Xi&rsquo;an TCH
to Shenqiu at no additional cost. In connection with the 2011 Shenqiu Lease, Shenqiu paid one month&rsquo;s rent as a security deposit
to Xi&rsquo;an TCH, in addition to providing personal guarantees.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 8, 2012, Xi&rsquo;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 &ldquo;Shenqiu Phase II Project&rdquo;). 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&rsquo;an TCH and Shenqiu entered into a BMPG Project Lease Agreement
(the &ldquo;2013 Shenqiu Lease&rdquo;). Under the 2013 Shenqiu Lease, Xi&rsquo;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&rsquo;an TCH to Shenqiu at no additional cost.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 4, 2019, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai, a resident of China, entered into a Projects Transfer
Agreement (the &ldquo;Agreement&rdquo;), pursuant to which Xi&rsquo;an TCH transferred two Biomass Power Generation Projects in Shenqiu
(&ldquo;Shenqiu Phase I and II Projects&rdquo;) to Mr. Bai for $18.55 million (RMB 127,066,000). Mr. Bai agreed to transfer all the equity
shares of his wholly owned company, Xi&rsquo;an Hanneng Enterprises Management Consulting Co. Ltd. (&ldquo;Xi&rsquo;an Hanneng&rdquo;),
to Beijing Hongyuan Recycling Energy Investment Center, LLP (the &ldquo;HYREF&rdquo;), as repayment for the loan made by Xi&rsquo;an
Zhonghong to HYREE as consideration for the transfer of the Shenqiu Phase I and II Projects (See Note 10). The transfer was completed
on February 15, 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Yida
Coke Oven Gas Power Generation Projects</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 28, 2014, Xi&rsquo;an TCH entered into an Asset Transfer Agreement (the &ldquo;Transfer Agreement&rdquo;) with Qitaihe City Boli
Yida Coal Selection Co., Ltd. (&ldquo;Yida&rdquo;), a limited liability company incorporated in China. The Transfer Agreement provided
for the sale to Xi&rsquo;an TCH of a 15 MW coke oven WGPG station, which was converted from a 15 MW coal gangue power generation station
from Yida. As consideration for the Transfer Asset, Xi&rsquo;an TCH paid Yida $18.69 million (RMB 115 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. The exchange rate between US Dollar and Chinese RMB in connection with the stock issuance was the rate equal to the
middle rate published by the People&rsquo;s Bank of China on the closing date of the assets transfer.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 28, 2014, Xi&rsquo;an TCH also entered into a Coke Oven Gas Power Generation Project Lease Agreement (the &ldquo;Lease Agreement&rdquo;)
with Yida. Under the Lease Agreement, Xi&rsquo;an TCH leased the Transfer Asset to Yida for $0.49 million (RMB 3 million) per month,
and the term of the lease is from June 28, 2014 to June 27, 2029. Yida will also provide an $0.49 million (RMB 3 million) security deposit
(without interest) for the lease. Xi&rsquo;an TCH will transfer the Transfer Asset back to Yida at no cost at the end of the lease term.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 22, 2016, Xi&rsquo;an TCH entered into a Coal Oven Gas Power Generation Project Repurchase Agreement (the &ldquo;Repurchase Agreement&rdquo;)
with Yida. Under the Repurchase Agreement, Xi&rsquo;an TCH agreed to transfer to Yida all the project assets for $16.89 million (RMB
112,000,000) (the &ldquo;Transfer Price&rdquo;) with Yida&rsquo;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 of $0.90 million (RMB 6,000,000) to Xi&rsquo;an TCH within
5 business days from the execution of the Repurchase Agreement; (ii) a payment of $7.54 million RMB 50,000,000) of the Transfer Price
to Xi&rsquo;an TCH within 5 business days from the execution of the Repurchase Agreement; and (iii) a payment of the remaining $9.35
million RMB 62,000,000) of the Transfer Price to Xi&rsquo;an TCH within 15 business days from the execution of the Repurchase Agreement.
Under the Repurchase Agreement, ownership of the project assets was transferred from Xi&rsquo;an TCH to Yida within 3 business days after
Xi&rsquo;an TCH received 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>The
Fund Management Company and the HYREF Fund</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 25, 2013, Xi&rsquo;an TCH and Hongyuan Huifu Venture Capital Co. Ltd (&ldquo;Hongyuan Huifu&rdquo;) jointly established Hongyuan
Recycling Energy Investment Management Beijing Co., Ltd (the &ldquo;Fund Management Company&rdquo;) with registered capital of $1.45
million (RMB 10 million). With respect to the Fund Management Company, voting rights and dividend rights are allocated 80% and 20% between
Hongyuan Huifu and Xi&rsquo;an TCH, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Fund Management Company is the general partner of Beijing Hongyuan Recycling Energy Investment Center, LLP (the &ldquo;HYREF Fund&rdquo;),
a limited liability partnership established 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 amount of $77 million (RMB 460 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 $46.67 million (RMB 280 million) to the HYREF Fund and is a preferred limited partner; (2) Hongyuan Huifu, which made
an initial capital contribution of $16.67 million (RMB 100 million) to the HYREF Fund and is an ordinary limited partner; and (3) the
Company&rsquo;s wholly-owned subsidiary, Xi&rsquo;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&rsquo;s partnership is six years from the date of its
establishment, and was extended again for another six years, expiring July 18, 2025. 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 size of the HYREF
Fund is $76.66 million (RMB 460 million). The HYREF Fund was formed for the purpose of investing in Xi&rsquo;an Zhonghong New Energy
Technology Co., Ltd., a then 90% owned subsidiary of Xi&rsquo;an TCH, for the construction of two coke dry quenching (&ldquo;CDQ&rdquo;)
waste heat power generation (&ldquo;WHPG&rdquo;) stations with Jiangsu Tianyu Energy and Chemical Group Co., Ltd. (&ldquo;Tianyu&rdquo;)
and one CDQ WHPG station with Boxing County Chengli Gas Supply Co., Ltd. (&ldquo;Chengli&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Chengli
Waste Heat Power Generation Projects</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 19, 2013, Xi&rsquo;an TCH formed a new company, &ldquo;Xi&rsquo;an Zhonghong New Energy Technology Co., Ltd.&rdquo; (&ldquo;Zhonghong&rdquo;),
with registered capital of $4.85 million (RMB 30 million). Xi&rsquo;an TCH paid $4.37 million (RMB 27 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. On December 29, 2018, Shanghai TCH entered into a Share Transfer Agreement with HYREF, pursuant to which
HYREF transferred its 10% ownership in Xi&rsquo;an Zhonghong to Shanghai TCH for $0.44 million (RMB 3 million). The transfer was completed
on January 22, 2019.&nbsp;The Company owns 100% of Xi&rsquo;an Zhonghong after the transaction.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 24, 2013, Zhonghong entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching Waste Heat Power Generation
Project) with Boxing County Chengli Gas Supply Co., Ltd. (&ldquo;Chengli&rdquo;). 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 &ldquo;Chengli Project&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 29, 2018, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed
Assets Transfer Agreement, pursuant to which Xi&rsquo;an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan
of $27.54 million (RMB 188,639,400) to HYREF. Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, Guohua Ku and Chonggong Bai also agreed to buy
back the CDQ WHPG Station when conditions under the Buy Back Agreement are met (see Note 9). The transfer of the Station was completed
January 22, 2019, the Company recorded $624,133 loss from this transfer. Since the original terms of Buy Back Agreement are still valid,
and the Buy Back possibility could occur; therefore, the loan principal and interest and the corresponding asset of Chengli CDQ WHPG
station cannot be derecognized due to the existence of Buy Back clauses (see Note 5 for detail).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Tianyu
Waste Heat Power Generation Project</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 19, 2013, Zhonghong entered into a Cooperative Agreement (the &ldquo;Tianyu Agreement&rdquo;) for Energy Management of CDQ and CDQ
WHPG Projects with Jiangsu Tianyu Energy and Chemical Group Co., Ltd. (&ldquo;Tianyu&rdquo;). 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 &ndash; Xuzhou
Tian&rsquo;an Chemical Co., Ltd. (&ldquo;Xuzhou Tian&rsquo;an&rdquo;) and Xuzhou Huayu Coking Co., Ltd. (&ldquo;Xuzhou Huayu&rdquo;)
&ndash; to be located at Xuzhou Tian&rsquo;an and Xuzhou Huayu&rsquo;s respective locations (the &ldquo;Tianyu Project&rdquo;). Upon
completion of the Tianyu Project, Zhonghong will charge Tianyu an energy saving fee of $0.087 (RMB 0.534) per kilowatt hour (excluding
tax). The term of the Tianyu Agreement is 20 years. The construction of the Xuzhou Tian&rsquo;an Project is anticipated to be completed
by the second quarter of 2020. The Xuzhou Huayu Project has been on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd. and
local residents on certain pollution-related issues.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 4, 2019, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement (the &ldquo;Agreement&rdquo;),
pursuant to which Xi&rsquo;an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking
Co., Ltd. (&ldquo;Xuzhou Huayu Project&rdquo;) to Mr. Bai for $17.52 million (RMB 120,000,000). Mr. Bai agreed that as consideration
for the transfer of the Xuzhou Huayu Project to him (Note 9), he would transfer all the equity shares of his wholly owned company, Xi&rsquo;an
Hanneng, to HYREF as repayment for the loan made by Xi&rsquo;an Zhonghong to HYREF. The transfer of the project was completed on February
15, 2019. The Company recorded $397,033 loss from this transfer during the year ended December 31, 2019.&nbsp;On January 10, 2019, Mr.
Chonggong Bai transferred all the equity shares of his wholly owned company, Xi&rsquo;an Hanneng, to HYREF as repayment for the loan.
Xi&rsquo;an Hanneng was expected to own 47,150,000 shares of Xi&rsquo;an Huaxin New Energy Co., Ltd for the repayment of Huayu system
and Shenqiu system. As of September 30, 2019, Xi&rsquo;an Hanneng already owned 29,948,000 shares of Huaxin, but was not able to obtain
the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 20,
2019, Mr. Bai and all the related parties agreed to have Mr. Bai instead pay in cash for the transfer price of Huayu (see Note 9 for
detail).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 10, 2020, Zhonghong, Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights
and interests of Xuzhou Tian&rsquo;an Project to Tianyu for $24.37 million including VAT (RMB 170 million) in three installment payments.
The 1st installment payment of $7.17 million (RMB 50 million) to be paid within 20 working days after the contract is signed. The 2nd
installment payment of $7.34 million (RMB 50 million) is to be paid within 20 working days after completion of the project construction
but no later than July 31, 2020. The final installment payment of $10.28 million (RMB 70 million) was to be paid before December 31,
2020. In December, 2020, the Company received the payment in full for Tian&rsquo;an Project.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Zhongtai
Waste Heat Power Generation Energy Management Cooperative Agreement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 6, 2013, Xi&rsquo;an TCH entered into a CDQ and WHPG Energy Management Cooperative Agreement (the &ldquo;Zhongtai Agreement&rdquo;)
with Xuzhou Zhongtai Energy Technology Co., Ltd. (&ldquo;Zhongtai&rdquo;), a limited liability company incorporated in Jiangsu Province,
China.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Zhongtai Agreement, Xi&rsquo;an TCH was to 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&rsquo;an TCH is also to build a furnace to generate steam from the smoke pipeline&rsquo;s waste
heat and sell the steam to Zhongtai.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
construction period of the Project was expected to be 18 months from the date when conditions are ready for construction to begin. Zhongtai
is to 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 $0.089 (RMB 0.534) 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 $0.067
(RMB 0.402) 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&rsquo;an
TCH at $16.67 (RMB 100) 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&rsquo;an TCH will transfer the systems to Zhongtai
for $0.16 (RMB 1). 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&deg;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&rsquo;an
TCH with a 60 day notice and pay the termination fee and compensation for the damages to Xi&rsquo;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&rsquo;an TCH&rsquo;s total
investment amount plus Xi&rsquo;an TCH&rsquo;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&rsquo;an TCH&rsquo;s
total investment amount minus total amortization cost (the amortization period is 10 years).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2016, Xi&rsquo;an TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Zhongtai and Xi&rsquo;an Huaxin (the
&ldquo;Transfer Agreement&rdquo;). Under the Transfer Agreement, Xi&rsquo;an TCH agreed to transfer to Zhongtai all of the assets associated
with the CDQ Waste Heat Power Generation Project (the &ldquo;Project&rdquo;), which is under construction pursuant to the Zhongtai Agreement.
Additionally, Xi&rsquo;an TCH agreed to transfer to Zhongtai the Engineering, Procurement and Construction (&ldquo;EPC&rdquo;) Contract
for the CDQ Waste Heat Power Generation Project which Xi&rsquo;an TCH had entered into with Xi&rsquo;an Huaxin in connection with the
Project. Xi&rsquo;an Huaxin will continue to construct and complete the Project and Xi&rsquo;an TCH agreed to transfer all its rights
and obligations under the EPC Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi&rsquo;an
TCH $25.77 million (RMB 167,360,000) including (i) $23.46 million (RMB 152,360,000) for the construction of the Project; and (ii) $2.31
million (RMB 15,000,000) as payment for partial loan interest accrued during the construction period. Those amounts have been, or will
be, paid by Zhongtai to Xi&rsquo;an TCH according to the following schedule: (a) $7.70 million (RMB 50,000,000) was to be paid within
20 business days after the Transfer Agreement was signed; (b) $4.32 million (RMB 30,000,000) was to be paid within 20 business days after
the Project was completed, but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) was to be paid no later than July
30, 2017. Xuzhou Taifa Special Steel Technology Co., Ltd. (&ldquo;Xuzhou Taifa&rdquo;) guaranteed the payments from Zhongtai to Xi&rsquo;an
TCH. The ownership of the Project was conditionally transferred to Zhongtai following the initial payment of $7.70 million (RMB 50,000,000)
by Zhongtai to Xi&rsquo;an TCH and the full ownership of the Project was to be transferred to Zhongtai after it completes all payments
pursuant to the Transfer Agreement. The Company recorded a $2.82 million loss from this transaction in 2016. In 2016, Xi&rsquo;an TCH
had received the first payment of $7.70 million and the second payment of $4.32 million. However, the Company received a repayment commitment
letter from Zhongtai on February 23, 2018, in which Zhongtai committed to pay the remaining payment of $13.45 million (RMB 87,360,000)
no later than the end of July 2018. In July 2018, Zhongtai and the Company reached a further oral agreement to extend the repayment term
of $13.45 million (RMB 87,360,000) by another two to three months. Nevertheless, in January 2020, Zhongtai paid RMB 10 million ($1.41
million); in March 2020, Zhongtai paid $2.82 million (RMB 20 million); in June 2020, Zhongtai paid $1.41 million (RMB 10 million); and
in December 2020, Zhongtai paid $4.28 million (RMB 30 million), which was payment in full. Accordingly, the Company reversed bad debt
expense of $5.80 million which was recorded earlier.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Formation
of Zhongxun</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 24, 2014, Xi&rsquo;an TCH incorporated a new subsidiary, Zhongxun Energy Investment (Beijing) Co., Ltd (&ldquo;Zhongxun&rdquo;)
with registered capital of $5,695,502 (RMB 35,000,000), to be paid no later than October 1, 2028. Zhongxun is 100% owned by Xi&rsquo;an
TCH and is 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Formation
of Yinghua</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 11, 2015, the Company incorporated a new subsidiary, Shanghai Yinghua Financial Leasing Co., Ltd (&ldquo;Yinghua&rdquo;) 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 is 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Summary
of Sales-Type Lease at December 31, 2020 Status at December 31, 2020</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2020, Xi&rsquo;an TCH had the following sales-type leases: BMPG systems to Pucheng Phase I and II (15 and 11-year terms,
respectively). On February 15, 2019, Xi&rsquo;an TCH transferred the Shenqiu Phase I and II Projects to Mr. Chonggong Bai.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Asset
Repurchase Agreement</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended December 31, 2020 and 2019, the Company entered into or completed the following Asset Repurchase Agreements:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 16, 2015, Xi&rsquo;an TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Rongfeng and Xi&rsquo;an Huaxin
New Energy Co., Ltd., a limited liability company incorporated in China (&ldquo;Xi&rsquo;an Huaxin&rdquo;). The Transfer Agreement provided
for the sale to Rongfeng of the CDQ Waste Heat Power Generation Project (the &ldquo;Project&rdquo;) from Xi&rsquo;an TCH. Additionally,
Xi&rsquo;an TCH agreed to transfer to Rongfeng the Engineering, Procurement and Construction (&ldquo;EPC&rdquo;) Contract for the CDQ
Waste Heat Power Generation Project which Xi&rsquo;an TCH had entered into with Xi&rsquo;an Huaxin in connection with the Project. As
consideration for the transfer of the Project, Rongfeng agreed to pay to Xi&rsquo;an TCH an aggregate purchase price of $25.45 million
(RMB 165,200,000), whereby (a) $10.05 million (RMB 65,200,000) will be paid by Rongfeng to Xi&rsquo;an TCH within 20 business days after
the Transfer Agreement is signed, (b) $7.70 million (RMB 50,000,000) will be paid by Rongfeng to Xi&rsquo;an TCH within 20 business days
after the Project is completed, but no later than March 31, 2016 and (c) $7.70 million (RMB 50,000,000) will be paid by Rongfeng to Xi&rsquo;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 $10.05 million
(RMB 65,200,000) by Rongfeng to Xi&rsquo;an TCH and the full ownership of the Project has been 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. The Company received full payment of $25.45 million in 2016.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2016, Xi&rsquo;an TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Zhongtai and Xi&rsquo;an Huaxin (the
&ldquo;Transfer Agreement&rdquo;). Under the Transfer Agreement, Xi&rsquo;an TCH agreed to transfer to Zhongtai all of the assets associated
with the CDQ Waste Heat Power Generation Project (the &ldquo;Project&rdquo;), which is under construction pursuant to the Zhongtai Agreement.
Xi&rsquo;an Huaxin will continue to construct and complete the Project and Xi&rsquo;an TCH agreed to transfer all its rights and obligation
under the &ldquo;EPC&rdquo; Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi&rsquo;an
TCH an aggregate transfer price of $25.77 million (RMB 167,360,000) including payments of: (i) $23.46 million (RMB 152,360,000) for the
construction of the Project; and (ii) $2.31 million (RMB 15,000,000) as payment for partial loan interest accrued during the construction
period. Those amounts have been, or will be, paid by Zhongtai to Xi&rsquo;an TCH according to the following schedule: (a) $7.70 million
(RMB 50,000,000) was paid within 20 business days after the Transfer Agreement was signed; (b) $4.32 million (RMB 30,000,000) will be
paid within 20 business days after the Project is completed, but no later than July 30, 2016; and (c) $13.45 million (RMB 87,360,000)
will be paid no later than July 30, 2017. Xuzhou Taifa Special Steel Technology Co., Ltd. (&ldquo;Xuzhou Taifa&rdquo;) has guaranteed
the payments from Zhongtai to Xi&rsquo;an TCH. The ownership of the Project was conditionally transferred to Zhongtai following the initial
payment of $7.70 million (RMB 50,000,000) by Zhongtai to Xi&rsquo;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. Xi&rsquo;an TCH received the first payment of $7.70 million
and the second payment of $4.32 million in 2016. The Company recorded a $2.82 million loss from this transaction. In January 2020, Zhongtai
paid $1.41 million (RMB 10 million); in March 2020, Zhongtai paid $2.82 million (RMB 20 million); in June 2020, Zhongtai paid $1.41 million
(RMB 10 million); in December 2020, Zhongtai paid $4.62 million (RMB 30 million). The company received full payment of $25.77 million
in 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 22, 2020, Shanghai TCH entered into an Equity Acquisition Agreement with Xi&rsquo;an Taiying Energy Saving Technology Co., Ltd.,
a PRC company (&ldquo;Xi&rsquo;an Taiying&rdquo;), and its three shareholders to purchase all of the issued and outstanding shares of
stock of Xi&rsquo;an Taiying. The purchase price for said shares shall consist of (i) 619,525 shares of common stock at an issuance price
of $4.37 per share, (ii) 60,000,000 shares of Series A convertible&nbsp;stock and (iii) a cash payment of RMB 1,617,867,026 (approximately
$247 million at a conversion rate of 1:6.55). The shares shall be issued within 15 business days after approval by the Board of Directors
and/or shareholders of the Company and Nasdaq approval and the cash shall be paid in three tranches &ndash; RMB 390 million (approximately
$59.5 million) within 10 days after the agreement is executed, RMB 300 million (approximately $45.8 million) by March 31, 2021 and RMB
927,867,026 (approximately $141.7 million) within 10 days after the shares of Xi&rsquo;an Taiying are registered to Buyer. As of the
date of this prospectus, the Company has not obtained, and there is no assurance that the Company will be able to obtain, necessary approval
from Nasdaq to proceed with the transaction. In addition, the Company is currently renegotiating the payment terms with the sellers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Industry
and Market Overview</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Overview
of Waste-to-Energy Industry</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
waste energy recycling industry concentrates mostly on power-intensive manufacturing and production processes, such as iron, steel and
nonferrous metal production, cement production, and coal and petrochemical plants. Our waste energy recycling projects allow customers
to recapture previously wasted pressure, heat, and gas from their manufacturing and production processes and use this waste to generate
electricity. Waste energy recycling projects are installed at a customer&rsquo;s facility and the electricity produced can be used on-site
to lower energy costs and create a more efficient production process. The industry verticals at the vanguard of this trend are metallurgical
production (including iron&nbsp;&amp; steel), cement, coal mining, coke production and petrochemicals.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
industry also includes the conversion of biomass to electricity. For thousands of years, biomass, biological material derived from living
organisms like plants and their byproducts, was burned to produce heat so as to convert it to energy. A number of non- combustion methods
are now available to convert raw biomass into a variety of gaseous, liquid, or solid fuels that can be used directly in a power plant
to generate electricity.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Waste-to-Energy
Industry Growth</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
has experienced rapid economic growth and industrialization in recent years, increasing the demand for electricity. In the PRC, growth
in energy consumption has exceeded growth in gross domestic product, causing a shortage of electricity with blackouts and brownouts over
much of the country. Much of the energy demand has been due to the expansion of energy intensive industrial sectors such as steel, cement,
and chemicals. China&rsquo;s increasing modernization and industrialization has made it the world&rsquo;s largest consumer of energy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">One
result of this massive increase in electric generation capacity has been the rise of harmful emissions. China has surpassed the United
States to become the world&rsquo;s largest emitter of greenhouse gases, and the country faces enormous challenges from the pollution
brought about by its consumption of conventional energy. On September 12, 2013, the State Council released the Action Plan for Air Pollution
Prevention and Control. The action plan has proposed that in five years, China will witness the overall improvement of air quality and
dramatic drop of seriously polluted days. It is anticipated that China will strive to gradually improve air quality in China by focusing
on reducing emissions and maximizing energy creation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Description
of WGPG (Waste Gas Power Generation)</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the process of industrial production, some by-products, such as blast furnace gas, coke furnace gas, oil gas, and others are created
with certain high intensive thermal energy. The waste gas can be collected and used as a fuel by gas turbine systems to generate power
energy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gas
turbines are a set of hi-tech equipment and devices that are crucial to the energy development strategy of China. Gas turbines, which
use flammable gas as fuel and combines with recycling power generating technology, have many merits. These include high efficiency power
generation, low investment, short construction periods, small land usage, water savings, environment protection and more. We believe
the market prospect of the gas turbine industry is promising.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Through
years of research, development and experimental applications, this gas-to-energy system has started to be applied into some high energy
intensive industrial plants, such as in the course of iron-smelting in metallurgy plants.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the vigorous promotion of national policies, the installed capacity of waste heat power generation in China is growing continuously.
According to the report by envirunion.com, by the end of 2020, the cumulative installed capacity of waste heat power generation in China
is estimated to be 45 million kilowatts.&nbsp;However, the utilization of waste heat resources is still not enough, and there is still
a large space for utilization.&nbsp;In 2020, the average total recycled waste heat resources in China will be about 1.3 billion tons
of standard coal. During the 14th Five-Year Plan period, continuous research and development and breakthroughs in efficient and energy-saving
technologies will promote the upgrading of traditional production processes. It is estimated that in 2026, the installed capacity of
waste heat power generation in China will be close to 200 million kilowatts. (<I>Source</I>: http://www.envirunion.com/newsinfo-27773.html.)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
report also indicates that at present, the installed capacity of waste heat power generation accounts for about 2% of the country&rsquo;s
installed capacity of power generation. During the 14th Five-Year Plan period, the continuous research and development and breakthrough
of efficient and energy-saving technology will promote the upgrading of traditional production process, and the market share of industrial
energy saving such as the utilization of waste heat and pressure will further expand, and the proportion of waste heat power generation
in the country&rsquo;s installed capacity will also continue to expand.&nbsp;It is estimated that in 2026, the installed capacity of
waste heat power generation in China will be close to 200 million kilowatts.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2021-2026
Forecast of China&rsquo;s Waste Heat Power Generation Installation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unit:
One hundred thousand GW)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;<IMG SRC="img_004.jpg" ALT="" STYLE="height: 400px; width: 650px"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Stringent
Environmental Standards and Increasing Government Support</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
energy is a major strategic issue affecting the development of the Chinese economy, the Chinese government has promoted the development
of recycling and encouraged enterprises to use waste energy recycling projects of the type we sell and service. Similar to previous five-year
periods, the China National Environment Protection Plan, for the 14th five year period (2021-2025), is focused on high energy consumption
industries, including specific programs to support the building of waste energy recycling projects for application in iron, steel and
nonferrous metal plants and in cement production lines. Given the worsening environment and insufficient energy supply in China, the
Chinese government has implemented policies to curb pollution and reduce wasteful energy usage. The Renewable Energy Law, strict administrative
measures to restrict investment and force consolidation in energy wasting industries, and the requirement to install energy-saving and
environment protecting equipment whenever possible are just some ways the government is emphasizing the need to reduce emissions and
to maximize energy creation. Local government officials are now required to tie emission, energy usage and pollution to GDP growth. If
local emissions of pollutants grow faster than the local GDP, these local officials face the risk of losing their jobs. Such determination
and strict enforcement by the central and local governments provide a good backdrop and are expected to enhance growth opportunities
for the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following tables show the funds invested, or expected to be invested, in the environmental protection industry by the Chinese government.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_005.jpg" ALT="" STYLE="height: 382px; width: 650px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_006.jpg" ALT="" STYLE="height: 309px; width: 650px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Source:
China National Environmental Protection Plan in the 13th Five Year Plan (2016-2020).</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
recent years, China attached great importance to the problem of environmental pollution, and has invested a lot of manpower and capital
cost in air pollution control. It is estimated that in 2021, the total output value of China&rsquo;s environmental protection industry
will reach nearly RMB 11 trillion.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_007.jpg" ALT="" STYLE="height: 329px; width: 650px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
14th Five-Year Plan (2021-2025) covers a crucial period in China&rsquo;s economic and social development. Environmental protection and
low-carbon development will be one of the top priority considerations during this period. The government, private enterprises and the
public sector are expected to jointly implement the strictest environmental protection system to realize environmental improvement, control
carbon emissions, honor climate commitments and deeply participate into global climate governance. China aims to hit the CO2 emissions
peak by around 2030 and reduce CO2 emissions per unit of the GDP by 60 percent to 65 percent from the 2005 level on or before 2030.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Waste-to-Energy
is a Cost-Effective Means to Meet Rising Energy Needs</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">It
is anticipated that China will need to increase its electricity generating capacity to meet its future needs. This demand may mean price
increases for electricity in China. With the need for more energy, in particular energy that does not cause additional emissions, and
the relative low price of the waste-to-energy production we provide, we believe that our markets will continue to expand.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
China has been experiencing a dramatic surge in its energy consumption as well as widespread energy shortages, recycling energy is not
only an attractive alternative to other sources of energy as part of a national diversification strategy to avoid dependence on any one
energy source or politically sensitive energy supplies, but also a proven solution to make the use of energy more efficient. Under current
economic conditions and current tax and regulatory regimes, waste energy recycling projects generally can create price- competitive electricity
compared to electricity generated from fossil fuels or other renewable sources. Our customers can reduce energy costs significantly by
installing our waste energy recycling projects. Because the waste heat/pressure/power we collect to recycle and generate electricity
is provided at no cost and the raw materials we use for power are free, the generating cost from recycling energy is lower compared to
electricity cost from the national grid. This means our customers can leverage the waste-to-energy projects to generate low-cost electricity,
reducing energy costs for the manufacturing process.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Customers
of our energy recycling projects may also qualify for credits from the Clean Development Mechanism (&ldquo;CDM&rdquo;). The CDM is an
international arrangement under the Kyoto Protocol, allowing industrialized countries with a greenhouse gas reduction commitment to invest
in ventures that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.
In 2005, China&rsquo;s government promulgated &ldquo;Measures for Operation and Management of Clean Development Mechanism Projects in
China&rdquo; (&ldquo;China CDM Measures&rdquo;) to facilitate the application and operation of CDM project activities in China. Our energy
recycling solutions are of a kind which fall into the beneficial categories accredited by the China CDM Measures. If our customers can
get approval from the Chinese government and successfully register their projects in the United Nations&rsquo; CDM Executive Board, they
can receive additional revenue income through exchanging their Certified Emission Reductions (&ldquo;CER&rdquo;) credits with investors
in industrialized countries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Trends
in Industries we Principally Service</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Iron,
Steel and Nonferrous Metal Industry</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
the biggest iron and steel producer in the world and one of the highest carbon dioxide emission sectors, China&rsquo;s iron and steel
industry is undergoing a low-carbon transition accompanied by remarkable technological progress and investment adjustment, in response
to the macroeconomic climate and policy intervention.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
nonferrous metals industry is an important raw material industry in China because it plays an important role in supporting the domestic
economy. In recent years, China &lsquo;s nonferrous metals industry has maintained strong momentum of development and made noteworthy
achievements. Faced with mounting pressure on resources and the environment, the industry of China &lsquo;s nonferrous metals has reached
an important transition without delay.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China&rsquo;s&nbsp;non-ferrous&nbsp;metal&nbsp;sector
started well in&nbsp;2021. The output of 10 types of non-ferrous metals stood at 16.05 million tons, a 11.7% increase from 2020 and resulting
in an average first-quarter year-on-year growth of 8.2% over the past two years, according to the National Bureau of Statistics.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Our
Strategies</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Expand
to New Business of Energy Storage with Future High Growth Potentials</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are in the process of transforming into an energy storage integrated solution provider. We plan to pursue disciplined and targeted expansion
strategies for market areas that we currently do not serve. We are actively seeking and exploring opportunities to apply energy storage
technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic
(PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies. By supporting and
motivating all kinds of the electric power market to participant in resource development and utilization of demand response, we plan
to provide services including peak shaving with compensation and frequency modulation.</FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
recent years, electrochemical energy storage technology has maintained a rapid growth trend, the cumulative installed capacity continues
to expand.&nbsp;In 2020, the accumulative installed capacity of electrochemical energy storage in China was 3269.2MW.&nbsp;During the
14th Five-Year Plan period, it is an important period for energy storage to explore and realize the &ldquo;rigid demand&rdquo; application
of the market, to productize the system and to obtain stable commercial interests. It is expected that the electrochemical energy storage
market will continue to develop rapidly in 2021, with the accumulative installed capacity reaching 5790.8MW.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2021, the National Development and Reform Commission and the National Energy Administration issued Guiding Opinions on Accelerating
the Development of New Type Energy Storage. This is the second national comprehensive policy document on the energy storage industry
since the National Energy Administration, together with five ministries and commissions, issued the Guiding Opinions on Promoting the
Development of China&rsquo;s Energy Storage Technology and Industry in 2017 (the &ldquo;New Energy Storage Guidance&rdquo;). The New
Energy Storage Guidance establishes a &ldquo;double carbon&rdquo; goal, providing a development goal and direction for the industry.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
New Energy Storage Guidance, for the first time, explicitly quantified the development &ldquo;double carbon&rdquo; goals of the energy
storage industry at the national level, and it is estimated that more than 30 million kilowatts (30GW+) of new energy storage projects
will be installed by 2025. From 3.28GW at the end of 2020 to 30GW in 2025, the scale of the new energy storage market is expected to
expand 10 times the current level in the next five years, with an annual compound annual growth rate of more than 55%, as a consequence
of the New Energy Storage Guidance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Continually
Enhance Research and Development Efforts</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
plan to devote resources to research and development in order to enhance our waste-to-energy design and engineering capabilities. We
anticipate that our in-house design and engineering team will provide additional competitive advantages, including flexibility to quickly
design and evaluate new technologies or applications in response to changing market trends.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Our
Business Models</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have sold our products to our customers under two models: the BOT model and the operating lease model, although we emphasize the BOT
model which we believe is more economically beneficial to us and to our customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>BOT
Model</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
primarily engage in the BOT model to provide waste-to-energy solutions to our customers:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&ldquo;Build&rdquo;</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
work directly with customers for each of our waste-to-energy projects. Our working process starts with a team of engineers that assesses
and analyzes the specific needs of the customer to establish the design layout, equipment procurement list and capital expenditure budget
for the project. Our sales team works closely with our engineering staff to present and negotiate the model with the customer.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
the signing of a contract, we finance the entire capital expenditure budget ourselves and commence the construction and installation
of the project. We do not manufacture the equipment and materials that are used in the construction of the waste-to-energy power generation
facility. Rather, we incorporate standard power generating equipment into a fully integrated on-site waste energy recycling project for
our customer. The construction and installation period ranges from three to 12 months subject to the project type, size and complexity.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
usually engage an energy, procurement and construction, or EPC, general contractor, who is experienced in power plant and waste energy
recycling project construction, to take charge of equipment procurement, project construction and installation. Our team of five engineers
participates in and monitors the equipment purchase process; this team also oversees the construction and installation activities to
ensure that they are completed on time and meet our rigorous standards and specifications.</FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&ldquo;Operate&rdquo;</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
the project has been installed at the customer site and passed a series of stringent tests, we outsource the operation to a third-party
vendor. The operation period ranges from five to 20 years, subject to the terms of each contract. Currently, we have one active project
under such contract as we transition into an energy storage integrated solution provider.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the operation period, the customer is able to purchase all the electricity at a below-market price. We collect energy-saving-based lease
payments from the customer; the lease term is equivalent to the operation period, ranging from five to 20 years, and the payments are
based on the sale by us, as lessor, to our customers, as lessee, of energy generated by the waste energy recycling project at below-market
rates. The customer&rsquo;s payments are based on a minimum operation schedule agreed upon with our customer, and are collateralized
by assets of the customer and/or third party guarantees. To reduce risk, we offer leasing services across a wide variety of industries
and only target larger manufacturers or state-owned enterprises. Operation in excess of the minimum schedule enables us to receive additional
revenues from the excess energy generated and sold to the customer.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&ldquo;Transfer&rdquo;</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
on the specific terms for each project, we eventually transfer the waste energy recycling project to the customer at no cost or a nominal
cost upon the completion of the operation/lease period. For example, Tongchuan Shengwei Cement Power Generation project signed a 9-year
lease starting from the first quarter of 2009 to the end of 2013. After the lease term was up, we transferred the station to the owner
at no cost pursuant to the contract terms, which vary based on industries and the type of power generation stations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Why
BOT</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Waste-to-energy
projects are capital intensive, which requires the manufacturers to invest a considerable amount of cash to purchase equipment during
the construction period. As a BOT service provider, we fund all contracted projects on our own or jointly with our customers; such financing
arrangements can help our customers by removing or reducing the heavy capital expenditure burden required by specific projects, thereby
allowing them to concentrate on their core business. While technologically mature in advanced countries, waste-to-energy projects are
still new to most of China&rsquo;s industrial companies and require intensive technology or know-how with respect to energy recycling
and power generation. It is time-consuming or not feasible for industrial manufacturers to equip themselves with adequate expertise and
technicians. We believe that our specific sector knowledge and project experience allow us to construct, operate and maintain the power
plants efficiently and to respond to operational issues in a timely and cost-efficient manner.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
exchange for upfront capital investment, we require secured power generating capacity during the operation period and guaranteed attractive
internal rates of return from each project. Our operation period ranges from five to 20 years, during which we are entitled to sell the
recycled electricity to those customers at a predetermined rate. Such electricity sales are secured by long-term electricity production
agreements with guarantees, which result in minimum annual payments. We employ a process of systematic internal scrutiny on new customer
development, so as to minimize operational and default risk. For some smaller or non-state-owned enterprises, we require property collateral,
management or third-party guarantees, and/or prepayment of three months. As such, our cash inflow schedule from each in-operation project
is fixed and predictable, providing clear financial visibility. Our payback period is generally two to three years, depending on the
project size.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
our experience, this BOT model is well received by our existing and potential customers in China. The insufficient supply of BOT vendors
to the market is wholly due to the funding limitations of most of the recycling energy solution providers. Not all of our competitors
have the ability to access sufficient capital on a timely basis.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Contractor
and Equipment Suppliers</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
generally conduct our project construction through an EPC general contractor. We select the EPC general contractor for each project through
a bidding process; then we sign a contract with the selected contractor for that project. The general contractor may outsource parts
of our project construction to subcontractors according to the complexity and economics of the project. The general contractor is responsible
for purchasing equipment to satisfy the requirements of the project we design for our customer. We generally do not purchase equipment
directly from the equipment suppliers, but our general contractors obtain our consent before selecting the equipment suppliers. Our engineering
department is involved in the equipment supplier selection process together with our general contractors and makes sure our standards
and requirements have been appropriately applied in selection of the equipment. We currently have engaged Shaanxi Huaxin Energy Engineering
Co., Ltd. for our projects under construction, and we also maintain relationships with several other quality general contractors in China,
including Wuxi Guolian, CITIC Heavy Industries Co., Ltd., A-Power Energy Generation Systems, Ltd.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
mentioned above, 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 system. The key equipment used in our projects
are the boilers and turbine generators, which represent the majority of equipment cost for each project. Though we do not place the direct
procurement orders, we believe we maintain good relationships with those power generation equipment suppliers, and these relationships
help provide cost-effective equipment purchasing by the general contractor for our intended projects and ensure the timely completion
of these projects. We have well-established business relationships with most of the suppliers from whom our general contractors procure
equipment, including Hangzhou Boiler Plant, Beijing Zhongdian Electric Machinery, Chengdu Engine Group, Shanghai Electric Group, China
Aviation Gas Turbine Co. Ltd and Xuji Electric. Therefore, we believe that we have a strong position and support in equipment supply
and installation, which benefits us, the general contractors and our customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Main
Customers</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
customers are mainly mid- to large-size enterprises in China involving high energy-consuming businesses. Following our selection process
described in the next paragraph, we conduct stringent evaluation procedures to identify and qualify potential customers and projects.
To lower our investment and operational risk, we target companies with geographic or industry competitive advantages, with strong reputations
and in good financial condition. Generally, our targets include steel and nonferrous metal mills with over 3 million tons of production
capacity per year, cement plants with over 2 million tons of production capacity per year that utilize new- suspension-line process,
and coking plants with over 600 tons production capacity per year. Our existing customers operate in Shanxi province, Shaan&rsquo;xi
province, Shandong province, Jiangsu province and the Inner Mongolia Autonomic Region in China.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Marketing
and Sales</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
market and sell our projects nationwide through our direct sales force of two employees based in Xi&rsquo;an, China. Our marketing programs
include industrial conferences, trade fairs, sales training, and trade publication advertising. Our sales and marketing group works closely
with our research and development and engineering departments to coordinate our project development activities, project launches and
ongoing demand and supply planning. We market our projects directly to the industrial manufacturers who can utilize our energy recovery
projects in their manufacturing processes, including steel, cement, nonferrous metal, coal and petrochemical industries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management team has long-standing relationships with our existing customers and those companies that we consider to be potential customers.
We also maintain relationships with municipal governments, which often sponsor or subsidize potential customers that can utilize our
projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Geographic
Distribution of Sales</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
in China accounted for 100% of revenue in 2020 and 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Seasonality</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the most part, the Company&rsquo;s business and sales are not subject to any seasonality factors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Intellectual
Property Rights</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company does not currently possess any intellectual property rights.</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Research
and Development</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that research and development (&ldquo;R&amp;D&rdquo;) is of the outmost importance in the waste heat, gas and pressure to energy
industry, particularly with regards to practical usage and application.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
develop new and practical solutions for our customers, our R&amp;D team, consisting of five employees, also has the support of our on-site
and project engineers who provide feedback and numerous ideas to the R&amp;D team from their daily experiences with installation and
operation of various waste gas, heat or pressure to energy projects. Our relationship with the Shanghai Electric Distributed Energy Sources
Technology Co., Ltd., which was memorialized under a cooperation agreement dated December 19, 2017, gives us access to the latest developments
in energy and waste-to-energy technologies as well as technical support of the R&amp;D teams of the R&nbsp;&amp; D team of Distributed
Energy Sources of Central Research Institute of Shanghai Electric Group.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Government
and Environmental Management System</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
we do not hold the licenses that the various levels of Chinese government require for our operations, we mainly rely on third-party servicers
and contractors, who do possess all levels of licenses, to carry out our operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Competition</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the past, waste energy recycling projects have been installed mainly by the industrial plants themselves. These plants hire general contractors
to purchase waste energy recycling equipment manufactured by third parties and with design support from government design institutes,
which usually charge a one-time design fee, construct the projects on-site. Pressure has increased on Chinese producers to become more
energy-efficient, but many mid-sized companies do not have the special technical expertise or the capital to install and operate such
waste energy recycling projects. Many companies have begun to outsource these functions to third- party providers, creating an opportunity
in a growing market.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
use a BOT model to provide energy saving and recovery systems for various energy intensive industries, such as cement, steel and metallurgy
industries. We face competition from an array of market participants.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
main competitors as third-party providers are state owned research institutes or their wholly owned construction companies; however,
smaller private companies occasionally employ a BOT model to provide waste-to-energy systems. The state-owned enterprises include Equipment
and System Engineer Co., Ltd. of Hangzhou Steam Turbine&nbsp;&amp; Power Group (Hangzhou Turbine) and Energy Saving Development Co.,
Ltd of China National Material Group, Sinoma Development Co., Ltd. The private companies include China Senyuan Electronic Co., Ltd.,
Dalian East New Energy Development Co. Ltd.<B>,&nbsp;</B>Top Resource Conservation Engineering Co., Ltd. and Nanjing Kaisheng Kaineng
Environmental Energy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that there is a larger market in the waste-to-energy industry in China for systems constructed on the &ldquo;Engineering Procurement
Construction&rdquo; or &ldquo;EPC&rdquo; model in which customers purchase the services of a contractor to construct a system for the
customer at the customer&rsquo;s expense. Service providers include Dalian East New Energy Development, Nanjing Kaisheng Cement Technology
and Engineering Co., Ltd., Jiangxi Sifang Energy Co., Ltd., Beijing Century Benefits Co., Ltd., Beijing Shineng Zhongjin Energy Technology
Co., Ltd., Kunming Sunwise Co., Ltd. and China Everbright International Ltd. We compete with EPC providers for waste-to-energy projects
when potential customers are able to obtain external financing or have the necessary capital.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that we offer advantages over our competitors in several ways:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    management team has over 20 years of industry experience and expertise;</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have the capabilities to provide TRT, CHPG and WGPG systems, while our competitors usually concentrate on one type or another;</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="margin: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have the capabilities and experience in undertaking large scale projects; and</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    provide BOT or capital lease services to the customers, while our competitors usually use an EPC (engineering, procurement and construction)
    or turnkey contract model.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Employees</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of May 31, 2021 we had 16 employees:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Management:&nbsp;</I>4&nbsp;Employees</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Administration:&nbsp;</I>4&nbsp;Employees</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Marketing:&nbsp;2</I>&nbsp;Employees</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Accounting&nbsp;&amp;
Finance: </I>4&nbsp;Employees</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Project
Officer: </I>2 Employees</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
of our personnel are employed full-time and none of them are represented under collective bargaining agreements. We consider our relations
with our employees to be good.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
maintain certain insurance policies to safeguard us against risks and unexpected events as required in China and with applicable PRC
laws, such as social security insurance, including pension insurance, unemployment insurance, work-related injury insurance and medical
insurance for our employees. However, we do not maintain business interruption insurance or product liability insurance, which are not
mandatory under PRC laws. In addition, we do not maintain key man insurance, insurance policies covering damages to our network infrastructures
or information technology systems nor any insurance policies for our properties. During the fiscal years 2020 and 2019, we did not make
any material insurance claims in relation to our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Costs
and Effects of Compliance with Environmental Laws</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were many new laws, regulations, rules and notices regarding the environment and energy production adopted, promulgated and put into
force during past years. The Chinese government is putting more stringent requirements and urgency on reducing pollution and emissions
and improving energy efficiency nationwide. Our products are designed and constructed to comply with the environmental laws and regulations
of China. As our systems allow our customers to use waste heat and gases to create energy, we help reduce the overall environmental impact
of our customers. Since our business focuses on recycling energy, the effect of the strengthening of environmental laws in China may
be to increase demand for the products and services we offer and others like them.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Legal
Proceedings</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party to any
material legal proceedings, and to our knowledge none is threatened. There can be no assurance that future legal proceedings arising
in the ordinary course of business or otherwise will not have a material adverse effect on our financial position, results of operations
or cash flows.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>REGULATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have been advised by our PRC counsel, that, based on their review of our operations material provided by us and their review of PRC laws
and regulations, our operations in the PRC, as presently conducted, based on our approved qualifications, comply in all material respects
with applicable PRC laws and regulations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PRC
Regulations</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with PRC regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise
(&ldquo;FIE&rdquo;) established in the PRC is required to provide statutory reserves, which are appropriated from net profit, as reported
in the FIE&rsquo;s PRC statutory accounts. A FIE is required to allocate at least 10% of its annual after-tax profit to the surplus reserve
until such reserve has reached 50% of its respective registered capital (based on the FIE&rsquo;s PRC statutory accounts). The aforementioned
reserves may only be used for specific purposes and may not be distributed as cash dividends. Until such contribution of capital is satisfied,
the FIE is not allowed to repatriate profits to its stockholders, unless approved by the State Administration of Foreign Exchange. After
satisfaction of this requirement, the remaining funds may be appropriated at the discretion of the FIE&rsquo;s board of directors. Our
subsidiary, Shanghai TCH, qualifies as a FIE and is therefore subject to the above-mandated regulations on distributable profits.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
in accordance with PRC corporate law, a domestic enterprise is required to maintain a surplus reserve of at least 10% of its annual after-tax
profit until such reserve has reached 50% of its respective registered capital based on the enterprise&rsquo;s PRC statutory accounts.
The aforementioned reserves can only be used for specific purposes and may not be distributed as cash dividends. Xi&rsquo;an TCH, Huahong,
Zhonghong and Erdos TCH were established as domestic enterprises; therefore, each is subject to the above-mentioned restrictions on distributable
profits.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of PRC laws and regulations that require annual appropriations of 10% of after-tax income to be set aside, prior to payment
of dividends, in a general reserve fund, the Company&rsquo;s PRC subsidiaries are restricted in their ability to transfer a portion of
their net assets to the Company as a dividend or otherwise.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Renewable
Energy Law and Other Government Directive</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Renewable Energy Law of PRC, which originally became effective on January 1, 2006 and was amended on December 26, 2009, sets forth policies
to encourage the development and on-grid application of renewable energy. Renewable energy under this law refers to non-fossil fuel energy,
including wind energy, solar energy, water energy, biomass energy, geothermal energy, ocean energy and other forms of renewable energy.
The Renewable Energy Law of PRC also sets forth a national policy to encourage the installation and use of solar energy water heating
systems, solar energy heating and cooling systems, photovoltaic systems and other systems that use solar energy. It also provides economic
incentives, such as the establishment of national funding, preferential loans provided by financial institutions with financial interest
subsidies to certain renewable energy development and utilization projects, and tax preferential treatment for the development of certain
renewable energy projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Energy Conservation Law, which was amended on October 28, 2007 and July 2, 2016, encourages utilization of energy-saving building
materials like new wall materials and energy-saving equipment, and encourage the installation and application of renewable energy use
systems such as solar energy. The PRC Energy Conservation Law also encourages and supports the vigorous development of methane in rural
areas, promotes the utilization of renewable energy resources such as biomass energy, solar energy and wind power, develops small-scale
hydropower generation based on the principles of scientific planning and orderly development, promotes energy-saving-type rural houses
and furnaces, encourages the utilization of non-cultivated lands for energy plants, and energetically develops energy forests such as
firewood forests.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 4, 2006, the Ministry of Finance, or MOF, and Ministry of Construction jointly promulgated the Interim Measures for Administration
of Special Funds for Application of Renewable Energy in Building Construction, pursuant to which the MOF will arrange special funds to
support the application of Building Integrated Photovoltaics systems, or BIPV applications, to enhance building energy efficiency, protect
the environment and reduce consumption of fossil fuel energy. Under these measures, applications to provide hot water supply, refrigeration,
heating and lighting are eligible for such special funds.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 26, 2009, the State Council of the PRC approved and circulated the Opinions of National Development and Reform Commission,
known as the NDRC, and other Nine Governmental Authorities on Restraining the Production Capacity Surplus and Duplicate Construction
in Certain Industries and Guiding the Industries for Healthy Development. These opinions concluded that polysilicon production capacity
in China has exceeded demand and the State Council set forth a policy to impose more stringent requirements on the construction of new
facilities for manufacturing polysilicon in China. The Opinions of the NRDC also stated that the government should encourage polysilicon
manufacturers to enhance cooperation and affiliation with downstream solar power product manufacturers to expand their product lines.
However, these opinions do not provide any detailed measures for the implementation of this policy. As we are not a polysilicon manufacturer
and do not expect to manufacture polysilicon in the future, we believe the Opinions of the NRDC will not have any material impact on
our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 10, 2010, the State Council of the PRC promulgated a decision to accelerate the development of seven strategic new industries.
Pursuant to this decision, the PRC government aspired to promote the popularization and application of solar thermal technologies by
increasing tax and financial policy support, encouraging investment and providing other forms of beneficial support.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2011, the National People&rsquo;s Congress approved the Outline of the Twelfth Five-Year Plan for National Economic and Social
Development of the PRC, which includes a national commitment to promoting the development of renewable energy and enhancing the competitiveness
of the renewable energy industry. Accordingly, in January 2012, the Ministry of Industry and Information Technology and the Ministry
of Science and Technology, respectively, promulgated the Twelfth Five-Year Special Plans Regarding the New Materials Industry and the
High-tech Industrialization to support the development of the PRC solar power industry.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 8, 2011, the MOF and the Ministry of Housing and Urban-Rural Development jointly promulgated the Circular on Further Application
of Renewable Energy in Building Construction to increase the utilization of renewable energy in buildings.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 27, 2011, the NDRC promulgated revised Guideline Catalogue for Industrial Restructuring, which categorized the solar power industry
as an encouraged item. On February 16, 2013, the NDRC promulgated the 2013 revised Guideline Catalogue for Industrial Restructuring to
be effective on May 1, 2013, the solar power industry is still categorized as an encouraged item.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2016, the National People&rsquo;s Congress approved the Outline of the Thirteenth Five-Year Plan for National Economic and
Social Development of the PRC, which mentions a national commitment to continuing to support the development of PV generation industry.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
Relating to Electric Power Industry</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
regulatory framework of the PRC power industry consists primarily of the Electric Power Law, which became effective on April 1, 1996,
and was most recently amended on December 29, 2018, and the Electric Power Regulatory Ordinance, which became effective on May 1, 2005.
One of the stated purposes of the Electric Power Law is to protect the legitimate interests of investors, operators and users and to
ensure the safety of power operations. According to the Electric Power Law, the PRC government encourages PRC and foreign investment
in the power industry. The Electric Power Regulatory Ordinance sets forth regulatory requirements for many aspects of the power industry,
including, among others, the issuance of electric power business permits, the regulatory inspections of power generators and grid companies
and the legal liabilities for violations of the regulatory requirements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Electric
Power Business Permit</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 5, 2006, the NDRC promulgated the Administrative Provisions on Renewable Energy Power Generation which set forth specific measures
for setting the price of electricity generated from renewable energy sources, including solar, and for allocating the costs associated
with renewable power generation. The Administrative Provisions on Renewable Energy Power Generation also delegate administrative and
supervisory authority among government agencies at the national and provincial levels and assign partial responsibility to electricity
grid companies and power generation companies for implementing the Renewable Energy Law.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Provisions on the Administration of the Electric Power Business Permit, which were issued by the State Electricity Regulatory
Commission, known as SERC, and became effective on December 1, 2005, unless otherwise provided by the SERC, no company or individual
in the PRC may engage in any aspect of electric power business (including power generation, transmission, dispatch and sales) without
first obtaining an electric power business permit from the SERC. These provisions also require that if an applicant seeks an electric
power business permit to engage in power generation, it must also obtain in advance all relevant government approvals for the project
including construction, generation capacity and environmental compliance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
there are exceptions pursuant to which certain of our photovoltaic power generation projects may not need to obtain an electric power
business permit from the SERC. On July 18, 2013, the NDRC issued the Interim Measures for the Administration of Distributed PV Power
Generation, which waived the previous requirement to obtain an Electric Power Business Permit for distributed generation projects. On
April 9, 2014, the National Energy Association, or NEA, issued the Circular on Clarifying Issues concerning the Administration of Electric
Power Business Permit, which waived requirement to obtain an Electric Power Business Permit for those solar power generation projects
with installed capacity less than 6MW and any distributed generation projects approved by or filed with the NDRC or its local branches,
and required the local NEA to simplify the Electric Power Business Permit application procedure for the solar power generation companies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Grid
Connection and Dispatchment</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
electric power generated in China is distributed through power grids, except for electric power generated by facilities not connected
to a grid. The distribution of power to each grid is administered by dispatch centers, which administer and dispatch planned output by
power plants connected to the grid. The Regulations on the Administration of Electric Power Dispatch to Networks and Grids, promulgated
by the State Council and the former Ministry of Electric Power Industry, effective on November 1, 1993, as amended on January 8, 2011,
and its implementation measures, regulate the operation of dispatch centers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Feed-in
Tariff (FIT) Payments</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Renewable Energy Law of the PRC, as amended on December 26, 2009 and effective on April 1, 2010, sets forth policies to encourage the
development and utilization of solar power and other renewable energy. The Renewable Energy Law authorizes the relevant pricing authorities
to set favorable prices for electricity generated from solar and other renewable energy sources.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
NDRC further issued the Circular on Promoting the Healthy Development of PV Industry by Price Leverage on August 26, 2013, or the 2013
Circular. Under the 2013 Circular, the feed-in tariff (&ldquo;FIT&rdquo;) (including VAT) for solar power projects approved or filed
after September 1, 2013 or beginning operation after January 1, 2014 would be RMB0.90 per kilowatt hour (&ldquo;kWh&rdquo;), RMB0.95
per kWh or RMB1.00 per kWh, depending on the locations of the projects (excluding on-grid solar power projects located in Tibet).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the 2013 Circular sets forth special rules that entitle distributed generation projects (excluding the projects that have received
an investment subsidy from the central budget) to a national subsidy of RMB0.42 per kWh. According to the Circular on Further Implementing
Polices Relating to Distributed Generation issued by the NEA on September 2, 2014 and the Circular on Implementation Plans of PV Generation
Construction for 2015 issued by the NEA on March 16, 2015, rooftop distributed generation projects that sell electricity directly to
consumers or to both consumers and grid enterprises receive a national subsidy of RMB0.42 per kWh plus the local desulphurized coal benchmark
electricity price for the electricity sold to the State Grid or a negotiated electricity purchase price for electricity sold directly
to consumers. Ground-mounted projects and rooftop distributed generation projects which sell all electricity to grid enterprises are
entitled to the FIT of RMB0.90 per kWh, RMB0.95 per kWh or RMB1.00 per kWh, depending on where the project is located (excluding on-grid
solar power projects located in Tibet).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 22, 2015, the NDRC issued the Circular on Improving the Policies on the On-grid Tariffs of Onshore Wind Power Generation and
PV Generation, effective on January 1, 2016, which provides that ground mounted projects, as well as rooftop distributed generation projects
that sell all electricity generated to the local grid companies, are entitled to FIT of RMB0.80 per kWh, RMB0.88 per kWh or RMB0.98 per
kWh, depending on where the project is located (excluding on grid solar power projects located in Tibet), provided that these projects
are filed after January 1, 2016 and fall within the regional scale index of the year, or these projects are filed prior to January 1,
2016 and fall within regional scale index of the year, but do not commence operations prior to June 30, 2016.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
difference between the FIT for solar power projects and the desulphurized coal benchmark electricity price, or the subsidies paid to
distributed generation projects, are funded by the renewable energy development funds. The above FIT and subsidy policies are valid for
20 years for each power generation project since its formal operation, in principle.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 30, 2016, the Ministry Industry of Information Technology, NDRC, the Ministry of Science and Technology and MOF jointly promulgated
the Development Guide Regarding the New Materials Industry to support and provide details for the development of the PRC solar power
industry.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 10, 2017, the NEA promulgated the Circular on Printing and Distributing the Guidance on Energy Work in 2017, which promotes
the construction of PV and thermal power projects. According to this circular, the PRC government planned to add the new construction
scale of 20 million kilowatts and the new installed capacity of 18 million kilowatts in 2017. Although it is the PRC government&rsquo;s
policy to encourage such construction, it is not clear what specific targets have been fulfilled.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 31, 2018, the NEA, Ministry of Finance and NDRC of the PRC jointly promulgated a Notice regarding the Matters of Photovoltaic Power
Generation in 2018 (&ldquo;2018 PV Power Generation Notice&rdquo;). The 2018 PV Power Generation Notice set forth new policies on general
and distributed PV power stations. For example, based on the industry practice, no scale for the construction of general photovoltaic
power station will be arranged in 2018. Before the issuance of any new rules in respect of the construction of general photovoltaic power
stations, no national government subsidies were provided to general photovoltaic power station. There will be a scale of 10 gigawatts
for the construction of distributed photovoltaic power station. In general, the feed-in tariff for general photovoltaic power stations
will be reduced by RMB 0.05 per kWh.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 28, 2019, the NDRC issued a Notice Regarding Issues of Improvement on Mechanism for Grid Price of Photovoltaic Power Generation,
effective on July 1, 2019. The benchmark solar PV tariff has been changed into guiding solar PV tariff. For utility-scale solar PV projects
that fully feed electricity into grids after July 1, 2019, the FIT will be RMB 0.4 per kWh, RMB 0.45 per kWh, or RMB 0.55 per kWh depending
on where the project is located. Commercial and industrial distributed PV that deliver 100% of output to the grid will apply utility-scale
PV FITs, others can receive a subsidy of RMB 0.1/kWh.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 7, 2019, NDRC and the NEA jointly promulgated the Circular on Actively Promoting Subsidy-free Grid Price Parity for Wind Power
and PV Power, which set forth several measures regarding project organization, construction, operation and supervision to promote PV
power generation power projects with grid price equivalent to or below the benchmark grid price of coal-fired power units.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Subsidy
Catalog</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 29, 2011, the MOF, NDRC and NEA jointly issued the Interim Measures for the Administration of Levy and Use of Renewable Energy
Development Fund, which provides that development funds for renewable energy include designated funds arranged by the public budget of
national finance, and the renewable energy tariff surcharge established thereunder be collected from electricity consumers. Solar power
projects can only receive central government subsidies after completing certain administrative and perfunctory procedures with the relevant
authorities of finance, price and energy to be listed in the Subsidy Catalog issued by the MOF, NDRC and NEA. These subsidies represent
the difference between the FIT for solar power projects and the desulphurized coal benchmark electricity price. In January 2016, the
NEA announced that there would be a nation-wide inspection on all solar power projects in operation and under construction, and that
fall within the regional scale index of the year would be included in and managed via the Platform for Renewable Energy Power Generation
Projects for the purpose of government subsidies application and payment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
order to be listed in the Subsidy Catalog, ground-mounted projects submit applications to the relevant provincial authorities; and in
accordance with the Circular on Issues Concerning Implementing Electric Quantity-based Subsidy Policy for Distributed Generation Projects
issued by the MOF on July 24, 2013, rooftop distributed generation projects submit applications to the grid enterprises in the area where
the projects are located. After preliminary review of the applications, the provincial authorities will jointly report to the MOF, NDRC
and NEA, and the MOF, NDRC and NEA have final review of such applications to decide whether to list in the Subsidy Catalog.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Development
Funds of Renewable Energy</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Renewable Energy Law provides financial incentives, including national funding for the development of renewable energy projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Interim Measures for the Administration of Designated Funds for the Development of Renewable Energy issued by the MOF and effective
on April 2, 2015, the MOF sets up designated funds to support the development and utilization of renewable energy in accordance with
the national fiscal budget.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Implementing Measures for the Administration of Price of Renewable Energy and Cost Sharing Program and the Interim Measures for
Adjustment to Additional On-grid Tariff for Renewable Energy issued by the NDRC, the gap between the FIT for solar power projects and
the desulphurized coal benchmark electricity price is subsidized by collecting a tariff surcharge from the electricity consumers within
the service coverage area of grid enterprises at or above provincial level.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Mandatory
Purchase of Renewable Energy</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Renewable Energy Law imposes mandatory obligations on grid enterprises to purchase the full amount of on-grid electricity generated by
approved renewable energy plants whose power generation projects meet the grid connection technical standards in the areas covered by
the grid enterprises&rsquo; power grids. Grid enterprises must improve the power grid construction in order to better absorb electricity
generated from renewable energy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Measures for the Supervision and the Administration of Purchase of Full Amount of Renewable Energy by Grid Companies issued by
the SERC in July 2007, the SERC and its local branches supervise the purchase of the full amount of renewable energy by the grid enterprises.
If the grid enterprises do not purchase the full volume of the electricity generated from the renewable energy due to the circumstances,
such as force majeure or any other circumstance endangering the safety and stability of the power grids, the grid enterprises must promptly
notify the renewable energy power generation companies of the details in writing and also submit detailed facts to the competent local
branches of the SERC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Several Opinions on Promoting the Healthy Development of PV Industry also requires the grid enterprises to ensure PV power generation
projects&rsquo; timely connection to the power grid and purchase the full amount of electricity generated by the PV power generation
projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 20, 2015, the NDRC and NEA issued a directive opinion that emphasized that the competent provincial authorities must strengthen
the implementation of the provisions with regard to the purchase of the full amount of electricity generated by renewable energy and
avoid any curtailment of solar power projects. In addition, the directive opinion stated that electricity generated by clean energy is
encouraged to be sold directly to the consumers in the regions where there is an ample supply of clean energy, and the relevant parities
must coordinate the trans-provincial supply of electricity and power transmission capability, in order to maximize the utilization of
clean energy. Local governments, such as the Inner Mongolian Autonomous Government, also announced their intentions to efficiently implement
the system regarding the purchase of the full amount of renewable energy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 24, 2016, the NDRC issued the Measures for the Administration of Guaranteed Purchase of Full Amount of Renewable Energy, to strengthen
the administration of, and provide details for, the implementation of the purchase of the full amount of renewable energy by the grid
enterprises.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 10, 2019, NDRC and NEA jointly released Notice on Establishing a Mandatory Renewable Electricity Consumption Mechanism, pursuant
to which, the government sets renewable electricity consumption quotas in electricity power consumption. The renewable consumption quotas
will be determined at the provincial level and the provincial energy administrations will lead the implementation process.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Environmental
Protection</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
construction processes of the solar power projects may generate noise, waste water, gaseous emissions and other industrial wastes. Therefore,
we are subject to a variety of government regulations related to the storage, use and disposal of hazardous materials and to the protection
of the environment of the community. The major environmental regulations applicable to our business activities in the PRC include the
Environmental Protection Law of the PRC, the Law on the Prevention and Control of Noise Pollution, the Law on the Prevention and Control
of Air Pollution, the Law on the Prevention and Control of Water Pollution, the Law on the Prevention and Control of Solid Waste Pollution,
the Environmental Impact Evaluation of Law, and the Regulations on the Administration of Environmental Protection in Construction Projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Corporate
Laws and Industry Catalogue Relating to Foreign Investment</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC, or the Company Law,
effective in 1994, as amended in 1999, 2004, and 2005, respectively. The Company Law is applicable to our PRC subsidiaries and affiliated
PRC entity unless the PRC laws on foreign investment have stipulated otherwise.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
establishment, approval, registered capital requirement and day-to-day operational matters of wholly foreign-owned enterprises (&ldquo;WFOE&rdquo;),
are regulated by the WFOE Law of the PRC effective in 1986, as amended in 2000, and the Implementation Rules of the WFOE Law of the PRC
effective in 1990, as amended in 2001.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investment
activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment, or
the Catalogue, which was promulgated and is amended from time to time by the Ministry of Commerce and the National Development and Reform
Commission. The Catalogue divides industries into three categories: encouraged, restricted and prohibited. Industries not listed in the
Catalogue are generally open to foreign investment unless specifically restricted by other PRC regulations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Establishment
of WFOEs is generally permitted in encouraged industries. Some restricted industries are limited to equity or contractual joint ventures,
while in some cases Chinese partners are required to hold the majority interests in such joint ventures.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
example, sales and distribution of audio and video products are among the restricted categories, and only contractual joint ventures
in which Chinese partners holding majority interests can engage in the distribution of audio and video products in China.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, restricted category projects are also subject to higher-level government approvals. Foreign investors are not allowed to invest
in industries in the prohibited category.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
Relating to Taxation</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2008, the PRC Enterprise Income Tax Law (The &ldquo;EIT&rdquo; Law) took effect. The EIT applies a uniform 25% enterprise income
tax rate to both foreign-invested enterprises and domestic enterprises, unless where tax incentives are granted to special industries
and projects. Under the EIT Law and its implementation regulations, dividends generated from the business of a PRC subsidiary after January
1, 2008 and payable to its foreign investor may be subject to a withholding tax rate of 10% if the PRC tax authorities determine that
the foreign investor is a non-resident enterprise, unless there is a tax treaty with China that provides for a preferential withholding
tax rate. Distributions of earnings generated before January 1, 2008 are exempt from PRC withholding tax.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the EIT Law, an enterprise established outside China with &ldquo;de facto management bodies&rdquo; within China is considered a &ldquo;resident
enterprise&rdquo; for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its
worldwide income. A circular issued by the State Administration of Taxation in April 2009 regarding the standards used to classify certain
Chinese-invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as &ldquo;resident
enterprises&rdquo; clarified that dividends and other income paid by such PRC &ldquo;resident enterprises&rdquo; will be considered PRC-source
income and subject to PRC withholding tax, currently at a rate of 10%, when paid to non-PRC enterprise shareholders. This circular also
subjects such PRC &ldquo;resident enterprises&rdquo; to various reporting requirements with the PRC tax authorities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the implementation regulations to the EIT Law, a &ldquo;de facto management body&rdquo; is defined as a body that has material and overall
management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise.
In addition, the tax circular mentioned above specifies that certain PRC-invested overseas enterprises controlled by a Chinese enterprise
or a Chinese enterprise group in the PRC will be classified as PRC resident enterprises if the following are located or residence in
the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and
personnel decision making bodies; key properties, accounting books, the company seal and minutes of board meetings and shareholders&rsquo;
meetings; and half or more of the senior management or directors having voting rights.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
Relating to Foreign Exchange</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Regulations on the Administration of Foreign Exchange issued by the State Council and effective in 1996, as amended in January
1997 and August 2008, current account transactions, such as sale or purchase of goods, are not subject to PRC governmental control or
restrictions. Certain organizations in the PRC, including foreign-invested enterprises, may purchase, sell, and/or remit foreign currencies
at certain banks authorized to conduct foreign exchange business upon providing valid commercial documents. Approval of the PRC State
Administration of Foreign Exchange (&ldquo;SAFE&rdquo;), however, is required for capital account transactions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2008, SAFE issued a circular on the conversion of foreign currency into Renminbi by a foreign-invested company that regulates
how the converted Renminbi may be used. The circular requires that the registered capital of a foreign-invested enterprise converted
into Renminbi from foreign currencies may only be utilized for purposes within its business scope. For example, such converted amounts
may not be used for investments in or acquisitions of other PRC companies, unless specifically provided otherwise, which can inhibit
the ability of companies to consummate such transactions. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi
registered capital of foreign-invested enterprises converted from foreign currencies. The use of such Renminbi capital may not be changed
without SAFE&rsquo;s approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been utilized.
Violations may result in severe penalties, such as heavy fines.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
Relating to Labor</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the PRC Labor Law effective in 1995 and the PRC Labor Contract Law effective in 2008, a written labor contract is required when an
employment relationship is established between an employer and an employee. Other labor-related regulations and rules of the PRC stipulate
the maximum number of working hours per day and per week as well as the minimum wages. An employer is required to set up occupational
safety and sanitation systems, implement the national occupational safety and sanitation rules and standards, educate employees on occupational
safety and sanitation, prevent accidents at work and reduce occupational hazards.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the PRC, workers dispatched by an employment agency are normally engaged in temporary, auxiliary or substitute work. Pursuant to the
PRC Labor Contract Law, an employment agency is the employer for workers dispatched by it, and it must perform an employer&rsquo;s obligations
toward them. The employment contract between the employment agency and the dispatched workers, and the placement agreement between the
employment agency and the company that receives the dispatched workers must be in writing. Also, the company that accepts the dispatched
workers must bear joint and several liabilities for any violation of the Labor Contract Law by the employment agencies arising from their
contracts with dispatched workers. An employer is obligated to sign an indefinite term labor contract with an employee if the employer
continues to employ the employee after two consecutive fixed-term labor contracts. The employer also has to pay compensation to the employee
if the employer terminates an indefinite term labor contract. Except where the employer proposes to renew a labor contract by maintaining
or raising the conditions of the labor contract and the employee is not agreeable to the renewal, an employer is required to compensate
the employee when a definite term labor contract expires. Furthermore, under the Regulations on Paid Annual Leave for Employees issued
by the State Council in December 2007 and effective as of January 2008, employees who have served an employer for more than one (1) year
and less than ten years are entitled to a 5-day paid vacation, those whose service period ranges from 10 to 20 years are entitled to
a 10-day paid vacation, and those who have served for more than 20 years are entitled to a 15-day paid vacation. An employee who does
not use such vacation time at the request of the employer shall be compensated at three times their normal salaries for each waived vacation
day.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Regulations on Occupational Injury Insurance effective in 2004 and the Interim Measures concerning the Maternity Insurance for
Enterprise Employees effective in 1995, PRC companies must pay occupational injury insurance premiums and maternity insurance premiums
for their employees. Pursuant to the Interim Regulations on the Collection and Payment of Social Insurance Premiums effective in 1999
and the Interim Measures concerning the Administration of the Registration of Social Insurance effective in 1999, basic pension insurance,
medical insurance, and unemployment insurance are collectively referred to as social insurance. Both PRC companies and their employees
are required to contribute to the social insurance plans. Pursuant to the Regulations on the Administration of Housing Fund effective
in 1999, as amended in 2002, PRC companies must register with applicable housing fund management centers and establish a special housing
fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
on PRC Company Law</I></B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the PRC Company Law, promulgated by the Standing Committee of the National People&rsquo;s Congress (the &ldquo;SCNPC&rdquo;) on December,
29 1993, effective as of July 1, 1994, and as revised on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and
October 26, 2018, the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law. The
PRC Company Law defines two types of companies: limited liability companies and companies limited by shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
of our PRC subsidiaries is a limited liability company. Unless otherwise stipulated in the related laws on foreign investment, foreign
invested companies are also required to comply with the provisions of the PRC Company Law.</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
on PRC Tort Liability Law</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Tort Liability Law of China, which was promulgated by the National People&rsquo;s Congress Standing Committee on December 30,
2009 and became effective on July 1, 2010, producers are liable for damages caused by defects in their products and sellers are liable
for damages attributable to their fault. If the defects are caused by the fault of third parties, such as the transporter or storekeeper,
producers and sellers have the right to seek compensation from these third parties after paying the damages. The producers and sellers
are obligated to take remedial measures, such as issuing warnings or recalling the products in a timely manner if defects are found in
products that are in circulation. If a party knowingly manufactured and sold defective products that cause death or severe personal injuries,
the injured person has the right to claim punitive damages.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Regulations
on Dividend Distribution</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Wholly
foreign-owned companies in the PRC may pay dividends only out of their accumulated profits after tax as determined in accordance with
PRC accounting standards. Remittance of dividends by a wholly foreign-owned enterprise out of China is subject to examination by the
banks designated by SAFE. Wholly foreign-owned companies may not pay dividends unless they set aside at least 10% of their respective
accumulated profits after tax each year, if any, to fund certain reserve funds, until such time as the accumulative amount of such fund
reaches 50% of the wholly foreign-owned company&rsquo;s registered capital. In addition, these companies also may allocate a portion
of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds at their discretion. These reserve funds
and staff welfare and bonus funds are not distributable as cash dividends.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Safe
Regulations on Offshore Special Purpose Companies Held by PRC Residents or Citizens</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment
via Overseas Special Purpose Vehicles, or Circular No. 75, issued in October 2005 by SAFE and its supplemental notices, PRC citizens
or residents are required to register with SAFE or its local branch in connection with their establishment or control of an offshore
entity established for the purpose of overseas equity financing involving a roundtrip investment whereby the offshore entity acquires
or controls onshore assets or equity interests held by the PRC citizens or residents. In addition, such PRC citizens or residents must
update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to increases or decreases
in investment amount, transfers or exchanges of shares, mergers or divisions, long-term equity or debt investments, external guarantees
or other material events that do not involve roundtrip investments. Subsequent regulations further clarified that PRC subsidiaries of
an offshore company governed by the SAFE regulations are required to coordinate and supervise the filing of SAFE registrations in a timely
manner by the offshore holding company&rsquo;s shareholders who are PRC citizens or residents. If these shareholders fail to comply,
the PRC subsidiaries are required to report to the local SAFE branches. If the shareholders of the offshore holding company who are PRC
citizens or residents do not complete their registration with the local SAFE branches, the PRC subsidiaries may be prohibited from distributing
their profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore company, and the offshore company
may be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover, failure to comply with the SAFE
registration and amendment requirements described above could result in liability under PRC law for evasion of applicable foreign exchange
restrictions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>M&amp;A
Rules</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 8, 2006, six PRC regulatory agencies, including China Securities Regulatory Commission (&ldquo;CSRC&rdquo;), promulgated a rule
entitled Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (&ldquo;the M&amp;A Rules&rdquo;)
to regulate foreign investment in PRC domestic enterprises. The M&amp;A rules, among other things, requires an overseas special purpose
vehicle (&ldquo;SPV&rdquo;), formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies
or individuals, to obtain the approval of CSRC prior to publicly listing their securities on an overseas stock exchange. There remains
some uncertainty as to how this regulation will be interpreted or implemented in the context of an overseas offering. If the CSRC or
another PRC regulatory agency subsequently determines that approval is required for this offering, we may face sanctions by the CSRC
or another PRC regulatory agency.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
M&amp;A Rules also establish procedures and requirements that could make some acquisitions of Chinese companies by foreign investors
more time-consuming and complex, including requirements in some instances that the Ministry of Commerce be notified in advance of any
change-of-control transaction in which a foreign investor takes control of a Chinese domestic enterprise.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>SAFE
Regulations on Employee Share Options</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 28, 2007, SAFE promulgated the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating
in Employee Share Holding Plan or Share Option Plan of Overseas Listed Company, or the Share Option Rule. Pursuant to the Share Option
Rule, Chinese citizens who are granted share options by an overseas publicly listed company are required to register with SAFE through
a Chinese agent or Chinese subsidiary of the overseas publicly listed company and complete certain other procedures. Our PRC employees
who have been granted share options will be subject to these regulations. Failure of our PRC share option holders to complete their SAFE
registrations may subject these PRC employees to fines and legal sanctions and may also limit our ability to contribute additional capital
into our PRC subsidiaries and limit our PRC subsidiaries&rsquo; ability to distribute dividends to us.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_010"></A>MANAGEMENT</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth certain information regarding our executive officers and director nominees as of the date of this prospectus:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif">
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left; width: 30%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Name</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 9%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Age</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 59%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Position</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guohua
    Ku</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">59</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Executive Officer, Director and Chairman of the Board</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yongjiang
    (Jackie) Shi</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">46</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Financial Officer and Vice President</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Binfeng
    (Adeline) Gu</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">43</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secretary</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yan
    Zhan</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">47</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xiaoping
    Guo<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">68</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Director</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhongli
    Liu<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">61</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Director</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">LuLu
    Sun<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">42</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Director</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Member
                                            of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Mr.
Guohua Ku&nbsp;</I></B>was appointed as a director and our Chief Executive Officer as of December 10, 2008. He was elected Chairman of
the Board as of April 1, 2009. Prior to joining the Company, Mr. Ku served as a Senior Engineer for Yingfeng Technology from 2003 to
2007. From 1979 to 2003, Mr. Ku served in multiple capacities for Shaanxi Blast Air Blower (Group) Co., Ltd., with his last position
serving as a Senior Engineer. Mr. Ku&rsquo;s experience as our Chief Executive Officer, as well as Chairman of the Board, and extensive
scientific and operational knowledge and expertise qualifies him to serve as Chairman of the Board and led the Board to conclude that
he should be nominated to serve another term as a director. Mr. Ku obtained MBA from Northwest University of China in 1999.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Mr.
Yongjiang (Jackie) Shi&nbsp;</B>was appointed as our Chief Financial Officer (&ldquo;CFO&rdquo;) and a Vice President, effective on December
20, 2019. Mr. Shi has served as the financial consultant to the Board since September 28, 2016 and was the CFO of the Company from May
16, 2015 to September 27, 2016. Mr. Shi was the Assistant CFO&nbsp;&amp; Vice President in charge of finance for the Company from January
2015 to May 2015. Mr. Shi joined Xi&rsquo;an TCH Energy Technology Company, Ltd., a wholly owned subsidiary of the Company in 2014 as
a VP of Finance and he previously worked as the Director of Investor Relations for Xilan Natural Gas Group from 2005 to 2014. Mr. Shi
studied professional accounting at the University of New South Wales, Australia from 2001 to 2003, and was awarded his master&rsquo;s
degree of finance in 2003. He studied public administration at Northwest University of China from 1994 to 1998, and obtained his bachelor&rsquo;s
degree in law in 1998.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Ms.
Adeline Gu&nbsp;</I></B>was appointed as the Company&rsquo;s Chief Financial Officer and Secretary on September 28, 2016. Ms. Gu resigned
as our Chief Financial Officer as of December 13, 2019. Ms. Gu has been serving as secretary for the office of Board of Directors of
the Company from August, 2012 to September 27, 2016. She was the Investor Relations Director from December 2007 to August 13, 2012 and
Investor Relations Director Assistant from March 2006 to December 2007 of China Natural Gas, Inc. From October 2005 to March 2006, Ms.
Gu was the Interpreter of Xi&rsquo;an Equity Exchange&nbsp;&amp; Shaanxi Watson Biology Gene Technology Co., Ltd. Ms. Gu studied at Northwest
University of China from September, 1995 to June, 1999 and received her bachelor degree, majoring in English. Ms. Gu has held a Chinese
Accounting Certificate since 2000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Mr.
Yan Zhan</B>&nbsp;was appointed as a director of the company on March 16, 2021. He has worked for Xi&rsquo;an TCH Energy Technology Co.,
Ltd., our wholly-owned subsidiary in the PRC,&nbsp;since May 2013 and he has served as the Chief Sales Officer since June 2016. Mr. Zhan
obtained his junior college diploma majored in Manufacturing&nbsp;Processes&nbsp;and&nbsp;Equipment&nbsp;from Northwestern Polytechnical
University in September 1995. After his graduation, he served as the head of production department of Xi&rsquo;An Kanghuamen Factory
from 1995 to 1996. Mr. Zhan studied and taught at Shanxi Educational College from 1996 to 1998. From 1998 to 2004, he served as the sales
manager of Xi&rsquo;An Equipment Import and Export Company, after which he served as the general manager of Shanxi Wanding Yandong Technology
Co., Limited from 2004 to 2013. In nominating Mr.&nbsp;Zhan&nbsp;for election as a director, our Board focused on his past&nbsp;marketing
and sales&nbsp;experience and technical knowledge in the energy recycling industry and his knowledge of the operations of the Company
as a member of management.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Mr.
Xiaoping Guo&nbsp;</I></B>was appointed as a director on June 1, 2017. Mr. Guo was also appointed as the Chairman of the Compensation
Committee and a member of the Audit, Nominating and Corporate Governance Committees. Mr. Guo has served as the assistant to the president
of Datang New Energy Co., Ltd., since 2010. Mr. Guo received his bachelor degree from the Xi&rsquo;an Jiaotong University in 1977, and
his master&rsquo;s degree in systems engineering from the same school in 2000. Mr. Guo&rsquo;s extensive project engineering and development
experience, as well as his management experience, qualifies him to serve on our Board and led the Board to conclude that he should be
nominated as a director.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Mr
Zhongli Liu</I></B>&nbsp;was appointed as a director on March 6, 2020. Mr. Liu was also appointed as the Chairman of the Audit Committee
and a member of the Compensation, Nominating and Corporate Governance Committees. Mr. Liu served as the inspector to be in charge of
securities inspection at Shaanxi Supervision Bureau of China Securities Regulatory Commission from 1999 to September 2019. He worked
as the head of department of economics and management, professor, chief of scientific research at Xi&rsquo;an Finance and Economics University
from 1984 to 1998. Since July 2017, he served as the independent director of the Board at China Haiseng Fresh Fruit Juice Co., Ltd. (00359.HK).
Mr. Liu studied industrial economy management at Xi&rsquo;an Jiaotong University from September 1978 to July 1982 and was awarded his
bachelor&rsquo;s degree of finance in 1982. He studied planning economics at Renmin University of China from 1982 to 1984 and was awarded
his master&rsquo;s degree of finance in 1984. Mr. Liu&rsquo;s significant financial expertise qualifies him to serve on our Board and
led the Board to conclude that he should be nominated as a director.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Ms.
LuLu Sun&nbsp;</I></B>was appointed as a director on August 5, 2015. Mr. Sun was also appointed as the Chairman of the Corporate Governance
Committee and a member of the Compensation and Nominating Committees. Ms. Sun serves as Marketing Director for Net Engine Power Tech.
Ltd. Co. in China from June 2013 to present and she was the New Media Business Development Director for Rayli Magazine in China from
June 2009 to May 2013. From July 2002 to May 2009, Ms. Sun was the Business Development Project Manager for Sina Mobile in China. Ms.
Sun&rsquo;s extensive experience in marketing and business development in China qualifies her to serve on our Board and led the Board
to conclude that she should be nominated as a director.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CORPORATE
GOVERNANCE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Leadership
Structure and Role in Risk Oversight</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s current board leadership structure separates the board chair and principal executive officer roles into two positions.
Mr. Ku has served as both Chairman of the Board and CEO of the Company since April 1, 2009. Our Board continues to believe there are
important advantages to Mr. Ku serving in both roles at this time. Mr. Ku is the director most familiar with our business and industry
and is best situated to propose Board agendas and lead Board discussions on important matters. Mr. Ku provides a strong link between
management and the Board, which promotes clear communication and enhances strategic planning and implementation of corporate strategies.
Another advantage is the clarity of leadership provided by one person representing us to employees, stockholders and other stakeholders.
The Board has not named a lead independent director.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Board is responsible for oversight of the Company&rsquo;s risk management practices while management is responsible for the day-to-day
risk management processes. In the Board&rsquo;s opinion, this division of responsibilities is the most effective approach for addressing
the risks facing the Company. The Board receives periodic reports from management regarding the most significant risks facing the Company.
In addition, the Audit Committee assists the Board in its oversight of our risk assessment and risk management policies. Our Audit Committee
is empowered to appoint and oversee our independent registered public accounting firm, monitor the integrity of our financial reporting
processes and systems of internal controls and provide an avenue of communication among our independent auditors, management, our internal
auditing department and our Board.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Diversity</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Board does not have a formal policy with respect to Board nominee diversity. In recommending proposed nominees to the full Board, the
Corporate Governance and Nominating Committee is charged with building and maintaining a board that has an ideal mix of talent and experience
to achieve our business objectives in the current environment. In particular, the Corporate Governance and Nominating Committee is focused
on relevant subject matter expertise, depth of knowledge in key areas that are important to us, and diversity of thought, background,
perspective and experience so as to facilitate robust debate and broad thinking on strategies and tactics pursued by us.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Director
Independence</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xiaoping
Guo, LuLu Sun and Zhongli Liu are our only non-employee directors, and our Board has determined that each of them is independent pursuant
to the listing rules of Nasdaq and the rules of the SEC. All of the members of each of the Audit Committee, Compensation Committee and
Corporate Governance and Nominating Committee are independent as defined in Nasdaq Rule 5605(a)(2). As required under applicable Nasdaq
listing standards, in the 2019 fiscal year, our independent directors met twice in regularly scheduled executive sessions at which only
our independent directors were present.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Board
Meetings and Committee Meeting; Annual Meeting Attendance</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended December 31, 2020, the Board held one (1) meeting and acted through unanimous consent on 17 different occasions. In addition,
the Audit Committee held four (4) meetings; the Corporate Governance and Nominating Committee held one (1) meeting; and the Compensation
Committee held one (1) meeting. During the year ended December 31, 2020, each of the directors attended, in person or by telephone, more
than 75% of the meetings of the Board and the committees on which he or she served. We encourage our Board members to attend our Annual
Meetings, but we do not have a formal policy requiring attendance. Some of our then-sitting Board members attended the 2020 Annual Meeting.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Corporate
Governance and Nominating Committee</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Corporate Governance and Nominating Committee currently consists of Xiaoping Guo, Zhongli Liu and LuLu Sun. Ms. LuLu Sun is the chairman
of our Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee oversees all aspects of the Company&rsquo;s
corporate governance functions on behalf of the Board, including identifying individuals qualified to become directors, recommending
to the Board the selection of director nominees for each meeting of the stockholders at which directors are elected and overseeing the
monitoring and evaluation of the Company&rsquo;s corporate governance practices. The Corporate Governance and Nominating Committee reviewed
the performance of all of the current members of the Board and determined and recommended to the Board that all of the current directors
should be nominated at the annual shareholder meeting each year for re-election. No other candidates were recommended or evaluated. The
Corporate Governance and Nominating Committee operates under a written charter, which is&nbsp;available on our website at www.creg-cn.com
under the links &ldquo;Investor Relations &ndash; Corporate Governance.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Selection
of Board Nominees</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Corporate Governance and Nominating Committee is responsible for identifying, selecting and evaluating Board candidates. From a general
perspective, candidates are reviewed in the context of the existing Board members, our operating requirements and the long-term interests
of our stockholders. In selecting candidates for appointment or re-election to the Board, the Corporate Governance and Nominating Committee
of the Board considers the following criteria: (i) personal and professional ethics and integrity, including a reputation for integrity
and honesty in the business community; (ii) experience as an executive officer of companies or as a senior leader of complex organizations,
including scientific, government, financial or technological organizations; (iii) financial knowledge, including an understanding of
finance, accounting, the financial reporting process, and company measures for operating and strategic performance; (iv) ability to critically
and independently evaluate business issues, contributing diverse perspectives or viewpoints, and making practical and mature judgments;
(v) a genuine interest in the Company, and the ability to spend the time required to make substantial contributions as a director; and
(vi) no conflict of interest or legal impediment that would interfere with the duty of loyalty to the Company and its stockholders. In
addition, the Corporate Governance and Nominating Committee reviews the qualifications of the directors to be appointed to serve as members
of the Audit Committee to ensure that they meet the financial literacy and sophistication requirements under the Nasdaq rules and that
at least one of them qualifies as an &ldquo;audit committee financial expert&rdquo; under the rules of the SEC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Audit
Committee</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Audit Committee currently consists of Xiaoping Guo, Zhongli Liu and LuLu Sun, each of whom is independent under Nasdaq listing standards.
Zhongli Liu serves as chairman of our Audit Committee.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Board determined that Mr. Liu qualifies as an &ldquo;audit committee financial expert,&rdquo; as defined by Nasdaq Rule 5605(a)(2) and
Item 407 of Regulation S-K. In reaching this determination, the Board made a qualitative assessment of Mr. Liu&rsquo;s level of knowledge
and experience based on a number of objective and subjective factors, including formal education, financial and accounting acumen, and
business experience. The Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities with respect
to: (i) the financial reports and other financial information provided by us to the public or any governmental body; (ii) our compliance
with legal and regulatory requirements; (iii) our systems of internal controls regarding finance, accounting and legal compliance that
have been established by management and the Board; (iv) the qualifications and independence of our independent registered public accounting
firm; (v) the performance of our internal audit function and the independent registered public accounting firm; and (vi) our auditing,
accounting and financial reporting processes generally. The Audit Committee has been established in accordance with Section 3(a)(58)(A)
of the Exchange Act. In connection with its responsibilities, the Board has delegated to the Audit Committee the authority to select
and hire our independent registered public accounting firm and determine their fees and retention terms. The Audit Committee&rsquo;s
policy is to pre-approve all audit and non-audit services by category, including audit-related services, tax services, and other permitted
non-audit services. In accordance with the policy, the Audit Committee regularly reviews and receives updates on specific services provided
by our independent registered public accounting firm. All services rendered by Prager Metis CPAs LLC to the Company are permissible under
applicable laws and regulations. During fiscal year 2020, all services requiring pre-approval and performed by the Company&rsquo;s accounting
firm, Prager Metis CPAs LLC, were approved in advance by the Audit Committee in accordance with the pre-approval policy. The Audit Committee
operates under a written charter, which is available on our&nbsp;website at www.creg-cn.com under the links &ldquo;Investor Relations
&ndash; Corporate Governance.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Compensation
Committee</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Compensation Committee currently consists of Xiaoping Guo, Zhongli Liu and LuLu Sun. Mr. Guo is the chairman of our Compensation Committee.
The Compensation Committee&rsquo;s purpose is (i) to oversee the Company&rsquo;s efforts to attract, retain and motivate members of the
Company&rsquo;s senior management team, (ii) to carry out the Board&rsquo;s overall responsibility relating to the determination of compensation
for all executive officers, (iii) to oversee all other aspects of the Company&rsquo;s compensation policies, and to oversee the Company&rsquo;s
management resources, succession planning and management development activities. The Compensation Committee has the authority to engage
independent advisors to assist it in carrying out its duties. During fiscal year 2020, the Compensation Committee did not engage the
services of any independent advisors, experts or other third parties. We believe that the functioning of our Compensation Committee complies
with any applicable requirements of Nasdaq and SEC rules and regulations. The Compensation Committee operates under a written charter,
which is available on our website at www.creg-cn.com&nbsp;under the links &ldquo;Investor Relations &ndash; Corporate Governance.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Compensation
Committee Interlocks and Insider Participation in Compensation Decisions</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
members of the Compensation Committee are independent directors. No current member of our Compensation Committee is a current or former
officer or employee of the Company or any of its subsidiaries, and no director or executive officer of the Company is a director or executive
officer of any other corporation that has a director or executive officer who is also a director of the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Stockholder
Communication with the Board of Directors</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stockholders
may communicate with the Board by writing to the attention of Ms. Adeline Gu, our Secretary, at 4/F, Tower C, Rong Cheng Yun Gu Building,
Keji 3rd&nbsp;Road, Yanta District, Xi&rsquo;an City, Shaanxi Province, 710075 China.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Code
of Ethics</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have adopted a &ldquo;code of ethics&rdquo; as defined by regulations promulgated under the Securities Act of 1933, as amended, and the
Exchange Act that applies to all of our directors and employees worldwide, including our principal executive officer, principal financial
officer and principal accounting officer. A current copy of our Code of Business Conduct and Ethics is available on our website at&nbsp;www.creg-cn.com
under the links &ldquo;Investor Relations &ndash; Corporate Governance.&rdquo; We intend to disclose any amendments to the Code of Business
Conduct and Ethics, as well as any waivers for executive officers or directors, on our website.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Delinquent
Section 16(a) Reports</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section
16(a) of the Exchange Act requires our executive officers, directors and holders of more than 10% of our common stock to file with the
SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely on
our review of the copies of these reports, we believe that all filing requirements of Section 16(a) of the Exchange Act were timely complied
with during the fiscal year ended December 31, 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_011"></A>EXECUTIVE
COMPENSATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following summary compensation table sets forth the compensation earned by our named executive officers for the years ended December
31, 2020 and 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Summary
Compensation Table</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes the compensation earned during the years ended December 31, 2020 and 2019, by those individuals who served
as our Chief Executive Officer, or Chief Financial Officer during any part of fiscal year 2020 and our other most highly compensated
executive officer. The individuals listed in the table below are referred to as the &ldquo;named executive officers.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1.5pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Name and
    Principal Position Year</B></FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Salary<BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Bonus
    <BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Stock<BR>
    Awards<BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Option<BR>
    Awards<BR>
    ($)(4)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Non-Equity<BR>
    Incentive Plan<BR>
    Compensation<BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Nonqualified<BR>
    Deferred<BR>
    Compensation<BR>
    Earnings <BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>All
    Other<BR>
    Compensation<BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1.5pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Total<BR>
    ($)</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; width: 11%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guohua
    Ku<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2020</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33,078</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33,078</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Chief
    Executive Officer and Chairman of the Board</I></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33,078</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33,078</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="background-color: White">
    <TD STYLE="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yongjiang
    (Jackie) Shi<SUP>(2)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2020</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">26,585</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">26,585</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Chief
    Financial Officer</I></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,462</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">--</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,462</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="background-color: White">
    <TD STYLE="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Binfeng&nbsp;(Adeline)&nbsp;Gu</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2020</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">22,648</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">22648</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Secretary</I></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">22,648</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">22648</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<!-- Field: Rule-Page --><DIV STYLE="margin-top: 3pt; margin-bottom: 3pt; width: 15%"><DIV STYLE="font-size: 1pt; border-top: Black 1.5pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guohua
    Ku was appointed as Chief Executive Officer of the Company on December 10, 2008.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yongjiang
    (Jackie) Shi was appointed as Chief Financial Officer and Vice President of the Company on December 16, 2019.</FONT></TD></TR>
  </TABLE>
<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Narrative
to Summary Compensation Table</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the 2020 fiscal year, we used base salary as the exclusive executive compensation to our executive officers. We use base salary to fairly
and competitively compensate our executives, including the named executive officers, for the jobs we ask them to perform. We view base
salary as the most stable component of our executive compensation program, as this amount is not at risk. We believe that the base salaries
of our executives should be targeted at or above the median of base salaries for executives in similar positions with similar responsibilities
at comparable companies, consistent with our compensation philosophy. Because of our emphasis on performance-based compensation for executives,
base salary adjustments are generally made only when we believe there is a significant deviation from the market or an increase in responsibility.
Our Compensation Committee reviews the base salary levels of our executives each year to determine whether an adjustment is warranted
or necessary.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Employment
Contracts</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Guohua Ku entered into
an employment agreement with the Company to serve as its CEO on December 10, 2008. The agreement had a two-year term, starting December
10, 2008, that included a one-month probationary period. In accordance with the terms and conditions of Mr. Ku&rsquo;s employment agreement,
on December 10, 2010, 2012, 2014, 2016, 2018, and, most recently, on December 10, 2020, the Company and Mr. Ku agreed to renew Mr. Ku&rsquo;s
employment agreement for an additional two-year term. Mr. Ku receives a salary of RMB 216,000 ($33,078) annually for his service as CEO.
The Company may terminate the employment agreement at any time without any prior notice to the employee if Mr. Ku engages in certain conduct,
including, but not limited to (i) violating rules and procedures of the Company or breaching the terms of the employment agreement; (ii)
neglecting his duties or engaging in malpractice for personal gain that damages the Company; (iii) entering into an employment relationship
with any other employer during his employment with the Company; or (iv) the commission of a crime. The Company also may terminate the
employment agreement upon 30 days written notice to Mr. Ku under certain other conditions, including but not limited to (i) inability
to continue position due to non-work-related sickness or injury; (ii) incompetence; and (iii) the need for mass layoffs or other restructuring.
Mr. Ku has the right to resign at any time upon a 30-day written notice to the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Yongjiang Shi entered
into an employment agreement with the Company to serve as its CFO on May 8, 2020. Pursuant to the terms of Mr. Shi&rsquo;s employment
agreement, he receives a cash compensation in the amount of RMB 16,000 (approximately $2,300) per month for his service as the CFO and
Vice President and is also entitled to receive an annual equity award of at least 5,000 shares of common stock of the Company. The term
of the employment agreement is for 24 months and may be renewed for an additional term by the Company upon 30-day notice prior to its
termination. This employment agreement may be terminated by the Company or Mr. Shi at any time without any prior notice.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with her appointment as Chief Financial Officer and Secretary, the Company entered into an employment agreement with Ms. Gu
on September 28, 2016. Pursuant to the terms of the employment agreement, Ms. Gu will receive compensation in the amount of RMB 10,000
(approximately $1,538) per month for her role as Chief Financial Officer, plus stock options for no less than 5,000 shares of common
stock of the Company each year to be issued under the China Recycling Energy Corporation Omnibus Equity Plan (the &ldquo;Plan&rdquo;)
with the specific terms of the options to be determined by the Compensation Committee of the Board in the future. The term of the employment
agreement is for two years, starting on September 28, 2016. The Compensation Committee approved the grant of an option to Ms. Gu to purchase
5,000 shares of the Company&rsquo;s common stock on April 27, 2017. On September 28, 2018, the Company and Ms. Gu agreed to renew Ms.
Gu&rsquo;s employment agreement for an additional two-year term. Ms. Gu receives a salary of RMB 144,000 ($22,052) annually for her service
as CFO. Ms. Gu resigned from her position as the Chief Financial Officer of the Company on December 13, 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Potential
Payments Upon Termination or Change of Control</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Employment
Agreements</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
of our executive officers, including our CEO, have employment agreements with the Company&rsquo;s operating subsidiaries in China. Under
Chinese law, we may only terminate employment agreements without cause and without penalty by providing notice of non-renewal one month
prior to the date on which the employment agreement is scheduled to expire. If we fail to provide this notice or if we wish to terminate
an employment agreement in the absence of cause, as defined in the agreement, then we are obligated to pay the employee one month&rsquo;s
salary for each year we have employed the employee. We are, however, permitted to terminate an employee for cause without penalty pursuant
to each employment agreement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>2015
Plan</I></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June of 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the &ldquo;2015 Equity
Plan&rdquo;) at its annual meeting. The total aggregate shares of common stock authorized for issuance during the term of the 2015 Equity
Plan is 124,6,26 shares of the Company&rsquo;s authorized shares of common stock, as adjusted for the Reverse Stock Split, effected on
April 13, 2020. The 2015 Equity Plan will terminate on the earliest to occur of (i) the 10th anniversary of the Equity Plan&rsquo;s effective
date, or (ii) the date on which all shares available for issuance under the Equity Plan shall have been issued as fully vested shares.
We have not granted any options to purchase shares of our common stock under the 2015 Equity Plan during the 2020 fiscal year.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NON-EMPLOYEE
DIRECTOR COMPENSATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Non-Employee
Director Compensation</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth certain information regarding the compensation earned by or awarded during the 2020 fiscal year to each of
our non-executive directors:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Fees<BR>
                                            Earned&nbsp;or<BR> Paid in</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Cash</B></FONT></P></TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; font-weight: bold; text-align: center">Stock<BR> Awards</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; font-weight: bold; text-align: center">Option<BR> Awards</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Non-Equity<BR>
                                            Incentive Plan</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Compensation</B></FONT></P></TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Nonqualified<BR>
                                            Deferred</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Compensation</B></FONT></P></TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; font-weight: bold; text-align: center">All Other<BR> Compensation</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; font-weight: bold; text-align: center">Total</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: left">Name</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">($)(1)</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">($)(1)</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">($)(1)</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">($)</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Earnings</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">($)</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">($)</TD><TD STYLE="vertical-align: bottom; text-align: center; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; width: 30%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">LuLu
    Sun<SUP>(2)</SUP></FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">7692</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">7692</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xiaoping
    Guo<SUP>(3)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7692</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xiaogang
    Zhu<SUP>(3)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhongli
    Liu<SUP>(4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7692</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yan
    Zhan<SUP>(5)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,906</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,906</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
    setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties to the
    Company, as well as the skill level required to serve as a director and manage the affairs of the Company. Each non-employee director
    receives an annual Board fee of RMB 50,000. Non&ndash;employee directors do not receive additional fees for attendance at Board or
    Board committee meetings or for serving on Board Committees. There were no stock options granted and exercised by non-employee directors
    during the 2020 fiscal year. There were no option awards outstanding as of December 31, 2020, for any of the non-employee directors.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ms.
    LuLu Sun was appointed to the Board on August 5, 2015.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Messrs.
    Guo and Zhu were appointed as directors effective June 1, 2017. Mr. Zhu resigned from the Board effective March 5, 2020.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
                                            Liu was appointed to the Board on March 6, 2020 to fill the vacancy resulted from the resignation
                                            of Xiaogang Zhu.</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
    Zhan was appointed to the Board on March 12, 2021 to fill the vacancy resulted from the resignation of Geyun Wang.</FONT></TD></TR>
  </TABLE>
<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Option
Grants</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had no outstanding equity awards as of the end of fiscal years ended December 31, 2020 and 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Option
Exercises and Fiscal Year-End Option Value Table</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were no stock options exercised during fiscal years ended December 31, 2020 and 2019 by the executive officers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Outstanding
Equity Awards at Fiscal Year-End Table</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had no outstanding equity awards as of the end of fiscal years ended December 31, 2020 and 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Long-Term
Incentive Plans and Awards</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were no awards made to a named executive officer in fiscal 2020 and 2019 under any long-term incentive plan.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_012"></A>PRINCIPAL
STOCKHOLDERS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth certain information provided to us by each of the following as of the date of this prospectus (unless otherwise
indicated) regarding their beneficial ownership of our common stock:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">each person, entity or
    group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known by us to be the beneficial owner of
    more than 5% of our outstanding shares of common stock;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">each of our directors and
    named executive officers; and</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">all of our directors and
    named executive officers as a group.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Information
relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by
each person using &ldquo;beneficial ownership&rdquo; concepts under the rules of the SEC. Under these rules, a person is deemed to be
a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or
direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security.
The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within
60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. The address for each director
and executive officer is 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd&nbsp;Road, Yanta District, Xi&rsquo;an City, Shaanxi Province,
China 710075.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid">Common Stock Beneficially Owned</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">Number of<BR> Shares</TD><TD STYLE="padding-bottom: 1.5pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1.5pt solid">Percent of<BR> Class</TD><TD STYLE="padding-bottom: 1.5pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif">Directors and Named Executive Officers</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Guohua Ku</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right">1,278,291</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; font: 10pt Times New Roman, Times, Serif; text-align: right">19.42</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Yongjiang (Jackie) Shi</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">0</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><SUP>(1)</SUP></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Adeline Gu</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">500</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><SUP>(2)</SUP></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Yan Zhan</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">0</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Xiaoping Guo</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">0</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Zhongli Liu</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">0</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: -9pt; padding-left: 9pt">LuLu Sun</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">0</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">All executive officers and directors as a group (7 persons)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,278,791</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">19.42</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Other 5% Stockholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Eastern Good Investments, Ltd.</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">440,000</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">6.68</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Forever Inherit Group (HK) Ltd.</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1,000,000</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">15.19</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Keen Merit Investments, Ltd.</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">440,000</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">6.68</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; text-indent: -9pt; padding-left: 9pt">Lead Crest Investments, Ltd.</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">440,000</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">6.68</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
  </TABLE>


<!-- Field: Rule-Page --><DIV STYLE="margin-top: 3pt; margin-bottom: 3pt; width: 15%"><DIV STYLE="font-size: 1pt; border-top: Black 1.5pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="margin-top: 0; margin-bottom: 0"></P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less than one percent (1%)
    of outstanding shares.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Excludes at least 5,000
    shares issuable to Mr. Shi annually pursuant to the term of his employment agreement with the Company.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 500 shares of
    common stock subject to currently exercisable stock options.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>EQUITY
COMPENSATION PLAN INFORMATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the fiscal year ended December 31, 2020, we have not issued any shares of common stock under the 2015 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_013"></A>RELATED
PARTY TRANSACTIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has not implemented a written policy concerning the review of related party transactions; however, the Company&rsquo;s policy
is that the Audit Committee must review related party transactions and Board must approve all related party transactions. Further, all
material related party transactions will be made or entered into on terms that are no less favorable to us than can be obtained from
unaffiliated third parties.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
&ldquo;related party transaction&rdquo; is a transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness)
or any series of similar transactions, arrangements or relationships in which the Company (including any of our subsidiaries) was, is
or will be a participant, the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect
interest.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 29, 2018, our Chairman of the Board and CEO, Guohua Ku, entered into a Buy-Back Agreement with the following parties: Xi&rsquo;an
TCH, Xi&rsquo;an Zhonghong, HYREF, Chonggong Bai and Xi&rsquo;an Hanneng Enterprises Management Consulting Co. Ltd. (&ldquo;Xi&rsquo;an
Hanneng&rdquo;). Pursuant to the terms of the Buy Back Agreement, Mr. Ku, together with Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, and Chonggong
Bai, as Buyers, jointly and severally agreed to buy back all outstanding capital equity of Xi&rsquo;an Hanneng which was transferred
to HYREF by Chonggong Bai, and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi&rsquo;an Zhonghong. (See Notes
5 and 10). Pursuant to the terms of the Buy-Back agreement, HYREF may request that the Buyers buy back the equity shares of Xi&rsquo;an
Hanneng and/or the CDQ WHPG station if one of the following conditions is met: (i) HYREF holds the equity shares of Xi&rsquo;an Hanneng
until December 31, 2021; (ii) Xi&rsquo;an Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations
Co., Ltd., a Chinese over-the-counter trading system (the &ldquo;NEEQ&rdquo;); (iii) Xi&rsquo;an Huaxin New Energy, or any of the Buyers
or its affiliates has a credit problem, including not being able to issue an auditor report or standard auditor report or any control
person or executive of the Buyers is involved in crimes and is under prosecution or has other material credit problems, to HYREF&rsquo;s
reasonable belief; (iv) if Xi&rsquo;an Zhonghong fails to timely make repayment on principal or interest of the loan agreement, its supplemental
agreement or extension agreement; (v) the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment
Agreement or its related transaction documents, including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer
Agreement, the Entrusted Loan Agreement and their guarantee agreements and supplemental agreements.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2020 and 2019, the Company had $28,440 and $41,174, respectively, in advances from the Company&rsquo;s management, which
bear no interest, are unsecured, and are payable upon demand.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and December 31, 2020, the Company had $28,466 and $28,440, respectively, in advances from the Company&rsquo;s management,
which bear no interest, are unsecured, and are payable upon demand.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors, pursuant to which
the Company agreed to sell to the purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at&nbsp;$11.522
per share.&nbsp;One of the purchasers is the Company&rsquo;s CEO and Chairman of the Board, who purchased 1,000,000 shares of common
stock of the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2021, the Company&rsquo;s CEO amended the number of shares that he would purchase from 1,000,000 shares to 940,000 shares. The
Company returned $691,320 in excess purchase price that were received earlier to the Company&rsquo;s CEO in April 2021.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_014"></A>DESCRIPTION
OF SECURITIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Issuances
of Shares of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of July 27, 2021, there
were 6,583,327 shares of our common stock outstanding, and warrants to purchase 30,411 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 27, 2021, the Company
filed a certificate of change to its Articles of Incorporate with the Secretary of State of the State of Nevada to increase its authorized
shares to 100,000,000 shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">Our common stock is currently
traded on the Nasdaq Capital Market under the symbol &ldquo;CREG.&rdquo;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&ldquo;BOD&rdquo;)
out of legally available funds; however, the current policy of our BOD 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Anti-Takeover
Effects of Certain Provisions of Nevada Law</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a Nevada corporation, we are also subject to certain provisions of 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 BOD 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 BOD 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 &ldquo;business combination&rdquo; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 &ldquo;controlling interest&rdquo; 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 &ldquo;controlling
interest&rdquo; 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 &ldquo;control shares.&rdquo; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Transfer
Agent and Registrar</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Transfer Agent for our common stock and Warrants is Securities Transfer Corporation, located at 2901 Dallas Pkwy Suite 380, Plano, TX
75093.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_015"></A>MARKET
PRICE AND DIVIDENDS ON OUR COMMON STOCK AND<BR>
RELATED STOCKHOLDER MATTERS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our common stock is currently
traded on the Nasdaq Capital Market under the symbol &ldquo;CREG.&rdquo; On July 27, 2021, the last reported sales price for our common
stock was $7.07 per share.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Shares
Issued for Stock Compensation</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm, engaging that firm as
the exclusive lead underwriter for a registered securities offering. Pursuant to the terms of this engagement agreement, the Company
issued 10,000 shares of its unregistered and restricted common stock to an investment banker firm within 10 days from the date of the
execution of the engagement agreement, and the remaining 5,000 shares to be paid upon completion of the offering. The agreement has expired
and the Company has no obligation to pay the remaining 5,000 shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 11, 2019, the Company entered a consulting agreement with a consulting company to advise the Company on an acquisition project.
Pursuant to the terms of this consulting agreement, the Company issued 31,250 shares of the Company&rsquo;s unregistered and restricted
common stock to this consulting company. The agreement has expired and the acquisition project was abandoned.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
issuances of the shares of common stock for stock compensation described above were exempt from registration under Section 4(a)(2) of
the Securities Act as transactions by an issuer not involving any public offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Equity
Compensation Plan Information</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>2015
Plan</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June of 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the &ldquo;2015 Equity
Plan&rdquo;) at its annual meeting. The total aggregate shares of common stock authorized for issuance during the term of the 2015 Equity
Plan is 124,6,26 shares of the Company&rsquo;s authorized shares of common stock, as adjusted for the Reverse Stock Split, effected on
April 13, 2020. The 2015 Equity Plan will terminate on the earliest to occur of (i) the 10th anniversary of the Equity Plan&rsquo;s effective
date, or (ii) the date on which all shares available for issuance under the Equity Plan shall have been issued as fully-vested shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Holders
of Capital Stock</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of July 27, 2021, there
were 6,583,327 shares of our common stock outstanding, held by approximately 2,728 shareholders of record, and warrants to purchase 30,411
shares of our common stock, held by 5 warrant holders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Stock
Option Grants</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
granted stock options to purchase 500 shares of common stock subject to currently exercisable stock options under the 2015 Equity Plan.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Dividends</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the
foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our
business, our Board of Directors has the discretion to declare and pay dividends in the future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payment
of dividends in the future will depend upon our earnings, capital requirements, and any other factors that our Board of Directors deems
relevant.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_016"></A>SHARES
ELIGIBLE FOR FUTURE SALE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Immediately prior to this offering,
there was little to no trading activity in our common stock. Future sales of substantial amounts of common stock in the public market,
or the perception that such sales may occur, could adversely affect the market price of our common stock. Immediately prior to the offering,
there are 6,583,327 shares of common stock outstanding. Upon the completion of the offering, we will have an aggregate of shares of common
stock outstanding immediately assuming no exercise of the over-allotment option by the Underwriter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for
any shares purchased by our &ldquo;affiliates,&rdquo; as that term is defined in Rule 144 under the Securities Act, whose sales would
be subject to the Rule 144 resale restrictions described below, other than the holding period requirement. The remaining shares of common
stock, representing approximately % or % of our outstanding shares, following the firm commitment offering, respectively, will be held
by our existing shareholders. Many of these shares are &ldquo;restricted securities&rdquo; as that phrase is defined in Rule 144 under
the Securities Act. Subject to certain contractual restrictions, including the&nbsp;lock-up&nbsp;agreements described below, holders
of restricted shares will be entitled to sell those shares in the public market pursuant to an effective registration statement under
the Securities Act or if they qualify for an exemption from registration under Rule 144. Sales of these shares in the public market after
the restrictions under the lock-up agreements lapse, or the perception that those sales may occur, could cause the prevailing market
price to decrease or to be lower than it might be in the absence of those sales or perceptions. As a result of&nbsp;lock-up agreements
described below, and the provisions of Rules 144 under the Securities Act, the restricted securities will be available for sale in the
public market.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We,
all of our directors and officers and certain shareholders have agreed with the Underwriter, subject to certain exceptions, not to sell,
transfer or dispose of, directly or indirectly, any of our shares of common stock or any securities convertible into or exercisable or
exchangeable for shares of our common stock for a period of 180-days after the date of this prospectus without the prior written consent
of the Underwriter. This consent may be given at any time without public notice. Upon expiration of the&nbsp;lock-up&nbsp;period, these
shares will be available for sale in the public market, subject in some cases to applicable volume limitations under Rule 144.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
also agreed to register shares underlying the Underwriter&rsquo;s Warrants. Once exercised, of which there can be no guarantee, subject
to the relative lock up period described elsewhere in this prospectus, those shares shall be freely tradable without restriction or further
registration under the Securities Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Rule
144</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Some
of our stockholders will be forced to hold their shares of our common stock for at least a&nbsp;six-month&nbsp;period before they are
eligible to sell those shares, and even after that&nbsp;six-month&nbsp;period, sales may not be made under Rule 144 promulgated under
the Securities Act unless we and such stockholders are in compliance with other requirements of Rule 144.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
general, Rule 144 provides that (i)&nbsp;any of our&nbsp;non-affiliates&nbsp;that has held restricted common stock for at least six months
is thereafter entitled to sell its restricted stock freely and without restriction, provided that we remain compliant and current with
our SEC reporting obligations, and (ii)&nbsp;any of our affiliates, which includes our directors, executive officers and other person
in control of us, that has held restricted common stock for at least six months is thereafter entitled to sell its restricted stock subject
to the following restrictions: (a)&nbsp;we are compliant and current with our SEC reporting obligations, (b)&nbsp;certain manner of sale
provisions are satisfied, (c)&nbsp;a Form 144 is filed with the SEC, and (d)&nbsp;certain volume limitations are satisfied, which limit
the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of
outstanding shares. A person who has ceased to be an affiliate at least three months immediately preceding the sale and who has owned
such shares of common stock for at least one year is entitled to sell the shares under Rule 144 without regard to any of the limitations
described above.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Summary
of Shares Available for Future Sale</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes the total shares potentially available for future sale. To the extent we sell a number of shares of common
stock under the firm commitment offering, the below tables will be adjusted proportionately as to numbers of shares available for sale
and dates on which such shares may be sold (as to currently outstanding shares).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: left; width: 48%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Outstanding
    Shares</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 48%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Date
    Available for Sale</B></FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently
    outstanding shares of common stock not subject to lock-up agreement:</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Available
    for sale and subject to Rule 144 requirement</FONT></TD></TR>
  <TR STYLE="background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently&nbsp;Outstanding&nbsp;Shares
    of Common Stock Subject to Lock-up Agreement: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
    180-day from the date of this prospectus. </FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shares
    Offered in this Offering<SUP>(1)</SUP>: </FONT></TD>
    <TD STYLE="text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
    the completion of this offering, these shares will be freely tradable. </FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Including the shares of
    common stock upon exercise of the Warrants. The shares of common stock upon exercise of the Underwriter Warrants will become available
    for sale after 180-day from commencement of sale of this offering. </FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_017"></A>UNDERWRITING</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the terms and subject to the conditions of an underwriting agreement dated the date of this prospectus, the underwriters named below,
for whom Univest Securities. LLC is acting as the representative and sole book-running manager, have severally agreed to purchase, and
we have agreed to sell to them, the number of securities at the initial public offering price, less the underwriting discounts, as set
forth on the cover page of this prospectus and as indicated below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: left">Underwriters</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Number<BR>
                                            of Shares of<BR>
                                            Common Stock<BR>
                                            and Warrants</B></FONT></P>

</TD>
    <TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; width: 88%">Univest Securities, LLC</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left; width: 9%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.25in; text-align: left; padding-bottom: 4pt">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 4pt">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriters are offering the securities subject to their acceptance of the securities rom us and subject to prior sale. The underwriting
agreement provides that the obligations of the underwriters to pay for and accept delivery of the securities offered by this prospectus
are subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take
and pay for all of the securities offered by this prospectus if any such securities are taken.&nbsp;However, the underwriters are not
required to take or pay for the securities covered by the underwriters&rsquo; option to purchase additional securities described below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have granted a 45-day option to the representative of the underwriters to purchase up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares of common stock and/or up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants at the initial public offering price listed
on the cover page of this prospectus, less underwriting discounts. The underwriters may exercise this option solely for the purpose of
covering over-allotments, if any, made in connection with the offering contemplated by this prospectus. To the extent the option is exercised,
each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares
of common stock and warrants as the number listed next to the underwriter&rsquo;s name in the preceding table bears to the total number
of shares of common stock and warrants listed next to the names of all underwriters in the preceding table.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriters will offer the shares to the public at the initial public offering price set forth on the cover of this prospectus and to
selected dealers at the initial public offering price less a selling concession not in excess of $0.16 per share. After this offering,
the initial public offering price, concession and reallowance to dealers may be reduced by the representative. No change in those terms
will change the amount of proceeds to be received by us as set forth on the cover of this prospectus. The securities are offered by the
underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in
part.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Discounts
and Expenses</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriting discounts are equal to 8% of the initial public offering price set forth on the cover of this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table shows the per share and accompanying warrant and total initial public offering price, underwriting discounts, and proceeds
before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters&rsquo; option to purchase
up to an additional shares of common stock and/or up to Warrants.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Per Share and<BR> accompanying<BR> Warrant</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Total Without<BR> Exercise of<BR> Over-allotment<BR> Option</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Total With<BR> Full Exercise<BR> of Over-<BR> allotment<BR> Option</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left; text-indent: -9pt; padding-left: 9pt">Initial public offering price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%">$</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">10,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">11,500,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Underwriting discounts to be paid by us</TD><TD>&nbsp;</TD>
    <TD>$</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">800,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">920,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Proceeds, before expenses, to us</TD><TD>&nbsp;</TD>
    <TD>$</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,580,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have agreed to pay to the underwriters
upon the consummation of the offering, a non-accountable expense allowance equal to one percent (1%) of the gross proceeds of the offering.
We have also agreed to pay the representative reasonable out-of-pocket expenses including but not limited to, (i) reasonable travel and
out-of-pocket expenses, including clearing charges; (ii) reasonable fees of legal counsel incurred by the Underwriter in connection with
the offering. The total accountable expenses shall not exceed $150,000. Notwithstanding any contained herein to the contrary, the representative
shall return to the Company any expenses previously paid, or advanced, but that which were not actually incurred, in accordance with FINRA
Rule 5110(g)(4)(A).</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Underwriter
Warrants</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have also agreed to grant to
the representative a warrant covering a number of shares equal to 5% of the aggregate number of shares of common stock sold in the offering
(the &ldquo;Underwriter Warrants&rdquo;). The Underwriter Warrants will be exercisable, in whole or in part, during a period commencing
after 6 months of the closing of the offering and will expire on the five-year anniversary of the date of commencement of sales of the
offering. The Underwriter Warrants will be exercisable at a price equal to 100% of the offering price and shall not be redeemable. We
have registered the shares underlying the Underwriter Warrants in the registration statement. The Underwriter Warrants may not be sold,
transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that
would result in the effective economic disposition of the securities by any person for a period of 180 days following the date of commencement
of sales of the offering (in accordance with FINRA Rule 5110(e)(1) except as may be provided in FINRA Rule 5110(e)(2). The Underwriter
Warrants may be exercised as to all or a lesser number of shares, and will provide for cashless exercise. The Underwriter Warrants shall
further provide for adjustment in the number and price of such warrants (and the share of the common stock underlying such warrants) in
the event of recapitalization, a merger or other structural transactions to prevent dilution.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Right
of First Refusal</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the underwriting agreement, we will provide the representative of the underwriters the right of first refusal for one year from the
date of commencement of sales of this public offering to act as financial advisor or to act as joint financial advisor on at least equal
economic terms on any public or private financing (debt or equity), merger, business combination, recapitalization or sale of some or
all of the equity or assets of our company, whether undertaken in conjunction with another broker-dealer or on the Company&rsquo;s own
volition.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Price
Stabilization</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The underwriters will be required
to comply with the Securities Act and the Exchange Act, including without limitation, Rule 10b-5 and Regulation M under the Exchange Act.
These rules and regulations may limit the timing of purchases and sales of shares of capital stock by the Underwriter acting as principal.
Under these rules and regulations, the Underwriter:</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    </FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">may not engage in any stabilization
    activity in connection with our securities&#894; and </FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    </FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">may not bid for or purchase
    any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange
    Act, until it has completed its participation in the distribution. </FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Determination
of Offering Price</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The public offering price of the
shares we are offering was determined by us in consultation with the underwriters based on discussions with potential investors in light
of the history and prospects of our company, the stage of development of our business, our business plans for the future and the extent
to which they have been implemented, an assessment of our management, the public stock price for similar companies, general conditions
of the securities markets at the time of the Offering and such other factors as were deemed relevant.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Indemnification</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have agreed to indemnify the
underwriters against liabilities relating to the Offering arising under the Securities Act and the Exchange Act and to contribute to payments
that the underwriters may be required to make for these liabilities.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Foreign
Regulatory Restrictions on Purchase of our Shares</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not taken any action to permit a public offering of our shares outside the United States or to permit the possession or distribution
of this prospectus outside the United States. People outside the United States who come into possession of this prospectus must inform
themselves about and observe any restrictions relating to this offering of our shares and the distribution of this prospectus outside
the United States.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Potential
Conflicts of Interest</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course
of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business
activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities
(or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their
customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and
their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities
or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Other
Relationships</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment,
hedging, financing and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment
banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future
receive customary fees, commissions and expenses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of
investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank
loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities
and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish
or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that
they acquire, long and/or short positions in such securities and instruments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Electronic
Offer, Sale and Distribution of Securities</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
prospectus in electronic format may be made available on the websites maintained by the Underwriter. In addition, the common stock may
be sold by the Underwriter to securities dealers who resell the common stock to online brokerage account holders. Other than the prospectus
in electronic format, the information on the Underwriter&rsquo;s website and any information contained in any other website maintained
by the Underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved
and/or endorsed by us or the Underwriter in its capacity as Underwriter and should not be relied upon by investors.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Lock-up
Agreements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We,
each of our directors and officers and holders of our common stock on a fully diluted basis immediately prior to the consummation of
this offering have agreed or are otherwise contractually restricted for a period of 180 days after the date of this prospectus, without
the prior written consent of the Underwriter not to directly or indirectly:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#9679;</B></FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">issue (in the case of the
    Company), offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
    grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any shares of our common stock or other
    capital stock or any securities convertible into or exercisable or exchangeable for our common stock or other capital stock;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#9679;</B></FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">in the case of the Company,
    file or cause the filing of any registration statement under the Securities Act with respect to any shares of our common stock or
    other capital stock or any securities convertible into or exercisable or exchangeable for our common stock or other capital stock,
    other than registration statements on Form S-8 filed with the SEC after the closing date of this offering; or</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#9679;</B></FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">enter into any swap or
    other agreement, arrangement, hedge or transaction that transfers to another, in whole or in part, directly or indirectly, any of
    the economic consequences of ownership of our common stock or other capital stock or any securities convertible into or exercisable
    or exchangeable for our common stock or other capital stock,</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">whether
any transaction described in any of the foregoing bullet points is to be settled by delivery of our common stock or other capital stock,
other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are no existing agreements between the Underwriter and any person who will execute a lock-up agreement in connection with this offering
providing consent to the sale of shares prior to the expiration of the lock-up period. The lock up does not apply to the issuance of
shares upon the exercise of rights to acquire shares of common stock pursuant to any existing stock option or the conversion of any of
our preferred convertible stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Offer
Restrictions outside the United States</U></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than in the United States, no action has been taken by us or the Underwriter that would permit a public offering of the securities offered
by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with
the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result
in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in
any jurisdiction in which such an offer or a solicitation is unlawful.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Australia.
</I>This prospectus is not a product disclosure statement, prospectus or other type of disclosure document for the purposes of Corporations
Act 2001 (Commonwealth of Australia) (the &ldquo;Act&rdquo;) and does not purport to include the information required of a product disclosure
statement, prospectus or other disclosure document under Chapter 6D.2 of the Act. No product disclosure statement, prospectus, disclosure
document, offering material or advertisement in relation to the offer of the securities has been or will be lodged with the Australian
Securities and Investments Commission or the Australian Securities Exchange.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accordingly,
(1) the offer of the securities under this prospectus may only be made to persons: (i) to whom it is lawful to offer the shares without
disclosure to investors under Chapter 6D.2 of the Act under one or more exemptions set out in Section 708 of the Act, and (ii) who are
&ldquo;wholesale clients&rdquo; as that term is defined in section 761G of the Act, (2) this prospectus may only be made available in
Australia to persons as set forth in clause (1) above, and (3) by accepting this offer, the offeree represents that the offeree is such
a person as set forth in clause (1) above, and the offeree agrees not to sell or offer for sale any of the securities sold to the offeree
within 12 months after their issue except as otherwise permitted under the Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Canada.
</I>The securities may not be offered, sold or distributed, directly or indirectly, in any province or territory of Canada other than
the provinces of Ontario and Quebec or to or for the benefit of any resident of any province or territory of Canada other than the provinces
of Ontario and Quebec, and only on a basis that is pursuant to an exemption from the requirement to file a prospectus in such province,
and only through a dealer duly registered under the applicable securities laws of such province or in accordance with an exemption from
the applicable registered dealer requirements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>European
Economic Area. </I>In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive, or a
Relevant Member State, from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or
the Relevant Implementation Date, an offer of the securities to the public may not be made in that Relevant Member State prior to the
publication of a prospectus in relation to the securities that has been approved by the competent authority in that Relevant Member State
or, where appropriate, approved in another Relevant Member State and the competent authority in that Relevant Member State has been notified,
all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date,
make an offer of the securities to the public in that Relevant Member State at any time,</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">to legal entities that
    are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is
    solely to invest in securities;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">to any legal entity that
    has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than
    &euro;43,000,000, and (3) an annual net turnover of more than &euro;50,000,000, as shown in its last annual or consolidated accounts;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">to fewer than 100 natural
    or legal persons (other than qualified investors as defined in the Prospectus Directive; or</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

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<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">in any other circumstances
    that do not require the publication by the company of a prospectus pursuant to Article 3 of the Prospectus Directive;</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">provided
that no such offer of securities shall result in a requirement for the publication by the company of a prospectus pursuant to Article
3 of the Prospectus Directive.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
purposes of the above provision, the expression &ldquo;an offer of securities to the public&rdquo; in relation to any securities in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the
securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the same may be varied in
that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression &ldquo;Prospectus Directive&rdquo;
means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Hong
Kong.&nbsp;</I>The securities may not be offered or sold by means of this document or any other document other than (i) in circumstances
that do not constitute an offer or invitation to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong)
or the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong), or (ii) to &ldquo;professional investors&rdquo; within the meaning
of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances that
do not result in the document being a &ldquo;prospectus&rdquo; within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong),
and no advertisement, invitation or document relating to the securities may be issued or may be in the possession of any person for the
purpose of issue (in each case whether in Hong Kong or elsewhere), that is directed at, or the contents of which are likely to be accessed
or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to securities
which are or are intended to be disposed of only to persons outside Hong Kong or only to &ldquo;professional investors&rdquo; within
the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Malaysia</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The securities have not been and
may not be approved by the Securities Commission Malaysia, or SC, and this document has not been and will not be registered as a prospectus
with the SC under the Malaysian capital markets and services act of 2007, or CMSA. Accordingly, no securities or offer for subscription
or purchase of securities or invitation to subscribe for or purchase securities are being made to any person in or from within Malaysia
under this document except to persons falling within any of paragraphs 2(g)(i) to (xi) of schedule 5 of the CMSA and distributed only
by a holder of a capital markets services license who carries on the business of dealing in securities and subject to the issuer having
lodged this prospectus with the SC within seven days from the date of the distribution of this prospectus in Malaysia. The distribution
in Malaysia of this document is subject to Malaysian laws. Save as aforementioned, no action has been taken in Malaysia under its securities
laws in respect of this document. This document does not constitute and may not be used for the purpose of a public offering or an issue,
offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the approval of the SC or the registration
of a prospectus with the SC under the CMSA.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>People&rsquo;s
Republic of China. </I>This prospectus may not be circulated or distributed in the PRC and the securities may not be offered or sold,
and will not offer or sell to any person for re-offering or resale directly or indirectly to any resident of the PRC except pursuant
to applicable laws and regulations of the PRC. For the purpose of this paragraph, PRC does not include Taiwan and the special administrative
regions of Hong Kong and Macau.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Singapore</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
securities represented may not be offered or sold, nor may any document or other material in connect with such securities be distributed,
either directly or indirectly, (i) to persons in Singapore other than under circumstances in which such offer or sale does not constitute
an offer or sale of such securities to the public in Singapore or (ii) to the public or any member of the public in Singapore other than
pursuant to, and in accordance with the conditions of, an exemption invoked under division 5a or part iv of the companies act, chapter
50 of Singapore and to persons to whom the securities may be offered or sold under such exemption.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>United
Kingdom.</I>&nbsp;An offer of the securities may not be made to the public in the United Kingdom within the meaning of Section 102B of
the Financial Services and Markets Act 2000, as amended, or the FSMA, except to legal entities that are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise
in circumstances that do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial
Services Authority, or the FSA.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) may only be communicated to persons
who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 or in circumstances in which Section 21 of FSMA does not apply to the company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
applicable provisions of the FSMA with respect to anything done by the underwriter in relation to the securities must be complied with
in, from or otherwise involving the United Kingdom.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_018"></A>LEGAL
MATTERS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
validity of the common stock and Warrants offered hereby will be passed upon for us by Ortoli Rosenstadt LLP. Hunter Taubman Fischer
&amp; Li LLC is acting as United States securities counsel to the Underwriter.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_019"></A>EXPERT</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated financial statements for each of the years ended December 31, 2020 and 2019, as set forth in this prospectus and elsewhere
in the registration statement have been so included in reliance on the report of Prager Metis CPAs LLP (&ldquo;Prager Metis&rdquo;),
an independent registered public accounting firm, given on their authority as experts in accounting and auditing. The current address
of Prager Metis is 2381 Rosecrans Avenue, Suite 350, El Segundo, CA 90245.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_021"></A>WHERE
YOU CAN FIND MORE INFORMATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
filed with the SEC a registration statement under the Securities Act for the common stock in this offering. This prospectus does not
contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement.
For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits that were
filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document
that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract
or other document filed as an exhibit to the registration statement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
file annual, quarterly and current reports and other information with the SEC. Our filings with the SEC are available to the public on
the SEC&rsquo;s website at <I>www.sec.gov</I>. Those filings are also available to the public on our corporate website at <I>www.ccmus.com</I>.
The information we file with the SEC or contained on, or linked to through, our corporate website or any other website that we may maintain
is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read and copy, at the SEC&rsquo;s
prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of which this prospectus
is a part, at the SEC&rsquo;s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330
to obtain information on the operation of the Public Reference Room.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="a_022"></A>INDEX
TO FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></p>


<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1.5pt solid; vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PAGE</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#c_001">Report
    of Independent Registered Public Accounting Firm</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">F-2</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#c_002">Consolidated
    Balance Sheets</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">F-4</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#c_003">Consolidated
    Statements of Operations and Comprehensive Loss</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">F-5</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><A HREF="#c_004">Consolidated Statements of Cash Flows</A></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">F-6</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#c_005">Consolidated
    Statements of Stockholders&rsquo; Equity</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">F-7</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#c_006">Notes
    to Consolidated Financial Statements</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">F-8 - F-33</TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<A NAME="c_001"></A>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><IMG SRC="img_009.jpg" ALT=""></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td rowspan="20" style="width: 1.75in; font: 12pt Cambria, Times, Serif; text-align: center"><IMG SRC="img_010.jpg" ALT=""><p style="margin-top: 0; margin-bottom: 0"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>
                                                                                                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>
                                                                                                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>
                                                                                                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p>
                                                                                <p style="margin-top: 0; margin-bottom: 0">&nbsp;</p></td>
    <td style="font: 12pt Cambria, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><B>REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; padding-right: 12pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; padding-right: 12pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    the Shareholders&rsquo;, Audit Committee, Board of Directors and Management </FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; padding-right: 12.25pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
    Recycling Energy Corp.</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Opinion
    on the Consolidated Financial Statements</B></FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    audited the accompanying consolidated balance sheets of China Recycling Energy Corp. (&ldquo;the Company&rdquo;) as of December 31,
    2020 and 2019 and the related consolidated statements of operations and comprehensive loss, stockholders&rsquo; equity, and cash
    flows for years then ended and the related notes (collectively referred to as &ldquo;financial statements&rdquo;). In our opinion,
    the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company
    as of December 31, 2020 and 2019, and the results of its operations and cash flows for the years then ended, in conformity with accounting
    principles generally accepted in the United States of America.</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Basis
    of Opinion</B></FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
    financial statements are the responsibility of the Company&rsquo;s management. Our responsibility is to express an opinion on the
    Company&rsquo;s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting
    Oversight Board (United States) (&ldquo;PCAOB&rdquo;) and are required to be independent with respect to the Company in accordance
    with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
    PCAOB.</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    conducted our audits in accordance with the standards of the PCAOB. Those standards require we plan and perform the audits to obtain
    reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The
    Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
    of our audits we are required to obtain understanding of internal control over financial reporting but not for the purpose of expressing
    an opinion on the effectiveness of the Company&rsquo;s internal control over financial reporting. Accordingly, we express no such
    opinion. </FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
    or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
    the amounts and disclosures in the financial statements. Our auditss also included evaluating the accounting principles used and
    significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
    that our audits provide a reasonable basis for our opinion.</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 12pt Cambria, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Critical
    Audit Matter </B></FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 9pt Palatino Linotype, Palatino, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Critical
    Audit Matters are matters arising from the current period audit of the financial statements that were communicated or required to
    be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements
    and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
    alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters
    below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.</FONT></td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

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    <td style="white-space: nowrap; width: 1.75in"><IMG SRC="img_011.jpg" ALT=""></td>
    <td style="white-space: nowrap; width: 2.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">An affiliate
    of Prager Metis International</FONT></td>
    <td style="white-space: nowrap; width: 1.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">NORTH AMERICA</FONT></td>
    <td style="white-space: nowrap; width: 1in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">EUROPE</FONT></td>
    <td style="white-space: nowrap"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASIA</FONT></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>

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  <tr style="vertical-align: top">
    <td style="text-align: right; width: 1.75in"><IMG SRC="img_012.jpg" ALT="">&nbsp;</td>
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China Recycling Energy Corp<BR>
    April 15, 2021<BR>
    Page 2 of 2</FONT></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 2in"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 2in; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Asset
subject to buyback and entrusted loan payable</I></FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 2in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">As
described in Notes 5, 9 and 19, on December 29, 2018, the Company worked out with the lender an alternative repayment proposal as a settlement
of the entrusted loan, whereby the Company transferred an asset as the partial repayment for the loan and accrued interest of approximately
$28 million. Per the agreement, the lender has an option to request the Company buyback the asset when certain conditions under the buy
back agreement are met, at the higher of the fair value of the asset or the loan and related accrued interest at the date of exercise
of the buyback option. The transferred asset and related portion of the entrusted loan was not derecognized on the accompanying consolidated
financial statements as of December 31, 2020 as the Company has not yet been fully relieved of its obligation due to the buyback option.
As of December 31, 2020, the lender has not exercised it buyback option. However, because of the buyback option, the Company was contingently
liable for the excess of fair value of the transferred asset over the balance of the loan and related interest. It is also noted that
as of April 9, 2021, the lender entered into a termination agreement of the buyback agreement, under which terms they will not execute
the buy-back option and will not ask for any additional payment from the Company other than the lender keeping the transferred asset.</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">We
identified the determination of fair value of the transferred asset as a critical audit matter. The evaluation of the fair value requires
management judgement, and is based on their engagement of an expert appraiser. This therefore involves auditing management&rsquo;s judgement,
as well as the formal appraisal of the estimated fair value of the transferred asset, which involved a high degree of subjectivity.</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">The
primary procedures we performed to address this critical audit matter included:</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 1.75in"></td><td style="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></td><td style="text-align: justify"><FONT STYLE="font-size: 10pt">We
                                            read the terms of the original buyback agreement,</FONT></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></p>

<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 1.75in"></td><td style="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></td><td style="text-align: justify"><FONT STYLE="font-size: 10pt">We
                                            utilized our internal valuation expert to assist in testing the appraisal of the fair value
                                            on the transferred asset as of December 31, 2020, that the Company had received,</FONT></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></p>

<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 1.75in"></td><td style="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></td><td style="text-align: justify"><FONT STYLE="font-size: 10pt">We
                                            obtained confirmation from the lender that it had not exercised its buyback right at the
                                            balance sheet date.</FONT></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"></p>

<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 1.75in"></td><td style="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></td><td style="text-align: justify"><FONT STYLE="font-size: 10pt">For
                                            the subsequent event, we obtained and evaluated the April 9 termination agreement</FONT></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">We
have served as the Company&rsquo;s auditor since 2019.</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in"><IMG SRC="img_013.jpg" ALT=""></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify"><FONT STYLE="font-size: 10pt">El
Segundo, California</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 1.75in; text-align: justify">April 15, 2021</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="c_002"></A>CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; text-indent: -10pt"><B>&nbsp;</B></td><td style="font-weight: normal"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: center"><B>DECEMBER 31, 2020</B></td><td style="font-weight: normal"><B>&nbsp;</B></td><td style="font-weight: normal"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: center"><B>DECEMBER 31, 2019</B></td><td style="font-weight: normal"><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; font-weight: normal; text-indent: -10pt"><B>ASSETS</B></td><td style="font-weight: bold"><B>&nbsp;</B></td>
    <td colspan="2" style="font-weight: bold; text-align: right"><B>&nbsp;</B></td><td style="font-weight: bold"><B>&nbsp;</B></td><td style="font-weight: bold"><B>&nbsp;</B></td>
    <td colspan="2" style="font-weight: bold; text-align: right"><B>&nbsp;</B></td><td style="font-weight: bold"><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; font-weight: normal; text-indent: -10pt">CURRENT ASSETS</td><td style="font-weight: bold">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold">&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; width: 66%; font-weight: normal; text-align: justify; text-indent: -10pt">Cash</td><td style="width: 1%; font-weight: normal">&nbsp;</td>
    <td style="width: 1%; font-weight: normal; text-align: left">$</td><td style="width: 14%; font-weight: normal; text-align: right">107,804,013</td><td style="width: 1%; font-weight: normal; text-align: left">&nbsp;</td><td style="width: 1%; font-weight: normal">&nbsp;</td>
    <td style="width: 1%; font-weight: normal; text-align: left">$</td><td style="width: 14%; font-weight: normal; text-align: right">16,221,297</td><td style="width: 1%; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Accounts receivable, net</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">308,677</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">42,068,760</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest receivable on sales type leases</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">5,245,244</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Prepaid expenses</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">55,420</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">52,760</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Other receivables</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">35,687</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">1,031,143</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Total current assets</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">108,203,797</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">64,619,204</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">NON-CURRENT ASSETS</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Investment in sales-type leases, net</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">8,287,560</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Long term deposit</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">16,799</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">15,712</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Operating lease right-of-use assets, net</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">54,078</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Asset subject to buyback</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">28,916,924</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">27,044,385</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Construction in
    progress</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">23,824,202</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Total non-current assets</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">28,933,723</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">59,225,937</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; padding-bottom: 1.5pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; padding-bottom: 2pt; text-indent: -10pt">TOTAL ASSETS</td><td style="font-weight: normal; padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">137,137,520</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">123,845,141</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt"><B>LIABILITIES AND STOCKHOLDERS&rsquo;
    EQUITY</B></td><td><B>&nbsp;</B></td>
    <td style="text-align: left"><B>&nbsp;</B></td><td style="text-align: right"><B>&nbsp;</B></td><td style="text-align: left"><B>&nbsp;</B></td><td><B>&nbsp;</B></td>
    <td style="text-align: left"><B>&nbsp;</B></td><td style="text-align: right"><B>&nbsp;</B></td><td style="text-align: left"><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">CURRENT LIABILITIES</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Accounts payable</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">$</td><td style="font-weight: normal; text-align: right">76,074</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">$</td><td style="font-weight: normal; text-align: right">2,200,220</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Taxes payable</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">3,145,612</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">4,087,642</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Accrued interest on notes</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">18,968</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Notes payable, net of unamortized OID of
    $144,355</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">3,005,645</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Accrued liabilities and other payables</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">726,696</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">1,184,751</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Operating lease liability</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">56,755</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Due to related parties</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">28,440</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">41,174</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest payable on entrusted loans</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">10,144,228</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">8,200,044</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Entrusted loan payable</td><td style="padding-bottom: 1.5pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">21,896,744</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">20,480,214</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Total current liabilities</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">39,042,407</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">36,250,800</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">NONCURRENT LIABILITIES</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Accrued interest on notes</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">368,362</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Income tax payable</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">5,174,625</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">5,782,625</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Notes payable, net of unamortized OID</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">1,552,376</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Long term payable</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">459,777</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">430,034</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Entrusted loan payable</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">306,518</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">286,689</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Refundable deposit
    from customers for systems leasing</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">544,709</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Total noncurrent
    liabilities</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">5,940,920</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">8,964,795</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Total liabilities</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">44,983,327</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">45,215,595</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: normal"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="font-weight: normal; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: normal; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: normal; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: normal"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="font-weight: normal; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: normal; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: normal; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">CONTINGENCIES AND COMMITMENTS (NOTE 17
    &amp; 18)</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td style="font-weight: bold; text-align: left">&nbsp;</td><td style="font-weight: bold; text-align: right">&nbsp;</td><td style="font-weight: bold; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">STOCKHOLDERS&rsquo; EQUITY</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-indent: -10pt">Common stock, $0.001 par value; 10,000,000 shares authorized,
    3,177,050 shares and 2,032,721 shares issued and outstanding as of December 31, 2020 and 2019, respectively</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">3,177</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">2,033</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Additional paid in capital</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">119,748,999</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">116,682,374</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Statutory reserve</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">15,155,042</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">14,525,712</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Accumulated other comprehensive income
    (loss)</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">273,440</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(6,132,614</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Accumulated deficit</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(43,026,465</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(46,447,959</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Total Company stockholders&rsquo; equity</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">92,154,193</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">78,629,546</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; padding-bottom: 1.5pt; text-indent: -10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="padding-bottom: 1.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 9pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2pt; padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">TOTAL LIABILITIES
    AND EQUITY</td><td style="padding-bottom: 2pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">137,137,520</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">123,845,141</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="c_003"></A>CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; text-indent: -10pt"><B>&nbsp;</B></td><td style="font-weight: normal"><B>&nbsp;</B></td>
    <td colspan="6" style="font-weight: normal; text-align: center"><B>YEARS ENDED DECEMBER 31,</B></td><td style="font-weight: normal"><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; text-indent: -10pt"><B>&nbsp;</B></td><td style="font-weight: normal; padding-bottom: 1.5pt"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: center"><B>2020</B></td><td style="padding-bottom: 1.5pt; font-weight: normal"><B>&nbsp;</B></td><td style="font-weight: normal; padding-bottom: 1.5pt"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: center"><B>2019</B></td><td style="padding-bottom: 1.5pt; font-weight: normal"><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; font-weight: normal; text-indent: -10pt">Revenue</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; width: 66%; font-weight: normal; text-align: left; text-indent: -10pt">Contingent rental income</td><td style="width: 1%; font-weight: normal">&nbsp;</td>
    <td style="width: 1%; font-weight: normal; text-align: left">$</td><td style="width: 14%; font-weight: normal; text-align: right">-</td><td style="width: 1%; font-weight: normal; text-align: left">&nbsp;</td><td style="width: 1%; font-weight: normal">&nbsp;</td>
    <td style="width: 1%; font-weight: normal; text-align: left">$</td><td style="width: 14%; font-weight: normal; text-align: right">697,028</td><td style="width: 1%; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Interest income
    on sales-type leases</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">170,403</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Total operating income</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">867,431</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Operating expenses</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Bad debt allowance (reversal)</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(6,031,058</td><td style="font-weight: normal; text-align: left">)</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">5,386,003</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Impairment loss on fixed assets and construction
    in progress</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">876,660</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on disposal of systems</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">1,242,694</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">General and administrative</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">204,039</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">2,469,162</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Total operating
    (income) expenses</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(5,827,019</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">9,974,519</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Income (loss) from operations</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">5,827,019</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(9,107,088</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Non-operating income (expenses)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on note conversion</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(502,393</td><td style="font-weight: normal; text-align: left">)</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(173,886</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest expense - inducement on note conversion</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">-</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(893,958</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest income</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">185,527</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">159,183</td><td style="font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest expense</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(1,463,721</td><td style="font-weight: normal; text-align: left">)</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(2,101,440</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Other income, net</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">4,392</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">319,625</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Total non-operating
    expenses, net</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(1,776,195</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(2,690,476</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Income (loss) before income tax</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">4,050,824</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(11,797,564</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Income tax benefit</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">-</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(3,024,807</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Net income (loss)</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">4,050,824</td><td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal">&nbsp;</td>
    <td style="font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; text-align: right">(8,772,757</td><td style="font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Other comprehensive items</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt; font-weight: normal; text-align: left; padding-bottom: 1.5pt; text-indent: -10pt">Foreign currency
    translation gain (loss)</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">6,406,054</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">(1,511,684</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; font-weight: normal; text-align: left; padding-bottom: 2pt; text-indent: -10pt">Comprehensive income
    (loss)</td><td style="font-weight: normal; padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">10,456,878</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">&nbsp;</td><td style="font-weight: normal; padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">(10,284,441</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; padding-left: 10pt; font-weight: normal; text-indent: -10pt">Basic and diluted weighted average
    shares outstanding</td><td style="padding-bottom: 1.5pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">2,564,373</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; font-weight: normal; text-align: right">1,564,940</td><td style="padding-bottom: 1.5pt; font-weight: normal; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2pt; padding-left: 10pt; font-weight: normal; text-align: left; text-indent: -10pt">Basic and diluted
    income (loss) per share</td><td style="padding-bottom: 2pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">1.58</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt; font-weight: normal">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; font-weight: normal; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: normal; text-align: right">(5.61</td><td style="padding-bottom: 2pt; font-weight: normal; text-align: left">)</td></tr>
</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="c_004"></A>CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt; font-style: normal; font-weight: normal">&nbsp;</FONT></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center">YEARS ENDED DECEMBER 31,</td><td style="font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">CASH FLOWS FROM OPERATING ACTIVITIES:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt; width: 66%">Net income (loss)</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">4,050,824</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">(8,772,757</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Adjustments to reconcile net loss to net
    cash provided by (used in) operating activities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Amortization of OID and debt issuing costs
    of notes</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">61,895</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">97,161</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Stock compensation expense</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,999</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">148,625</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Operating lease expenses</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">55,519</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">66,262</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Asset impairment loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">876,660</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Bad debt allowance (reversal)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,031,058</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,386,003</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on disposal of 40% ownership of Fund
    Management Co</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">46,461</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on transfer of Chengli Boxing system</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">624,133</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on transfer of Xuzhou Huayu system</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">397,033</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on transfer of Shenqiu Phase I &amp;
    II systems</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">208,359</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on disposal of fixed assets</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">289</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Loss on note conversion</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">502,393</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">173,886</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest expense-inducement on note conversion</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">893,958</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Changes in deferred tax</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,024,807</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 40pt; font-weight: normal; text-align: left; text-indent: -10pt">Changes in assets and liabilities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest receivable on sales type leases</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(170,403</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Collection of principal and interest on
    sales type leases for Pucheng systems</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">14,149,790</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Accounts receivable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">72,933,179</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,383,251</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Prepaid expenses</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,596</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(21,126</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Other receivables</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,549</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(135,938</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Accounts payable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,153,320</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,837,609</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Taxes payable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,164,906</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,317,882</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Payment of lease liability</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(58,226</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(63,555</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest payable on entrusted loan</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,302,610</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(9,091,732</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Accrued liabilities and other payables</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(404,087</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(36,932</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 50pt; font-weight: normal; text-align: left; text-indent: -10pt">Refundable deposit for systems leasing</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(478,368</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Net cash provided by (used in) operating
    activities</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">82,248,467</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(14,649,028</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">CASH FLOWS FROM INVESTING ACTIVITIES:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Purchase of property &amp; equipment</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,885</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Proceeds from disposal of property &amp;
    equipment</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,074</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Net cash provided by (used in) investing
    activities</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,885</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,074</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Repayment of entrusted loan</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(27,125,768</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Issuance of notes payable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,000,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Issuance of common stock</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">497,187</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,309,475</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Net cash provided by financing activities</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,497,187</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(21,816,293</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">EFFECT OF EXCHANGE RATE CHANGE ON CASH</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,838,947</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(541,598</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">NET INCREASE (DECREASE) IN CASH</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">91,582,716</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(37,001,845</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt">CASH, BEGINNING OF PERIOD</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">16,221,297</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">53,223,142</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">CASH, END OF PERIOD</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">107,804,013</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16,221,297</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Supplemental cash flow data:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Income tax paid</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">221,934</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Interest paid</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Supplemental disclosure of non-cash operating activities</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Transfer of Tian&rsquo;an project from
    construction in progress to accounts receivable</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">24,095,685</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Transfer of Xuzhou Huayu Project and Shenqiu
    Phase I &amp; II projects to Mr. Bai</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">35,415,556</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Adoption of ASC 842-right-of-use asset</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(118,234</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Adoption of ASC 842-operating lease liability</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">118,234</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td>
    <td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td><td style="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal; font-weight: normal">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Supplemental disclosure of non-cash financing activities</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 30pt; font-weight: normal; text-align: left; text-indent: -10pt">Conversion of notes into common shares</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,057,191</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,612,392</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7pt; font-style: normal; font-weight: normal">&nbsp;</FONT></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="c_005"></A>CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS&rsquo;
EQUITY</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>YEARS ENDED DECEMBER 31, 2020 AND 2019</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; text-indent: -10pt"><B>&nbsp;</B></td><td><B>&nbsp;</B></td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; text-align: center"><B>Common Stock</B></td><td><B>&nbsp;</B></td><td style="color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="color: Black; text-align: center"><B>Paid in</B></td><td style="color: Black"><B>&nbsp;</B></td><td style="color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="color: Black; text-align: center"><B>Statutory</B></td><td style="color: Black"><B>&nbsp;</B></td><td style="color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="color: Black; text-align: center"><B>Other Comprehensive</B></td><td style="color: Black"><B>&nbsp;</B></td><td><B>&nbsp;</B></td>
    <td colspan="2" style="text-align: center"><B>&nbsp;Accumulated</B></td><td><B>&nbsp;</B></td><td><B>&nbsp;</B></td>
    <td colspan="2" style="text-align: center"><B>&nbsp;</B></td><td><B>&nbsp;</B></td><td><B>&nbsp;</B></td>
    <td colspan="2" style="text-align: center"><B>Non controlling&nbsp;</B></td><td><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-left: 10pt; padding-bottom: 1.5pt; text-indent: -10pt"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; color: Black; text-align: center"><B>Shares</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; color: Black; text-align: center"><B>Amount</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; color: Black; text-align: center"><B>Capital</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; color: Black; text-align: center"><B>Reserves</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; color: Black; text-align: center"><B>(Loss)/Income</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><B>Deficit</B></td><td style="padding-bottom: 1.5pt"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; color: Black; text-align: center"><B>Total</B></td><td style="padding-bottom: 1.5pt; color: Black"><B>&nbsp;</B></td><td style="padding-bottom: 1.5pt"><B>&nbsp;</B></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><B>Interest</B></td><td style="padding-bottom: 1.5pt"><B>&nbsp;</B></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; width: 12%; text-indent: -10pt">Balance at January 1, 2019</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 8%; text-align: right">1,029,528</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">1,030</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">114,493,283</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">14,525,712</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(4,620,930</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(37,675,202</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">86,723,893</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(3,544,624</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Net loss for the year</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(8,772,757</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(8,772,757</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Purchase of noncontrolling interest</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,948,242</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,948,242</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,544,624</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Issuance of common stock for equity financing</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">395,927</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">396</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,309,079</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,309,475</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Issuance of common stock for stock compensation</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">41,250</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">41</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">148,584</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">148,625</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Conversion of convertible notes including accrued interest into
    common shares</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">185,195</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">185</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,014,791</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,014,976</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Conversion of long-term notes into common shares</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">175,400</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">176</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">665,084</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">665,260</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Warrants exchanged into shares</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">205,421</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">205</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(205</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; padding-bottom: 1.5pt; text-align: left; text-indent: -10pt">Foreign currency translation loss</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,511,684</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,511,684</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt">Balance at December 31, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,032,721</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,033</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">116,682,374</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">14,525,712</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,132,614</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(46,447,959</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">78,629,546</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Net income for the year</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,050,824</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,050,824</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Issuance of common stock for stock compensation</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,333</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,996</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,999</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Conversion of long-term notes into common shares</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">866,646</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">867</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,558,716</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,559,583</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Shares issued for equity financing</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">265,250</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">265</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">496,922</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">497,187</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Round-up of fractional shares due to&nbsp;&nbsp;reverse split</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">9,100</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">9</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(9</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-align: left; text-indent: -10pt">Transfer to statutory reserves</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">629,330</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(629,330</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; padding-bottom: 1.5pt; color: #404040; text-align: left; text-indent: -10pt">Foreign currency translation
    gain</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,406,054</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,406,054</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; padding-bottom: 2pt; color: #404040; text-indent: -10pt">Balance at December 31, 2020</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">3,177,050</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,177</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">119,748,999</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">15,155,042</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">273,440</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(43,026,465</td><td style="padding-bottom: 2pt; text-align: left">)</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">92,154,193</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="c_006"></A>CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DECEMBER 31, 2020 AND 2019</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>1. ORGANIZATION AND DESCRIPTION OF BUSINESS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">China Recycling Energy
Corporation (the &ldquo;Company&rdquo; or &ldquo;CREG&rdquo;) is incorporated in Nevada state. The Company, through its subsidiaries,
provides energy saving solutions and services, including selling and leasing energy saving systems and equipment to customers, and project
investment in the Peoples Republic of China (&ldquo;PRC&rdquo;).</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">The Company&rsquo;s organizational
chart as of December 31, 2020 is as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><IMG SRC="img_014.jpg" ALT="" STYLE="height: 520px; width: 750px"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Erdos TCH &ndash; Joint Venture</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On April 14, 2009, the
Company formed a joint venture (the &ldquo;JV&rdquo;) with Erdos Metallurgy Co., Ltd. (&ldquo;Erdos&rdquo;) to recycle waste heat from
Erdos&rsquo; 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. (&ldquo;Erdos TCH&rdquo;) with a term of 20 years. Erdos contributed 7% of the total investment
of the project, and Xi&rsquo;an TCH Energy Technology Co., Ltd. (&ldquo;Xi&rsquo;an TCH&rdquo;) contributed 93%. On June 15, 2013, Xi&rsquo;an
TCH and Erdos entered into a share transfer agreement, pursuant to which Erdos sold its 7% ownership interest in the JV to Xi&rsquo;an
TCH for $1.29 million (RMB 8 million), plus certain accumulated profits as described below. Xi&rsquo;an TCH paid the $1.29 million in
July 2013 and, as a result, became the sole stockholder of the JV. 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 started to charge Erdos based on actual electricity sold at RMB 0.30 / KWH. The selling price of each KWH is determined
annually based on prevailing market conditions. Since May 2019, Erdos TCH has ceased its operations due to renovations and furnace safety
upgrades of Erdos, and the Company initially expected the resumption of operations in July 2020, but the resumption of operations was
further delayed due to government&rsquo;s request for Erdos&rsquo; production line rectification for lowering its energy consumption
per unit of GDP, the Company expects to resume the production in July 2021. During this period, Erdos will compensate Erdos TCH RMB 1
million ($145,460) per month, until operations resume.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In addition, Erdos TCH
has 30% ownership in DaTangShiDai (BinZhou) Energy Savings Technology Co., Ltd. (&ldquo;BinZhou Energy Savings&rdquo;), 30% ownership
in DaTangShiDai DaTong Recycling Energy Technology Co., Ltd. (&ldquo;DaTong Recycling Energy&rdquo;), and 40% ownership in DaTang ShiDai
TianYu XuZhou Recycling Energy Technology Co, Ltd. (&ldquo;TianYu XuZhou Recycling Energy&rdquo;). These companies were incorporated
in 2012 but there have not been any operations since then nor has any registered capital contribution been made.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Pucheng Biomass Power Generation Projects</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On June 29, 2010, Xi&rsquo;an
TCH entered into a Biomass Power Generation (&ldquo;BMPG&rdquo;) Project Lease Agreement with Pucheng XinHengYuan Biomass Power Generation
Co., Ltd. (&ldquo;Pucheng&rdquo;), a limited liability company incorporated in China. Under this lease agreement, Xi&rsquo;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 (&ldquo;Pucheng Phase I&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On September 11, 2013,
Xi&rsquo;an TCH entered into a BMPG Asset Transfer Agreement (the &ldquo;Pucheng Transfer Agreement&rdquo;) with Pucheng. The Pucheng
Transfer Agreement provided for the sale by Pucheng to Xi&rsquo;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 87,666 shares (post-reverse stock split) of common stock, par value $0.001 per share
(the &ldquo;Common Stock&rdquo;) of the Company at $187.0 per share (post-reverse stock price). Also on September 11, 2013, Xi&rsquo;an
TCH entered into a BMPG Project Lease Agreement with Pucheng (the &ldquo;Pucheng Lease&rdquo;). Under the Pucheng Lease, Xi&rsquo;an
TCH leases this same set of 12 MW BMPG systems 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 &ldquo;Pucheng Phase II Project&rdquo;).
The term for the combined lease is from September 2013 to June 2025. The lease agreement for the 12 MW station from the Pucheng Phase
I project terminated upon the effective date of the Pucheng Lease. The ownership of the two 12 MW BMPG systems will transfer to Pucheng
at no additional charge when the Pucheng Lease expires.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On September 29, 2019,
Xi&rsquo;an TCH entered into a Termination Agreement of the Lease Agreement of the Biomass Power Generation Project (the &ldquo;Termination
Agreement&rdquo;) with Pucheng.&nbsp;Pursuant to the Termination Agreement, the parties agreed that: (i) Pucheng shall pay outstanding
lease fees of RMB 97.6 million ($14 million) owed as of December 31, 2018 to Xi&rsquo;an TCH before January 15, 2020; (ii) Xi&rsquo;an
TCH will waive the lease fees owed after January 1, 2019; (iii) Xi&rsquo;an TCH will not return RMB 3.8 million ($542,857) in cash deposits
paid by Pucheng; (iv) Xi&rsquo;an TCH will transfer the Project to Pucheng at no additional cost after receiving RMB 97.6 million ($14
million) from Pucheng, and the original lease agreement between the parties will be formally terminated; and (v) if Pucheng fails to
pay off RMB 97.6 million ($14 million) to Xi&rsquo;an TCH before January 15, 2020, Xi&rsquo;an TCH will still hold ownership of the Project
and the original lease agreement shall still be valid. The Company recorded $2.67 million bad debt expense for Pucheng during the year
ended December 31, 2019. Xi&rsquo;an TCH received RMB 97.6 million ($14 million) in full on January 14, 2020 and the ownership of the
system was transferred.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -0.05pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Shenqiu Yuneng Biomass Power Generation Projects</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On September 28, 2011,
Xi&rsquo;an TCH and Shenqiu entered into a BMPG Project Lease Agreement (the &ldquo;2011 Shenqiu Lease&rdquo;). Under the 2011 Shenqiu
Lease, Xi&rsquo;an TCH agreed to lease a set of 12 MW BMPG systems to Shenqiu at a monthly rental of $286,000 (RMB 1,800,000) for 11
years.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On March 30, 2013, Xi&rsquo;an
TCH and Shenqiu entered into a BMPG Project Lease Agreement (the &ldquo;2013 Shenqiu Lease&rdquo;). Under the 2013 Shenqiu Lease, Xi&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As repayment for a loan
made by Xi&rsquo;an Zhonghong to Beijing Hongyuan Recycling Energy Investment Center, LLP (the &ldquo;HYREF&rdquo;) on January 10, 2019
(see further discussion in Note 9); on January 4, 2019, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai (or &ldquo;Mr.
Bai&rdquo;), a resident of China, entered into a Projects Transfer Agreement (the &ldquo;Agreement&rdquo;), pursuant to which Xi&rsquo;an
TCH transferred two BMGP in Shenqiu (&ldquo;Shenqiu Phase I and II Projects&rdquo;) to Mr. Bai for RMB 127,066,000 ($18.55 million).
As consideration for the transfer of the Shenqiu Phase I and II Projects to Mr. Bai (Note 9), Mr. Bai transferred all the equity shares
of his wholly owned company, Xi&rsquo;an Hanneng Enterprises Management Consulting Co. Ltd. (&ldquo;Xi&rsquo;an Hanneng&rdquo;) to Beijing
Hongyuan Recycling Energy Investment Center, LLP (the &ldquo;HYREF&rdquo;) as repayment for a loan made by Xi&rsquo;an Zhonghong to HYREF
on January 10, 2019. The transfer of the projects was completed on February 15, 2019. The Company recorded $208,359 loss from the transfer
during the year ended December 31, 2019. Xi&rsquo;an Hanneng was expected to own 47,150,000 shares of Xi&rsquo;an Huaxin New Energy Co.,
Ltd for the repayment of Shenqiu system and Huayu system. However, Xi&rsquo;an Hanneng was not able to obtain all the Huaxin shares due
to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 20, 2019, Mr. Bai and all the related parties
therefore agreed to have Mr. Bai instead make a payment in cash for the transfer price of Shenqiu (see Note 9 for detail).&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Chengli Waste Heat Power Generation Projects</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On July 19, 2013, Xi&rsquo;an
TCH formed a new company, &ldquo;Xi&rsquo;an Zhonghong New Energy Technology Co., Ltd.&rdquo; (&ldquo;Zhonghong&rdquo;), of which it
owns 90% of Zhonghong, with HYREF owning the other 10%. Zhonghong is engaged to provide energy saving solution and services, including
constructing, selling and leasing energy saving systems and equipment to customers. On December 29, 2018, Shanghai TCH entered into a
Share Transfer Agreement with HYREF, pursuant to which HYREF transferred its 10% ownership in Zhonghong to Shanghai TCH for RMB 3 million
($0.44 million). The transfer was completed on January 22, 2019.&nbsp;The Company owns 100% of Xi&rsquo;an Zhonghong after the transaction.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On July 24, 2013, Zhonghong
entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching Waste Heat Power Generation Project) with Boxing
County Chengli Gas Supply Co., Ltd. (&ldquo;Chengli&rdquo;). 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 &ldquo;Chengli Project&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 29, 2018, Xi&rsquo;an
Zhonghong, Xi&rsquo;an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed Assets Transfer Agreement,
pursuant to which Xi&rsquo;an Zhonghong transferred Chengli CDQ WHPG station (&ldquo;the Station&rdquo;) as the repayment for the loan
of RMB 188,639,400 ($27.54 million) to HYREF. Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, Guohua Ku and Chonggong Bai also agreed to a Buy
Back Agreement for the Station when certain conditions are met (see Note 9). The transfer of the Station was completed January 22, 2019,
at which time the Company recorded a $624,133 loss from this transfer. Since the original terms of the Buy Back Agreement are still valid,
and the Buy Back possibility could occur; therefore, the loan principal and interest and the corresponding asset of the Station cannot
be derecognized due to the existence of Buy Back clauses (see Note 9 for detail).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Tianyu Waste Heat Power Generation Project</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On July 19, 2013, Zhonghong
entered into a Cooperative Agreement (the &ldquo;Tianyu Agreement&rdquo;) for Energy Management of CDQ and CDQ WHPG Projects with Jiangsu
Tianyu Energy and Chemical Group Co., Ltd. (&ldquo;Tianyu&rdquo;). 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 &ndash; Xuzhou Tian&rsquo;an Chemical
Co., Ltd. (&ldquo;Xuzhou Tian&rsquo;an&rdquo;) and Xuzhou Huayu Coking Co., Ltd. (&ldquo;Xuzhou Huayu&rdquo;) &ndash; to be located at
Xuzhou Tian&rsquo;an and Xuzhou Huayu&rsquo;s respective locations (the &ldquo;Tianyu Project&rdquo;). 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 term of the Tianyu
Agreement is 20 years. The construction of the Xuzhou Tian&rsquo;an Project is anticipated to be completed by the second quarter of 2020.
The Xuzhou Huayu Project has been on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd. and local residents on certain pollution-related
issues.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On January 4, 2019, Xi&rsquo;an
Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement (the &ldquo;Agreement&rdquo;), pursuant
to which Xi&rsquo;an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co.,
Ltd. (&ldquo;Xuzhou Huayu Project&rdquo;) to Mr. Bai for RMB 120,000,000 ($17.52 million). Mr. Bai agreed that as consideration for the
transfer of the Xuzhou Huayu Project to him, as well as Shenqiu discussed above, he would transfer all the equity shares of his wholly
owned company, Xi&rsquo;an Hanneng, to HYREF as repayment for the loan made by Xi&rsquo;an Zhonghong to HYREF. (Note 9). The transfer
of the project was completed on February 15, 2019. The Company recorded $397,033 loss from this transfer during the year ended December
31, 2019.&nbsp;On January 10, 2019, Mr. Chonggong Bai transferred all the equity shares of his wholly owned company, Xi&rsquo;an Hanneng,
to HYREF as repayment for the loan. Xi&rsquo;an Hanneng was expected to own 47,150,000 shares of Xi&rsquo;an Huaxin New Energy Co., Ltd
for the repayment of Huayu system and Shenqiu system. As of September 30, 2019, Xi&rsquo;an Hanneng already owned 29,948,000 shares of
Huaxin, but was not able to obtain the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018
annual report. On December 20, 2019, Mr. Bai and all the related parties agreed to have Mr. Bai instead making a payment in cash for
the transfer price of Huayu (see Note 9 for detail).&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On January 10, 2020, Zhonghong,
Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights and interests of Xuzhou Tian&rsquo;an
Project to Tianyu for RMB 170 million including VAT ($24.37 million) in three installment payments. The 1st installment payment of RMB
50 million ($7.17 million) to be paid within 20 working days after the contract is signed. The 2nd installment payment of RMB 50 million
($7.34 million) is to be paid within 20 working days after completion of the project construction but no later than July 31, 2020. The
final installment payment of RMB 70 million ($10.28 million) is to be paid before December 31, 2020. The Company received the payment
in full for Tian&rsquo;an Project as of December 31, 2020.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Zhongtai Waste Heat Power Generation Energy Management Cooperative
Agreement</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 6, 2013, Xi&rsquo;an
TCH entered into a CDQ and WHPG Energy Management Cooperative Agreement (the &ldquo;Zhongtai Agreement&rdquo;) with Xuzhou Zhongtai Energy
Technology Co., Ltd. (&ldquo;Zhongtai&rdquo;), a limited liability company incorporated in Jiangsu Province, China.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Pursuant to the Zhongtai
Agreement, Xi&rsquo;an TCH was to 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&rsquo;an TCH is also to build a furnace to generate steam from the smoke pipeline&rsquo;s waste heat and sell the
steam to Zhongtai.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In March 2016, Xi&rsquo;an
TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Zhongtai and Xi&rsquo;an Huaxin (the &ldquo;Transfer Agreement&rdquo;).
Under the Transfer Agreement, Xi&rsquo;an TCH agreed to transfer to Zhongtai all of the assets associated with the CDQ Waste Heat Power
Generation Project (the &ldquo;Project&rdquo;), which is under construction pursuant to the Zhongtai Agreement. Additionally, Xi&rsquo;an
TCH agreed to transfer to Zhongtai the Engineering, Procurement and Construction (&ldquo;EPC&rdquo;) Contract for the CDQ Waste Heat
Power Generation Project which Xi&rsquo;an TCH had entered into with Xi&rsquo;an Huaxin in connection with the Project. Xi&rsquo;an Huaxin
will continue to construct and complete the Project and Xi&rsquo;an TCH agreed to transfer all its rights and obligations under the EPC
Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi&rsquo;an TCH RMB 167,360,000 ($25.77
million) including (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&rsquo;an TCH according to the following schedule: (a) RMB 50,000,000 ($7.70 million) was to be paid within 20 business days after
the Transfer Agreement was signed; (b) RMB 30,000,000 ($4.32 million) was to be paid within 20 business days after the Project was completed,
but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) was to be paid no later than July 30, 2017. Xuzhou Taifa Special
Steel Technology Co., Ltd. (&ldquo;Xuzhou Taifa&rdquo;) guaranteed the payments from Zhongtai to Xi&rsquo;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&rsquo;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. The Company recorded a $2.82 million loss from this transaction in 2016. In 2016, Xi&rsquo;an TCH had received the
first payment of $7.70 million and the second payment of $4.32 million. However, the Company received a repayment commitment letter from
Zhongtai on February 23, 2018, in which Zhongtai committed to pay the remaining payment of RMB 87,360,000 ($13.45 million) no later than
the end of July 2018; in July 2018, Zhongtai and the Company reached a further oral agreement to extend the repayment term of RMB 87,360,000
($13.45 million) by another two to three months. In January 2020, Zhongtai paid RMB 10 million ($1.41 million); in March 2020, Zhongtai
paid RMB 20 million ($2.82 million); in June 2020, Zhongtai paid RMB 10 million ($1.41 million); and in December 2020, Zhongtai paid
RMB 30 million ($4.28 million), which was payment in full. Accordingly, the Company reversed the bad debt expense of $5.80 million which
had been recorded earlier.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Formation of Zhongxun</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On March 24, 2014, Xi&rsquo;an
TCH incorporated a subsidiary, Zhongxun Energy Investment (Beijing) Co., Ltd. (&ldquo;Zhongxun&rdquo;) 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&rsquo;an TCH and will be mainly engaged
in project investment, investment management, economic information consulting, and technical services. Zhongxun has not yet commenced
operations nor has any capital contribution been made as of the date of this report.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Formation of Yinghua</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On February 11, 2015, the
Company incorporated a subsidiary, Shanghai Yinghua Financial Leasing Co., Ltd. (&ldquo;Yinghua&rdquo;) 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 nor has any capital contribution
been made as of the date of this report.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Reverse Stock Split</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On April 13, 2020, the
Company filed a certificate of change (&ldquo;Certificate of Change&rdquo;) with the Secretary of State of the State of Nevada, pursuant
to which, on April 13, 2020, the Company effected a reverse stock split of its Common Stock, at a rate of 1-for-10, accompanied by a
corresponding decrease in the Company&rsquo;s issued and outstanding shares of Common Stock (the &ldquo;Reverse Stock Split&rdquo;).
The accompanying consolidated financial statements and related disclosure in for periods prior to the Reverse Stock Split have been retroactively
restated to reflect this reverse stock split.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Other Events </I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In December 2019, a novel
strain of coronavirus (COVID-19) was reported in and the World Health Organization has declared the outbreak to constitute a &ldquo;Public
Health Emergency of International Concern.&rdquo; This pandemic, which continues to spread to additional countries, and is disrupting
supply chains and affecting production and sales across a range of industries as a result of quarantines, facility closures, and travel
and logistics restrictions in connection with the outbreak. However, as a result of PRC government&rsquo;s effort on disease control,
most cities in China were reopened, the outbreak in China is under the control. The Company disposed all of its systems and currently
holds only five power generating systems through Erdos TCH, the Company initially expected to resume production of these five power generating
systems in July 2020 from the renovation and furnace safety upgrade, but the resumption of operations was further delayed due to government&rsquo;s
request for Erdos&rsquo; production line rectification for lowering its energy consumption per unit of GDP; the Company expects the resumption
date to be July 2021. As of this report date, there are some new Covid-19 cases discovered in a few provinces of China, however, the
number of new cases is not significant due to PRC government&rsquo;s strict control.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 22, 2020, Shanghai
TCH entered into an Equity Acquisition Agreement with Xi&rsquo;an Taiying Energy Saving Technology Co., Ltd., a PRC company (&ldquo;Xi&rsquo;an
Taiying&rdquo;) and its three shareholders to purchase all of the issued and outstanding shares of stock of Xi&rsquo;an Taiying. The
purchase price for said shares shall consist of (i) 619,525 shares of common stock at an issuance price of $4.37 per share, (ii) 60,000,000
shares of Series A convertible&nbsp;stock and (iii) a cash payment of RMB 1,617,867,026 (approximately $247 million at a conversion rate
of 1:6.55). The shares shall be issued within 15 business days after approval by the Board of Directors and/or shareholders of the Company
and Nasdaq approval and the cash shall be paid in three tranches &ndash; RMB 390 million (approximately $59.5 million) within 10 days
after the agreement is executed, RMB 300 million (approximately $45.8 million) by March 31, 2021 and RMB 927,867,026 (approximately $141.7
million) within 10 days after the shares of Xi&rsquo;an Taiying are registered to Buyer. As of the date of this report, the Company has
not obtained and there is no assurance that the Company will be able to obtain necessary approval to proceed with the transaction. In
addition, the Company is currently renegotiating the payment terms with the sellers for paying less shares but does not know when the
renegotiation will be completed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Basis of Presentation</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The consolidated financial
statements (&ldquo;CFS&rdquo;) were prepared in accordance with accounting principles generally accepted in the United States of America
(&ldquo;US GAAP&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Basis of Consolidation</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The CFS include the accounts
of CREG and its subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. (&ldquo;Yinghua&rdquo;) and Sifang Holdings; Sifang Holdings&rsquo;
wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. (&ldquo;Huahong&rdquo;) and Shanghai TCH Energy Tech Co., Ltd. (&ldquo;Shanghai
TCH&rdquo;); Shanghai TCH&rsquo;s wholly-owned subsidiary, Xi&rsquo;an TCH Energy Tech Co., Ltd. (&ldquo;Xi&rsquo;an TCH&rdquo;); and
Xi&rsquo;an TCH&rsquo;s subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd (&ldquo;Erdos TCH&rdquo;), 100% owned by Xi&rsquo;an
TCH (See note 1), 2) Zhonghong, 90% owned by Xi&rsquo;an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun, 100% owned by Xi&rsquo;an
TCH. Substantially all the Company&rsquo;s revenues are derived from the operations of Shanghai TCH and its subsidiaries, which represent
substantially all the Company&rsquo;s consolidated assets and liabilities as of December 31, 2020. However, there was no revenue for
the Company for the year ended December 31, 2020. All significant inter-company accounts and transactions were eliminated in consolidation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Uses and Sources of Liquidity</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">For the year ended December
31, 2020, the Company had a net income of $4.05 million based on receipts of accounts receivable which had previously been reserved as
bad debt allowance and was reversed in 2020. For the year ended December 31, 2019, the Company had net loss of $8.77 million. The Company
had an accumulated deficit of $43.03 million as of December 31, 2020. The Company disposed all of its systems and currently holds only
five power generating systems through Erdos TCH, which is expected to resume production in July 2021. The Company is in the process of
transforming and expanding into an energy storage integrated solution provider. The Company plans to pursue disciplined and targeted
expansion strategies for market areas the Company currently does not serve. The Company actively seeks and explores opportunities to
apply energy storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes,
large scale photovoltaic (PV) and wind power stations,&nbsp;remote islands without electricity,&nbsp;and smart energy cities with multi-energy
supplies.&nbsp;The Company had cash of $107.80 million as of December 31, 2020, and has raised additional $38.25 million in a private
offering in March 2021. The Company&rsquo;s cash flow forecast indicate it will have sufficient cash to funds its operations for the
next 12 months from the date of issuance of these financial statements.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The historical operating
results indicate the Company has recurring losses from operations which rise the question related to the Company&rsquo;s ability to continue
as a going concern. However, the Company had $107.80 million cash on hand at December 31, 2020 as a result of collection the full payment
from all the projects that had been disposed earlier.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The ability of the Company
to continue as a going concern is dependent upon the Company&rsquo;s ability to further implement its business plan and generate sufficient
revenue and its ability to raise additional funds by way of a public or private offering, or debt financing including bank loans. The
consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Use of Estimates</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In preparing these CFS
in accordance with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the balance sheets as well as revenues and expenses during the period reported. Actual results may differ from these estimates.&nbsp;On
an on-going basis, management evaluates their estimates, including those related to allowances for bad debt and inventory obsolescence,
impairment loss on fixed assets and construction in progress, income taxes, and contingencies and litigation. Management bases their
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
resources.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Revenue Recognition</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><I>A)</I>&nbsp;<I>Sales-type
Leasing and Related Revenue Recognition</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On January 1, 2019, the
Company adopted Financial Accounting Standards Board (&ldquo;FASB&rdquo;) Accounting Standards Codification (&ldquo;ASC&rdquo;) Topic
842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application.
Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC Topic 842, while prior
period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. (See
Operating lease below as relates to the Company as a lessee). The Company&rsquo;s sales type lease contracts for revenue recognition
fall under ASC 842. During the years ended December 31, 2020 and 2019, the Company did not sell any new power generating projects.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company constructs
and leases waste energy recycling power generating projects to its customers. The Company typically transfers legal ownership of the
waste energy recycling power generating projects to its customers at the end of the lease. Prior to January 1, 2019, the investment in
these projects was recorded as investment in sales-type leases in accordance with ASC Topic 840<I>, &ldquo;Lease</I>s<I>,&rdquo;</I>&nbsp;and
its various amendments and interpretations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company finances construction
of waste energy recycling power generating projects. The sales and cost of sales are recognized at the inception of the lease, which
is when the control is transferred to the lessee. The Company accounts for the transfer of control as a sales type lease in accordance
with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of payments is probable. This is
in accordance with the revenue recognition principle in ASC 606 - Revenue from contracts with customers. The investment in sales-type
leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated executory cost. Minimum
lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee). The discount rate
implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments consist of the gross
lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over the lease term to
produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception of the lease,
the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction of receivables.
Revenue is recognized net of value-added tax.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><I>B)</I>&nbsp;<I>Contingent
Rental Income</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company records income
from actual electricity generated of each project in the period the income is earned, which is when the electricity is generated. Contingent
rent is not part of minimum lease payments.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Operating Leases</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On January 1, 2019, the
Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at
the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented
under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with its historical accounting
under Topic 840. The new standard establishes a right-of-use (&ldquo;ROU&rdquo;) model that requires a lessee to record a ROU asset and
a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or
operating, with classification affecting the pattern of expense recognition in the income statement.&nbsp;A modified retrospective transition
approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative
period presented in the financial statements, with certain practical expedients available.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company elected the
package of practical expedients permitted under the transition guidance, which allowed it to carry forward its historical lease classification,
its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January
1, 2019. The Company also elected to combine its lease and non-lease components and to keep leases with an initial term of 12 months
or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line
basis over the lease term.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company leased an office
in Xi&rsquo;an, China as the Company&rsquo;s headquarter; upon adoption, the Company recognized total Right of Use Asset (&ldquo;ROU&rdquo;)
of $116,917, with corresponding liabilities of $116,917 on the consolidated balance sheets. The ROU assets include adjustments for prepayments
and accrued lease payments. The adoption did not impact its beginning retained earnings, or its prior year consolidated statements of
income and statements of cash flows. At December 31, 2020, the ROU was $0 as the lease was expired in November 2020.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Under Topic 842, the Company
determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present
value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable
at the time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the
information available at commencement date in determining the present value of lease payments. The Company&rsquo;s incremental borrowing
rate is a hypothetical rate based on its understanding of what its credit rating would be. The ROU asset also includes any lease payments
made prior to commencement and is recorded net of any lease incentives received. The Company&rsquo;s lease terms may include options
to extend or terminate the lease when it is reasonably certain that it will exercise such options.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Operating leases are included
in operating lease right-of-use assets and operating lease liabilities (current and non-current), on the consolidated balance sheets.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Cash</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Cash include cash on hand,
demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three
months or less as of the purchase date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Accounts Receivable</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company&rsquo;s policy
is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable
and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer
payment patterns to evaluate the adequacy of these reserves.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020,
the Company had gross accounts receivable of $342,974 of Erdos TCH for electricity sold. As of December 31, 2019, the Company had gross
accounts receivable of $48.06 million; of which, $35.42 million was for transferring the ownership of Huayu and Shenqiu Phase I and II
systems to Mr. Bai; $10.03 million was from the sales of CDQ and a CDQ WHPG system to Zhongtai, and $2.61 million accounts receivable
of Erdos TCH for electricity sold. As of December 31, 2020, the Company had bad debt allowance of $34,297 for Erdos TCH due to the customer
not making the payments as scheduled. As of December 31, 2019, the Company had bad debt allowance of $5,733,781 for Zhongtai and $261,430
for Erdos TCH due to the customer not making the payments as scheduled. During the year ended December 31, 2020, the Company recognized
a reversal of the bad debt allowance of $6,031,058, of which $5,799,094 was for Zhongtai and $231,964 was for Erdos TCH as a result of
payment collection from Zhongtai and Erdos TCH. As of December 31, 2020, the Company received the payment in full from all the projects
which had been disposed earlier.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="text-align: center; font-weight: bold; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="text-align: center; font-weight: bold; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Xuzhou Zhongtai project</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">10,034,116</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Bai Chonggong (for Shenqiu and Huayu projects)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">35,415,556</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Xuzhou Tian&rsquo;an project</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Receivable of electricity sales of Erdos</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">342,974</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,614,299</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total accounts receivable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">342,974</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">48,063,971</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Bad debt allowance</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(34,297</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,995,210</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2pt">Accounts receivable, net</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">308,677</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">42,068,761</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Interest Receivable on Sales Type Leases</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020,
the interest receivable on sales type leases was $0. As of December 31, 2019, the interest receivable on sales type leases was $5,245,244,
mainly from recognized but not yet collected interest income for the Pucheng systems. The ownership of Pucheng systems was transferred
to Pucheng as a result of full payment received by Xi&rsquo;an TCH in January 2020.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Investment in sales-type leases, net</I>&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020,
the Company had net investment in sales-type leases of $0. As of December 31, 2019, the Company had net investment in sales-type leases
of $8,287,560 (after bad debt allowance for investment in sales-type leases of $24,416,441 for the Pucheng system). The Company maintains
reserves for potential credit losses on receivables. Management reviews the composition of receivables and analyzes historical bad debts,
customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Concentration of Credit Risk</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Cash includes cash on hand
and demand deposits in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are
covered by insurance up to RMB 500,000 (US$77,000) per bank. Any balance over RMB 500,000 (US$77,000) per bank in PRC will not be covered.
At December 31, 2020, cash held in the PRC bank of $107,510,548 was not covered by such insurance. The Company has not experienced any
losses in such accounts.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Certain other financial
instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The Company does not
require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers&rsquo; financial
condition and customer payment practices to minimize collection risk on accounts receivable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The operations of the Company
are in the PRC. Accordingly, the Company&rsquo;s business, financial condition and results of operations may be influenced by the political,
economic and legal environments in the PRC.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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    <!-- Field: /Page --><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Property and Equipment</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Property and equipment
are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals
and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided
using the straight-line method over the estimated lives as follows:&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 87%">Vehicles</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2
                                            - 5 years</FONT></td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Office and Other Equipment</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2
                                            - 5 years</FONT></td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Software</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2
                                            - 3 years</FONT></td><td style="text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Impairment of Long-lived Assets</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In accordance with FASB
ASC Topic 360,&nbsp;<I>&ldquo;Property, Plant, and Equipment</I>,&rdquo; the Company reviews its long-lived assets, including property
and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be
fully recoverable. If the total expected undiscounted future net cash flows are less than the carrying amount of the asset, a loss is
recognized for the difference between the fair value and carrying amount of the asset. The Company recorded $0 asset impairment loss
for the years ended December 31, 2020 and 2019.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Cost of Sales</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Cost of sales consists
primarily of the direct material of the power generating system and expenses incurred directly for project construction for sales-type
leasing and sales tax and additions for contingent rental income.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Income Taxes</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Income taxes are accounted
for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years
of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted
tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company follows FASB
ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities,
classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions,
accounting for income taxes in interim periods, and income tax disclosures.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Under the provisions of
FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing
authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would
be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on
all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including
the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax
positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than
50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with
tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in
the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling,
general and administrative expenses in the statement of income.&nbsp;At December 31, 2020 and 2019, the Company did not take any uncertain
positions that would necessitate recording a tax related liability.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.2pt 0pt 0.1pt">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Statement of Cash Flows</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In accordance with FASB
ASC Topic 230,&nbsp;<I>&ldquo;Statement of Cash Flows,&rdquo;</I>&nbsp;cash flows from the Company&rsquo;s operations are calculated
based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not
necessarily agree with changes in the corresponding balances on the balance sheet.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Fair Value of Financial Instruments</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">For certain of the Company&rsquo;s
financial instruments, including cash and equivalents, restricted cash, accounts receivable, other receivables, accounts payable, accrued
liabilities and short-term debts, the carrying amounts approximate their fair values due to their short maturities. Receivables on sales-type
leases are based on interest rates implicit in the lease.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">FASB ASC Topic 820,&nbsp;<I>&ldquo;Fair
Value Measurements and Disclosures,&rdquo;</I>&nbsp;requires disclosure of the FV of financial instruments held by the Company. FASB
ASC Topic 825,&nbsp;<I>&ldquo;Financial Instruments,&rdquo;</I>&nbsp;defines FV, and establishes a three-level valuation hierarchy for
disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated
balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FV
because of the short period of time between the origination of such instruments and their expected realization and their current market
rate of interest. The three levels of valuation hierarchy are defined as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></td>
    <td style="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 1 inputs to the valuation
    methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</FONT></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>

<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></td>
    <td style="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 2 inputs to the valuation
    methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset
    or liability, either directly or indirectly, for substantially the full term of the financial instrument.</FONT></td></tr>
<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>

<tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></td>
    <td style="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level 3 inputs to the valuation
    methodology are unobservable and significant to FV measurement.</FONT></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Effective on January 1,
2020, the Company adopted ASU 2018-13, Fair Value Measurement: Disclosure Framework-Changes to the Disclosure Requirements for Fair Value
Measurement, which modifies the disclosure requirements for Level&nbsp;1, Level&nbsp;2 and Level&nbsp;3 instruments in the FV hierarchy.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company analyzes all
financial instruments with features of both liabilities and equity under FASB ASC 480,&nbsp;<I>&ldquo;Distinguishing Liabilities from
Equity,&rdquo;</I>&nbsp;and ASC 815,&nbsp;<I>&ldquo;Derivatives and Hedging.&rdquo;</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020
and 2019, the Company did not have any long-term debt obligations; and the Company did not identify any assets or liabilities that are
required to be presented on the balance sheet at FV.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Stock-Based Compensation</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company accounts for
share-based compensation awards to employees in accordance with FASB ASC Topic 718, &ldquo;Compensation &ndash; Stock Compensation&rdquo;,
which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument
issued and recognized as compensation expense over the requisite service period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company accounts for
share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, &ldquo;Equity-Based
Payments to Non-employees&rdquo;. Share-based compensation associated with the issuance of equity instruments to non-employees is measured
at the fair value of the equity instrument issued or committed to be issued, as this is more reliable than the fair value of the services
received. The fair value is measured at the date that the commitment for performance by the counterparty has been reached or the counterparty&rsquo;s
performance is complete.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Effective on January 1,
2020, the Company adopted ASU 2018-07, &ldquo;Compensation &mdash; Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting,&rdquo; which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services
from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance on inputs
to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based payment transactions
in which a grantor acquires goods or services to be used or consumed in a grantor&rsquo;s own operations by issuing share-based payment
awards. The adoption of ASU 2018-07 did not have an impact on the Company&rsquo;s financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Basic and Diluted Earnings per Share</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company presents net
income (loss) per share (&ldquo;EPS&rdquo;) in accordance with FASB ASC Topic 260,&nbsp;<I>&ldquo;Earning Per Share.&rdquo;</I>&nbsp;Accordingly,
basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of
shares outstanding, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income by the weighted-average
number of common shares outstanding as well as common share equivalents outstanding for the period determined using the treasury-stock
method for stock options and warrants and the if-converted method for convertible notes. The Company made an accounting policy election
to use the if-converted method for convertible securities that are eligible to receive common stock dividends, if declared. Diluted EPS
reflect the potential dilution that could occur based on the exercise of stock options or warrants or conversion of convertible securities
using the if-converted method.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">For the years ended December
31, 2020 and 2019, the basic and diluted loss per share were the same due to the anti-dilutive features of the warrants and options.
For the years ended December 31, 2020 and 2019, 31,311 shares and 406,764 shares (post-reverse stock split), respectively; purchasable
under warrants and options were excluded from the EPS calculation as these were not dilutive due to the exercise price was more than
the stock market price.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Foreign Currency Translation and Comprehensive Income (Loss)</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company&rsquo;s functional
currency is the Renminbi (&ldquo;RMB&rdquo;). For financial reporting purposes, RMB were translated into United States Dollars (&ldquo;USD&rdquo;
or &ldquo;$&rdquo;) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet
date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments
arising from the use of different exchange rates from period to period are included as a component of stockholders&rsquo; equity as &ldquo;Accumulated
other comprehensive income.&rdquo; Gains and losses resulting from foreign currency transactions are included in income. There was no
significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company follows FASB
ASC Topic 220,&nbsp;<I>&ldquo;Comprehensive Income.&rdquo;</I>&nbsp;Comprehensive income is comprised of net income and all changes to
the statements of stockholders&rsquo; equity, except those due to investments by stockholders, changes in paid-in capital and distributions
to stockholders.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Segment Reporting</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">FASB ASC Topic 280,&nbsp;<I>&ldquo;Segment
Reporting,&rdquo;</I>&nbsp;requires use of the &ldquo;management approach&rdquo; model for segment reporting. The management approach
model is based on the way a company&rsquo;s management organizes segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner
in which management disaggregates a company. FASB ASC Topic 280 has no effect on the Company&rsquo;s CFS as substantially all of the
Company&rsquo;s operations are conducted in one industry segment. All of the Company&rsquo;s assets are located in the PRC.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>New Accounting Pronouncements</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In June 2016, the FASB
issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses
for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.
This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at
amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December
15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In December&nbsp;2019,
the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates
certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application
among reporting entities. The guidance is effective for fiscal&nbsp;years beginning after December&nbsp;15, 2020, and interim periods
within those fiscal&nbsp;years, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard
retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect
adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is evaluating the impact this update
will have on its financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Other recent accounting
pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants,
and the SEC did not or are not believed by management to have a material impact on the Company&rsquo;s present or future CFS.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>3. INVESTMENT IN SALES-TYPE LEASES, NET</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Under sales-type leases,
as of December 31, 2019, Xi&rsquo;an TCH leases BMPG systems to Pucheng (Phase I and II, 15 and 11 year terms, respectively); The components
of the net investment in sales-type leases as of December 31, 2020 and 2019 are as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Total future minimum lease payments receivable</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">56,477,739</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Less: executory cost</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,623,100</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Less: unearned interest</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(14,905,393</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Less: realized interest income but not yet received</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(5,245,244</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: allowance for net investment receivable</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(24,416,442</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Investment in sales-type leases, net</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">8,287,560</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Current portion</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2pt">Noncurrent portion</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">8,287,560</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The ownership of Pucheng
systems was transferred to Pucheng in January 2020 as a result of receiving full payment from Pucheng to Xi&rsquo;an TCH.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>4. OTHER RECEIVABLES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020,
other receivables mainly consisted of (i) advances to third parties of $7,663, bearing no interest, payable upon demand, ii) advance
to employees of $11,011, iii) advance to suppliers of $4,791 and (iv) others of $12,222 including social insurance receivable of $4,579.
As of December 31, 2019, other receivables mainly consisted of (i) advances to third parties of $7,167, bearing no interest, payable
upon demand, (ii) tax and maintenance cost receivable of $1,001,527 for Xi&rsquo;an TCH, and iii) others of $22,449.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>5. ASSET SUBJECT TO BUYBACK AND CONSTRUCTION IN PROGRESS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Asset subject to buyback</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020
and 2019, the Company had asset subject to buyback of $28.92 million and $27.04 million, respectively, which was for the Chengli project.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Chengli project finished
construction, and was transferred to the Company&rsquo;s fixed assets at a cost of $35.24 million (without impairment loss) and ready
to be put into operation as of December 31, 2018. On January 22, 2019, Xi&rsquo;an Zhonghong completed the transfer of Chengli CDQ WHPG
project as the partial repayment for the loan and accrued interest of RMB 188,639,400 ($27.54 million) to HYREF (see Note 9). However,
because the loan was not deemed repaid due to the buyback right (See Note 9 for detail), the Company kept the loan and the Chengli project
in its books as fixed assets for accounting purposes.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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    <!-- Field: /Page --><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Construction in Progress</I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020
and 2019, the Company&rsquo;s construction in progress included:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Xuzhou Tian&rsquo;an</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">37,759,277</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: assets impairment allowance</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(13,935,075</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2pt">Total</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">23,824,202</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On January 10, 2020, Zhonghong,
Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights and interests of Xuzhou Tian&rsquo;an
Project to Tianyu for RMB 170 million including $0.6 million VAT (total of $24.37 million) in three installment payments. The Company
recorded impairment loss of $13.9 million as of December 31, 2019. The 1st installment payment of RMB 50 million ($7.17 million) was
to be paid within 20 working days after the contract was signed. The 2nd installment payment of RMB 50 million ($7.17 million) was to
be paid within 20 working days after completion of the project construction but no later than July 31, 2020. The final installment payment
of RMB 70 million ($10.03 million) was to be paid before December 31, 2020. As of December 31, 2020, the Company received the payment
in full for Tian&rsquo;an Project.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>6. TAXES PAYABLE</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Taxes payable consisted
of the following as of December 31, 2020 and 2019:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td style="text-align: justify">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: justify">Income tax &ndash; current</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,746,757</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,118,432</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Value-added tax</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">322,652</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,708,298</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 1.5pt">Other taxes</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76,203</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">260,912</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Total &ndash; current</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,145,612</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,087,642</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 2pt">Income tax &ndash; noncurrent</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,174,625</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,782,625</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Income tax payable included
$7.61 million ($2.44 million included in current above and $5.17 million noncurrent) from recording the estimated one-time transition
tax on post-1986 foreign unremitted earnings under the Tax Cut and Jobs Act signed on December 22, 2017. An election is available for
the U.S. shareholders of a foreign company to pay the tax liability in installments over a period of eight years with 8% of net tax liability
in the first five years, 15% in the sixth year, 20% in the seventh year, and 25% in the eighth year. The Company made such an election.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>7. ACCRUED LIABILITIES AND OTHER PAYABLES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Accrued liabilities and
other payables consisted of the following as of December 31, 2020 and 2019:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Education and union fund and social insurance payable</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">373,740</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">843,807</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Consulting and legal expenses</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">31,090</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">40,602</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accrued payroll and welfare</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">255,278</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">254,882</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">66,588</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">45,460</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2pt">Total</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">726,696</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,184,751</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>8. DEFERRED TAX, NET</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Deferred tax assets resulted
from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with US GAAP, interest
income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not meet revenue recognition
in accordance with US GAAP, accrued employee social insurance that can be deducted for tax purposes in the future, and the difference
between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part of cost of systems
in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net investment in sales-type
leases.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page --><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">As of December 31, 2020 and
2019, net deferred tax assets consisted of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>Non-current deferred tax assets</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: right">&nbsp;</td><td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; padding-left: 10pt">Accrued expenses</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">70,019</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">189,050</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Interest income in sales-type leases on cash basis</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">853,265</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Depreciation of fixed assets</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2,938,605</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Assets impairment loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">7,537,556</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Write-off Erdos TCH net investment in sales-type leases</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">6,155,300</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">6,349,604</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">US NOL</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">254,035</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,246,655</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">PRC NOL</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,849,690</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,424,558</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Non-current deferred tax liabilities</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Net investment in sales-type leases</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,685,021</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Net non-current deferred tax assets</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">17,329,044</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">24,854,272</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: valuation allowance for deferred tax assets</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(17,329,044</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(24,854,272</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 4pt">Non-current deferred tax assets, net</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td><td style="padding-bottom: 4pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&nbsp;</td></tr>
  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>9. LOANS PAYABLE</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Entrusted Loan Payable (HYREF Loan)</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The HYREF Fund was established
in July 2013 with a total fund size of RMB 460 million ($77 million) invested in Xi&rsquo;an Zhonghong for Zhonghong&rsquo;s three new
CDQ WHPG projects. The HYREF Fund invested RMB 3 million ($0.5 million) as an equity investment and RMB 457 million ($74.5 million) as
a debt investment in Xi&rsquo;an Zhonghong; in return for such investments, the HYREF Fund was to receive interest from Zhonghong for
the HYREF Fund&rsquo;s debt investment. The loan was collateralized by the accounts receivable and the fixed assets of Shenqiu Phase
I and II power generation systems; the accounts receivable and fixed assets of Zhonghong&rsquo;s three CDQ WHPG systems; and a 27 million
RMB ($4.39 million) capital contribution made by Xi&rsquo;an TCH in Zhonghong. Repayment of the loan (principal and interest) was also
jointly and severally guaranteed by Xi&rsquo;an TCH and the Chairman and CEO of the Company. In the fourth quarter of 2015, three power
stations of Erdos TCH were pledged to Industrial Bank as an additional guarantee for the loan to Zhonghong&rsquo;s three CDQ WHPG systems.
In 2016, two additional power stations of Erdos TCH and Pucheng Phase I and II systems were pledged to Industrial Bank as an additional
guarantee along with Xi&rsquo;an TCH&rsquo;s equity in Zhonghong.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The term of this loan was
for 60 months from July 31, 2013 to July 30, 2018, with an interest rate of 12.5%. On August 6, 2016, Zhonghong was required to repay
principal of RMB 280 million ($42.22 million), of which the Company paid RMB 50 million ($7.54 million); while on August 6, 2017, Zhonghong
was initially supposed to repay principal of RMB 100 million ($16.27 million) and on July 30, 2018, Zhonghong was initially supposed
to repay the remainder of RMB 77 million ($12.52 million). During the term, Zhonghong was to maintain a minimal funding level and capital
level in its designated account with the Supervising Bank to make sure it has sufficient funds to make principal payments when they are
due. Notwithstanding the requirements, the HYREF Fund and Supervising Bank verbally notified Zhonghong from the beginning that it was
unlikely that they would enforce these requirements for the purpose of the efficient utilization of working capital. The Company had
paid RMB 50 million ($7.54 million) of the RMB 280 million ($42.22 million), and on August 5, 2016, the Company entered into a supplemental
agreement with the lender to extend the due date of the remaining RMB 230 million ($34.68 million) of the original RMB 280 million ($45.54
million) to August 6, 2017. During the year ended December 31, 2017, the Company negotiated with the lender again to further extend the
remaining loan balance of RMB 230 million ($34.68 million), RMB 100 million ($16.27 million), and RMB 77 million ($12.52 million) (which
included investment from Xi&rsquo;an TCH of RMB 75 million and was netted off with the entrusted loan payable of the HYREF Fund in the
balance sheet). The lender had tentatively agreed to extend the remaining loan balance until August 2019 with an adjusted annual interest
rate of 9%, subject to the final approval from its headquarters. The headquarters did not approve the extension proposal with an adjusted
annual interest rate of 9%; however, on December 29, 2018, the Company worked out with the lender an alternative repayment proposal as
described below. As of December 31, 2018, the entrusted loan payable had an outstanding balance of $59.29 million, of which, $10.92 million
was from the investment of Xi&rsquo;an TCH; accordingly, the Company netted the loan payable of $10.92 million with the long-term investment
to the HYREF Fund made by Xi&rsquo;an TCH. As of December 31, 2019, the interest payable for this loan was $8.20 million and the outstanding
balance for this loan was $20.77 million including a non-current portion of $0.29 million.&nbsp;As of December 31, 2020, the interest
payable for this loan was $10.14 million and the outstanding balance for this loan was $22.20 million including a non-current portion
of $0.30 million.&nbsp;The Company recorded interest expense of $1.30 million and $1.72 million for the years ended December 31, 2020
and 2019.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Repayment of HYREF loan</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt">1.&nbsp;Transfer of Chengli
project as partial repayment</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 29, 2018, Xi&rsquo;an
Zhonghong, Xi&rsquo;an TCH, HYREF, Guohua Ku, and Chonggong Bai entered into a CDQ WHPG Station Fixed Assets Transfer Agreement, pursuant
to which Xi&rsquo;an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan of RMB 188,639,400 ($27.54 million)
to HYREF, the transfer of which was completed on January 22, 2019.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Xi&rsquo;an TCH is a secondary limited partner of
HYREF. The fair value of the CDQ WHPG station applied in the transfer was determined by the parties based upon the appraisal report issued
by Zhonglian Assets Appraisal Group (Shaanxi) Co., Ltd. as of August 15, 2018. However, per the discussion below, Xi&rsquo;an Zhonghong,
Xi&rsquo;an TCH, Guohua Ku and Chonggong Bai (the &ldquo;Buyers&rdquo;) entered into a Buy Back Agreement, also agreed to buy back the
Station when conditions under the Buy Back Agreement are met. Due to the Buy Back agreement, the loan was not deemed repaid, the Company
kept the Chengli project in its books as assets subject to buyback and kept the loan payable in its book under ASC 405-20-40-1 as of
December 31, 2020 and 2019.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">2.&nbsp;Buy Back Agreement</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 29, 2018, Xi&rsquo;an TCH, Xi&rsquo;an
Zhonghong, HYREF, Guohua Ku, Chonggong Bai and Xi&rsquo;an Hanneng Enterprises Management Consulting Co. Ltd. (&ldquo;Xi&rsquo;an Hanneng&rdquo;)
entered into a Buy Back Agreement.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to the Buy Back Agreement, the Buyers jointly
and severally agreed to buy back all outstanding capital equity of Xi&rsquo;an Hanneng which was transferred to HYREF by Chonggong Bai
(see 5 below), and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi&rsquo;an Zhonghong. The buy-back price for
the Xi&rsquo;an Hanneng&rsquo;s equity was based on the higher of (i) the market price of the equity shares at the time of buy-back;
or (ii) the original transfer price of the equity shares plus bank interest. The buy-back price for the Station was based on the higher
of (i) the fair value of the Station on the date transferred; or (ii) the loan balance at the date of the transfer plus interest accrued
through that date. HYREF could request that the Buyers buy back the equity shares of Xi&rsquo;an Hanneng and/or the CDQ WHPG station
if one of the following conditions is met: (i) HYREF holds the equity shares of Xi&rsquo;an Hanneng until December 31, 2021; (ii) Xi&rsquo;an
Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations Co., Ltd., a Chinese over-the-counter trading
system (the &ldquo;NEEQ&rdquo;); (iii) Xi&rsquo;an Huaxin New Energy, or any of the Buyers or its affiliates has a credit problem, including
not being able to issue an auditor report or standard auditor report or any control person or executive of the Buyers is involved in
crimes and is under prosecution or has other material credit problems, to HYREF&rsquo;s reasonable belief; (iv) if Xi&rsquo;an Zhonghong
fails to timely make repayment on principal or interest of the loan agreement, its supplemental agreement or extension agreement; (v)
the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment Agreement or its related transaction documents,
including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer Agreement, the Entrusted Loan Agreement and their
guarantee agreements and supplemental agreements.&nbsp;Due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report,
on December 19, 2019, Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all
outstanding capital equity of Xi&rsquo;an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was
RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi&rsquo;an TCH
on December 20, 2019.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
Company might be contingently liable for the difference between the fair value of the transferred asset and the loan and related interest
if the fair value of the transferred asset at the time of the exercise of the buyback option is higher than the loan and related accrued
interest. Based on an appraisal, as of December 31, 2020, the asset was&nbsp;valued at $27.97 million while the loan and related interest
was $32.35 million.</FONT></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 9, 2021, the buyers and HYREF entered
a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement was terminated
upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from
the buyers other than keeping the CDQ WHPG station (also see Note 19).</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Due to halted trading of
Huaxin stock by NEEQ for not filing its 2018 annual report, on December 19, 2019, Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, Guohua Ku and
Chonggong Bai jointly and severally agreed to buy back all outstanding capital equity of Xi&rsquo;an Hanneng which was transferred to
HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506
($2.10 million), and was paid in full by Xi&rsquo;an TCH.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">3. Xi&rsquo;an TCH transferred
40% ownership in the Fund Management Company to Hongyuan Huifu for partial payment of financial advisory fee</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 29, 2018, Xi&rsquo;an
TCH entered into a Share Transfer Agreement with Hongyuan Huifu Venture Capital Co. Ltd (&ldquo;Hongyuan Huifu&rdquo;), pursuant to which
Xi&rsquo;an TCH transferred its 40% ownership in Hongyuan Recycling Energy Investment Management Beijing Co., Ltd. (the &ldquo;Fund Management
Company&rdquo;) to Hongyuan Huifu for consideration of RMB 3,453,867 ($504,000) (the &ldquo;Fund Management Company Transfer Price&rdquo;).
On January 22, 2019, Xi&rsquo;an TCH completed the 40% ownership transfer transaction. The Company had $46,461 loss from the sale of
a 40% equity interest in Fund Management Company during the year ended December 31, 2019.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 29, 2018, Xi&rsquo;an
TCH, Hongyuan Huifu and Fund Management Company entered into a supplemental agreement to the Share Transfer Agreement. Xi&rsquo;an TCH
owes the Fund Management Company RMB 18,306,667 ($2,672,000) in financial advisory fees, and the parties agreed that the Fund Management
Company Transfer Price could be used to offset the outstanding financial advisory fees. Upon the completion of this transaction, the
Fund Management Company owed RMB 3,453,867 ($502,400) to Hongyuan Huifu, and Xi&rsquo;an TCH owed RMB 14,852,800 ($2,168,000) to the
Fund Management Company. As of December 31, 2020, Xi&rsquo;an TCH paid in full of $2,168,000 to the Fund Management Company.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">4.&nbsp;HYREF Fund transferred
10% ownership in Xi&rsquo;an Zhonghong to Shanghai TCH (Long-Term Payable)</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 29, 2018, Shanghai
TCH entered into a Share Transfer Agreement with HYREF, pursuant to which HYREF agreed to transfer its 10% ownership in Xi&rsquo;an Zhonghong
to Shanghai TCH for RMB 3 million ($460,000), and was recorded as long-term payable in the Company&rsquo;s balance sheet. On January
22, 2019, Hongyuan Huifu completed the transfer of its 10% ownership in Xi&rsquo;an Zhonghong to Shanghai TCH,&nbsp;Xi&rsquo;an Zhonghong
then became a 100% subsidiary of the Company. The Company did not record any gain or loss for this purchase as the controlling interest
did not change.</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">5.&nbsp;Transfer of Xuzhou
Huayu Project and Shenqiu Phase I&nbsp;&amp; II project to Mr. Bai for partial repayment of HYREF loan</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On January 4, 2019, Xi&rsquo;an
Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement, pursuant to which Xi&rsquo;an Zhonghong
transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co., Ltd. (&ldquo;Xuzhou Huayu Project&rdquo;)
to Mr. Bai for RMB 120,000,000 ($17.52 million) and Xi&rsquo;an TCH transferred two Biomass Power Generation Projects in Shenqiu (&ldquo;Shenqiu
Phase I and II Projects&rdquo;) to Mr. Bai for RMB 127,066,000 ($18.55 million). Mr. Bai agreed to transfer all the equity shares of
his wholly owned company, Xi&rsquo;an Hanneng, to HYREF as repayment for the RMB 247,066,000 ($36.07 million) loan made by Xi&rsquo;an
Zhonghong to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu Phase I and II Projects.&nbsp;</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On February 15, 2019, Xi&rsquo;an
Zhonghong completed the transfer of the Xuzhou Huayu Project and Xi&rsquo;an TCH completed the transfer of Shenqiu Phase I and II Projects
to Mr. Bai, and on January 10, 2019, Mr. Bai transferred all the equity shares of his wholly owned company, Xi&rsquo;an Hanneng, to HYREF
as repayment of Xi&rsquo;an Zhonghong&rsquo;s loan to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu
Phase I and II Projects.&nbsp;</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Xi&rsquo;an Hanneng is
a holding company and was supposed to own 47,150,000 shares of Xi&rsquo;an Huaxin New Energy Co., Ltd. (&ldquo;Huaxin&rdquo;), so that
HYREF will indirectly receive and own such shares of Xi&rsquo;an Huaxin as the repayment for the loan of Zhonghong. Xi&rsquo;an Hanneng
already owned 29,948,000 shares of Huaxin; however, Xi&rsquo;an Hanneng was not able to obtain the remaining 17,202,000 shares due to
halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 19, 2019, Xi&rsquo;an TCH, Xi&rsquo;an
Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all outstanding capital equity of Xi&rsquo;an Hanneng
which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506 ($37.52 million) including accrued
interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi&rsquo;an TCH on December 20, 2019. On December 20, 2019, Mr. Bai,
Xi&rsquo;an TCH and Xi&rsquo;an Zhonghong agreed to have Mr. Bai repay the Company in cash for the transfer price of Xuzhou Huayu and
Shenqiu in five installment payments. The 1<SUP>st</SUP>&nbsp;payment of RMB 50 million ($7.17 million) is due on January 5, 2020, the
2<SUP>nd&nbsp;</SUP>payment of RMB 50 million ($7.17 million) was due on February 5, 2020, the 3<SUP>rd&nbsp;</SUP>payment of RMB 50
million ($7.17 million) was due on April 5, 2020, the 4<SUP>th</SUP>&nbsp;payment of RMB 50 million ($7.17 million) is due on June 30,
2020, and the final payment of RMB 47,066,000 ($6.75 million) is due on September 30, 2020. As of December 31, 2020, the Company has
received the full payment of RMB 247 million ($36.28 million) from Mr. Bai.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">6. The lender agreed to
extend the repayment of RMB 77.00 million ($11.04 million) to July 8, 2023; of which, RMB 75.00 million ($10.81 million) was Xi&rsquo;an
TCH&rsquo;s investment into the HYREF fund as a secondary limited partner, and the Company netted off the investment of RMB 75 million
($10.81 million) by Xi&rsquo;an TCH with the entrusted loan payable of the HYREF Fund.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">A reconciliation of repayment
of HYREF loan (entrusted loan) by three Projects at December 31, 2020 was as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 25%; text-align: left; text-indent: -10pt; padding-left: 10pt">Transfer price for Chengli Project</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">28,910,696</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 50%; text-align: left">Entrusted loan payable at December 31, 2020, net with Xi&rsquo;an TCH investment in entrusted
    loan (current and noncurrent)</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">22,203,262</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Transfer price for Xuzhou Huayu Project</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">18,391,086</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Interest payable on entrusted loan at December 31, 2020</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,144,228</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">Transfer price for Shenqiu Phase I and
    II Projects</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">19,474,015</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="text-align: left; padding-bottom: 1.5pt">Add back: Xi&rsquo;an TCH investment in entrusted loan</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt; text-align: right">11,494,429</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -10pt; padding-left: 10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Less: interest accrued from September 20, 2018 to December 31, 2020 (cut-off date for interest calculation
    for repayment was September 20, 2018)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,130,276</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -10pt; padding-left: 10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Less: portion of loan with repayment due date extended to year 2023</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(11,800,947</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -10pt; padding-left: 10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -10pt; padding-left: 10pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Add back: interest&nbsp;&amp; penalty repaid by Xi&rsquo;an TCH</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">9,186,358</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt; text-align: right">&nbsp;</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="text-align: left; padding-bottom: 1.5pt">Add back: loan principle repaid by Xi&rsquo;an TCH</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">28,678,743</td><td style="padding-bottom: 1.5pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2pt; text-indent: -10pt; padding-left: 10pt">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">66,775,797</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="padding-bottom: 2pt">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">66,775,797</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>10. REFUNDABLE DEPOSITS FROM CUSTOMERS FOR SYSTEMS LEASING</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020
and 2019, the balance of refundable deposits from customers for systems leasing was $0 and $544,709 (for Pucheng systems), respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>11. RELATED PARTY TRANSACTIONS</B>&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of December 31, 2020
and 2019, the Company had $28,440 and $41,174, respectively, in advances from the Company&rsquo;s management, which bear no interest,
are unsecured, and are payable upon demand.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>12. NOTE PAYABLES, NET</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Convertible Notes / Promissory Notes in January and February
2019</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On&nbsp;January 31, 2019,
the Company entered into a Securities Purchase Agreement with Iliad Research and Trading, L.P., a Utah limited partnership (the &ldquo;Purchaser&rdquo;),
pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note of $1,050,000. The Purchaser purchased the
Note with an original issue discount of $50,000. The Note bears interest at 8%. All outstanding principal and accrued interest on the
Note will become due and payable on January 30, 2021, subject to a potential one-year extension period during which interest would not
accrue. The Company&rsquo;s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would
pay 125% of any amounts outstanding under the Note and being prepaid. Amounts outstanding under the Note may be converted at any time,
at the Lender&rsquo;s option, into shares of the Company&rsquo;s Common Stock at a conversion price of $3.00 per share, subject to certain
adjustments as discussed in the July 2018 Note above. The conversion feature did not require bifurcation and derivative accounting as
the conversion price was greater than the market price of the Company common shares, there was no beneficial conversion feature to recognize.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On February 27, 2019, the
Company entered into a Securities Purchase Agreement with Iliad Research and Trading, L.P., a Utah limited partnership (the &ldquo;Purchaser&rdquo;),
pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note of $1,050,000. The Purchaser purchased the
Note with an original issue discount of $50,000. The Note bears interest at 8%. All outstanding principal and accrued interest on the
Note will become due and payable on February 26, 2021, subject to a potential one-year extension period during which interest would not
accrue. The Company&rsquo;s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would
pay 125% of any amounts outstanding under the Note and being prepaid. Amounts outstanding under the Note may be converted at any time,
at the Lender&rsquo;s option, into shares of the Company&rsquo;s Common Stock at a conversion price of $3.00 per share, subject to certain
adjustments as discussed above in the July 2018 Note. The conversion feature did not require bifurcation and derivative accounting and
as the conversion price was greater than the market value of the Company common shares, there was no beneficial conversion feature to
recognize.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Pursuant to an Exchange
Agreement dated April 14, 2019 (the &ldquo;Exchange Agreement&rdquo;), the Company and Iliad Research and Trading, L.P. agreed to exchange
the above two notes (the &ldquo;Original Notes&rdquo;) with two new promissory notes (the &ldquo;Exchange Notes&rdquo;). Upon execution
of the agreement, the notes holder surrendered the Convertible Notes to the Company and the Company issued to the holder the Exchange
Notes. Upon surrender, the two Convertible Notes were cancelled and the remaining amount owed to Holder hereafter be evidenced solely
by the Exchange Notes ($1,173,480 and $ 1,165,379 for the January and February 2019 notes, respectively). All outstanding principal and
accrued interest on the Exchange Notes will become due and payable on January 31, 2021 and February 27, 2021, respectively. The Exchange
Notes bore interest at 8% and did not grant conversion options to the Purchaser. The Company&rsquo;s obligations under the Exchange Notes
could be prepaid at any time, provided that in such circumstance the Company would have paid 125% of any amounts outstanding under the
Exchange Notes. Beginning on the date that is six months from the issue date of the respective Original Notes (the &ldquo;Issue Dates&rdquo;)
and at any time thereafter until the Exchange Notes are paid in full, Purchaser shall have the right to redeem up to $750,000 of the
outstanding balance during months six to eight following the respective Issue Date and any amount thereafter. The exchange of the Convertible
Notes with Promissory Notes did not cause substantially different terms, and did not meet the conditions described in ASC 405-20-40-1,
and therefore was accounted for as a modification and not an extinguishment; accordingly, the Company did not recognize any gain or loss
for the exchange of the notes under ASC 470-50-40-8. During the year ended December 31, 2020, the Company amortized OID of $56,250 and
recorded $80,204 interest expense. During the year ended December 31, 2019, the Company amortized OID of $43,750 and recorded $368,362
interest expense (including $106,680 and $105,944 in exchange fees, respectively) for these two notes.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0; margin: 0pt 0; text-align: justify">As a result of default in the
redemption request by the lender made on August 1, 2019, the Company and the lender entered into a forbearance agreement in which the
lender agreed not to enforce its rights under the agreement and agreed not to make any Redemptions pursuant to the Section 4 of the Note
before October 1, 2019. Under the term of the forbearance agreement, in the event Lender delivers after October 1, 2019 a Redemption
Notice to Borrower and the Redemption Amount set forth therein is not paid in cash to Lender within three Trading Days, then the applicable
Redemption Amount shall be increased by 25% (the &ldquo;First Adjustment,&rdquo; and such increase to the Redemption Amount, the &ldquo;First
Adjusted Redemption Amount&rdquo;). In the event the First Adjusted Redemption Amount is not paid within three Trading Days after the
date of First Adjustment, then the First Adjusted Redemption Amount shall be increased in accordance with the following formula: $0.50
divided by the lowest Closing Trade Price of the Common Stock during the 20 Trading Days prior to the date of the Second Adjustment and
the resulting quotient multiplied by the First Adjusted Redemption Amount (the &ldquo;Second Adjustment,&rdquo; and such increase to
the First Adjusted Redemption Amount, the &ldquo;Second Adjusted Redemption Amount&rdquo;), provided, however, that such formula shall
only be applied if the resulting quotient is greater than one and such formula shall in no event be used to reduce the First Adjusted
Redemption Amount.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">In 2019, the Company entered
into a series of Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender partitioned
five Promissory Notes in the original total principal amount of $797,000 from a Promissory Note issued by the Company on April 14, 2019.
The Company and Lender exchanged the Partitioned Note for the delivery of total 175,400 shares (post-reverse stock split) of the Company&rsquo;s
Common Stock. The Company recorded $131,740 gain on conversion of these portion of the note. However, on December 16, 2019, the Company
and the lender amended the September 11, 2019 forbearance agreement to increase the adjustment ratio described above from $0.50 to $0.30
(pre-reverse stock split price). The outstanding balance of the Note shall be reduced by an amount equal to the total outstanding balance
of the Partitioned Note. The investor made adjustments of $305,626 to increase the principle of the notes during the year ended December
31, 2019 under the term of the September 11<SUP>th</SUP>&nbsp;forbearance agreement and the amendment to forbearance agreement dated
on December 16, 2019.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">During the first quarter of 2020,
Company entered into three Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender
partitioned three new Promissory Notes in the original total principal amount of $430,000 from a Promissory Note issued by the Company
on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 143,333 shares (post-reverse stock
split) of the Company&rsquo;s Common Stock. The Company recorded $103,167 loss on conversion of these portion of the note.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">During the second quarter of
2020, Company entered into four Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and
Lender partitioned four new Promissory Notes in the original total principal amount of $819,586 from a Promissory Note issued by the
Company on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 304,710 shares (post-reverse
stock split) of the Company&rsquo;s Common Stock. The Company recorded $49,837 gain on conversion of these portion of the note. In addition,
the investor also made adjustments of $145,000 to increase the principle of the notes during the second quarter of 2020 under the term
of the September 11<SUP>th</SUP>&nbsp;forbearance agreement and the amendment to forbearance agreement dated on December 16, 2019. These
transactions were recorded as credit to additional paid in capital of $769,749, which was the difference between Note conversion of $819,586
and gain on conversion of $49,837. The $49,837 gain on conversion and $145,000 principal adjustment discussed above resulted in a net
loss on note redemption / conversion of $95,163 in the statement of operations.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On May 15, 2020, the Company
entered into a Forbearance Agreement with the Lender. The Lender had delivered a redemption notice to the Company on November 4, 2019
pursuant to the terms of the Exchange Agreement dated April 14, 2019 and the Company failed to pay the amount provided therein. Accordingly,
the Lender has the right to accelerate the maturity date of the Note and cause the outstanding balance to be increased by 25%. The Lender
agreed with the Company to withdraw the November 4, 2019 redemption notice as if it was never made and agreed that as of May 15, 2020
there is no default under the Note. The Company did not pay any consideration to the Lender for this forbearance. The outstanding balance
of the Note as of May 15, 2020 is $1,271,720, and under the new Forbearance Agreement, if the Lender delivers a redemption notice and
the amount set forth in such notice is not paid in cash to Lender within three trading days, the applicable redemption amount shall be
increased to 25%. &nbsp;</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">During the third quarter of 2020,
Company entered into three Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreements, the Company and Lender
partitioned three new Promissory Notes in the original total principal amount of $600,000 from a Promissory Note issued by the Company
on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 242,699 shares (post-reverse stock
split) of the Company&rsquo;s Common Stock. The Company recorded $36,023 loss on conversion of these portion of the note. In addition,
under the term of the forbearance agreement, as the investor delivered&nbsp;redemption notices totaling $1,050,000 which were not paid
within 5 days, per the forbearance agreement, adjustments of $262,500 were made to increase the principle of the notes during the third
quarter of 2020. These transactions were recorded as credit to additional paid in capital of $636,023, which was the fair value of the
shares issued based on the stock price on the date of the exchange. The $36,023 loss on conversion and $262,500 principle adjustment
discussed above resulted in a loss on note redemption/ conversion of $298,523 in the statement of operations for the three months ended
September 30,2020.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">During the fourth quarter of
2020, Company entered into three Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreements, the Company and
Lender partitioned three new Promissory Notes in the original total principal amount of $600,000 from a Promissory Note issued by the
Company on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 175,904 shares (post-reverse
stock split) of the Company&rsquo;s Common Stock. The Company recorded $5,540 loss on conversion of these portion of the note. As of
December 31, 2020, two Notes that were issued in January and February 2019 were repaid in full by the Company&rsquo;s shares.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Promissory Notes in December 2020</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On December 4, 2020, the Company
entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company sold and issued to the Purchaser
a Promissory Note of $3,150,000. The Purchaser purchased the Note with an original issue discount of $150,000, which was recognized as
a debt discount and will be amortized using the interest method over the life of the note. The Note bears interest at 8% per annum and
has a term of 24 months. All outstanding principal and accrued interest on the Note will become due and payable on December 3, 2022.
The Company&rsquo;s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125%
of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date of the Note,
Purchaser shall have the right to redeem any amount of this Note up to $500,000 per calendar month by providing written notice to the
Company. During the year ended December 31, 2020, the Company amortized OID of $5,645 and recorded $18,968 interest expense on this Note.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>13. SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Private Placement in February 2019</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On February 13, 2019, CREG entered
into a Securities Purchase Agreement (the &ldquo;Agreement&rdquo;) with Great Essential Investment, Ltd. a company incorporated in the
British Virgin Islands (the &ldquo;Purchaser&rdquo;), pursuant to which the Company sold to the Purchaser in a private placement 1,600,000
shares (pre-reverse stock split) of the Company&rsquo;s common stock, par value $0.001 per share, at $10.13 per share, for $1,620,800.
The Company was required to file a registration statement for the registration of the Shares for their resale by the Purchaser within
100 days from the effective date of this Agreement. The Private Placement was completed pursuant to the exemption from registration provided
by Regulation S promulgated under the Securities Act of 1933, as amended. The Company filed the registration statement on May 24, 2019,
and was declared effective on June 4, 2019.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Registered Direct Offering and Private
Placement in April 2019</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On April 15, 2019, the Company
entered into a Securities Purchase Agreement (the &ldquo;Purchase Agreement&rdquo;) with certain purchasers (the &ldquo;Purchasers&rdquo;),
pursuant to which the Company offered to the Purchasers, in a registered direct offering, 2,359,272 shares (pre-reverse stock split)
of common stock. The Shares were sold to the Purchasers at a negotiated purchase price of $0.80 per share, for gross proceeds to the
Company of $1,887,417, before deducting $200,000 in placement agent fees and other estimated offering expenses payable by the Company.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">In a concurrent private placement,
the Company also issued to the each of the Purchasers a warrant to purchase 0.75 of a share of the Company&rsquo;s Common Stock for each
share purchased under the Purchase Agreement, or 1,769,454 warrants (pre-reverse stock split). The Warrants are exercisable beginning
on the six month anniversary of the date of issuance at an exercise price of $0.9365 per share, and expire on the five and one-half year
anniversary of the date of issuance.&nbsp;</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">H.C. Wainwright&nbsp;&amp; Co.,
LLC acted as the Company&rsquo;s exclusive placement agent in connection with the offerings under the Purchase Agreement and received
cash fee of 7% of the gross proceeds received by the Company from the offerings (or $132,119), up to $75,000 for certain expenses, $10,000
for clearing expenses and warrants to purchase the Company&rsquo;s Common Stock in an amount equal to 7% of our Shares sold to the Purchasers
in the offerings, or 165,149 shares of Common Stock, on substantially the same terms as the Warrants, except that the Placement Agent
Warrants have an initial exercise price of $1.00 per share, are exercisable commencing on the later of (i) six months of the issuance
date or (ii) the date on which the Company increases the number of its authorized shares, and expire on April 15, 2024.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The warrants issued in this private
placement were classified as equity instruments. The Company accounted for the warrants issued in the private placement based on the
fair value method under ASC Topic 505, and the FV of the warrants was calculated using the Black-Scholes model under the following assumptions:
estimated life of 5.5 years for Investor Warrants and 5 years for Placement Agent Warrants, volatility of 100%, risk-free interest rate
of 2.41% and dividend yield of 0%. The FV of the warrants issued to investors at grant date was $855,246, and the FV of the warrants
issued to the placement agent at grant date was $75,901.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On November 22, 2019, the Company
entered into an Exchange Agreement (the &ldquo;First Exchange Agreement&rdquo;) with certain investors who had been party to that certain
Securities Purchase Agreement dated October 29, 2018. Pursuant to the First Exchange Agreement, the Company and the October Investors
agreed to exchange the outstanding warrant issued by the Company to the October Investors pursuant to the October Securities Purchase
Agreement into shares of common stock of the Company, with an exchange ratio of 1 share of October Warrant Stock for 0.5 shares of common
stock, according to the terms and conditions of the First Exchange Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On November 22, 2019, the Company
entered into a Second Exchange Agreement (the &ldquo;Second Exchange Agreement&rdquo;) with certain investors who had been party to that
certain Securities Purchase Agreement dated April 15, 2019 by and among the Company and such investors. Pursuant to the Second Exchange
Agreement, the Company and the April Investors agreed to exchange the outstanding warrant issued by the Company to the April Investors
pursuant to the April Securities Purchase Agreement into shares of common stock of the Company, with an exchange ratio of 1 share of
April Warrant Stock for 0.6 shares of common stock, according to the terms and conditions of the Second Exchange Agreement.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company let the warrant holders
exercised the 375,454 warrants (post-reverse stock split) into 205,421 common shares (post-reverse stock split) of the Company at a cashless
exercise method. The fair value of these shares was the additional cost to the Company for the issuance of the shares under securities
purchase agreements previously entered (described above). However, since the warrants were initially equity classified as they met the
qualifications for equity classification under ASC 815-40, accordingly, the modification upon exercise of these warrants had no impact
to the Company&rsquo;s financial statements.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">Following is a summary of the
activities of warrants that were issued from equity financing (post-reverse stock split) for the years ended December 31, 2020 and 2019:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of<BR> Warrants</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average<BR> Exercise<BR> Price<BR>
    (post-reverse<BR> stock split<BR> price)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted<BR> Average<BR> Remaining<BR>
    Contractual<BR> Term in Years</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Outstanding at January 1, 2019</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">212,404</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">14.1</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">5.29</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exercisable at January 1, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">212,404</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">14.1</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5.29</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Granted</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">193,460</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">9.5</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5.25</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exchanged</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(375,454</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Forfeited</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Expired</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Outstanding at December 31, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">30,411</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">14.0</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4.21</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exercisable at December 31, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">30,411</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">14.0</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4.21</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Granted</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exercised</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Forfeited</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Expired</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Outstanding at December 31, 2020</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">30,411</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">14.0</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3.21</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exercisable at December 31, 2020</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">30,411</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">14.0</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3.21</td><td style="text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Shares Issued for Stock Compensation</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On March 16, 2020, the Company&rsquo;s
Board of Director agreed to issue 3,333 shares of the Company&rsquo;s Common Stock (post-reverse stock split) to the Company&rsquo;s
law firm. The shares are earned in full and non-refundable as of March 9, 2020. The FV of these shares are $10,999 on March 9, 2020.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Shares Issued for Equity Financing</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On August 24, 2020 and September
28, 2020, the Company entered into Securities Purchase Agreements with the purchaser and offered and sold to such purchaser 265,250 shares
of Common Stock at&nbsp;negotiated purchase prices (132,000 shares at $2.15 per share and 133,250 shares at $2.34 per share)&nbsp;without
reference to the market price and received the net proceeds was $497,187 after deducting the placement agent commission and certain expenses.
&nbsp;These 265,250 shares were offered and sold in a registered public offering pursuant to the prospectus supplement dated August 24,
2020, and the original prospectus contained in an effective shelf registration statement on Form S-3 (the &ldquo;Registration Statement&rdquo;),
which was originally filed with the Securities and Exchange Commission on December 1, 2017, and was declared effective on December 8,
2017 (File No. 333-221868).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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    <!-- Field: /Page --><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>14. INCOME TAX</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company&rsquo;s Chinese subsidiaries
are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally subject to tax at 25% on income
reported in the statutory financial statements after appropriate tax adjustments. Under Chinese tax law, the tax treatment of finance
and sales-type leases is similar to US GAAP. However, the local tax bureau continues to treat the Company&rsquo;s sales-type leases as
operating leases. Accordingly, the Company recorded deferred income taxes.&nbsp;</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company&rsquo;s subsidiaries
generate all of their income from their PRC operations. All of the Company&rsquo;s Chinese subsidiaries&rsquo; effective income tax rate
for 2020 and 2019 was 25%. Yinghua, Shanghai TCH, Xi&rsquo;an TCH, Huahong, Zhonghong and Erdos TCH file separate income tax returns.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">There is no income tax for companies
domiciled in the Cayman Islands. Accordingly, the Company&rsquo;s CFS do not present any income tax provisions related to Cayman Islands
tax jurisdiction, where Sifang Holding is domiciled.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The US parent company, CREG is
taxed in the US and, as of December 31, 2020, had net operating loss (&ldquo;NOL&rdquo;) carry forwards for income taxes of $1.21 million;
for federal income tax purposes, the NOL arising in tax years beginning after 2017 may only reduce 80% of a taxpayer&rsquo;s taxable
income, and may be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (&ldquo;the CARES Act&rdquo;)
issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily
repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The management believes the realization of benefits from these
losses may be uncertain due to the US parent company&rsquo;s continuing operating losses. Accordingly, a 100% deferred tax asset valuation
allowance was provided.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">As of December 31, 2020, the
Company&rsquo;s PRC subsidiaries had $43.40 million NOL that can be carried forward to offset future taxable income for five years from
the year the loss is incurred. The NOL was mostly from Xi&rsquo;an TCH, Erdos TCH and Zhonghong. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration
of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred
tax assets due to the recurring losses from operations of these entities, accordingly, the Company recorded a 100% deferred tax valuation
allowance for PRC NOL.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The following table reconciles
the U.S. statutory rates to the Company&rsquo;s effective tax rate for the years ended December 31, 2020 and 2019, respectively:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">U.S. statutory rates</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">21.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">(21.0</td><td style="width: 1%; text-align: left">)%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Tax rate difference &ndash; current provision</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5.1</td><td style="text-align: left">%</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3.4</td><td style="text-align: left">)%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Reversal of temporary difference due to disposal of Shenqiu</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">%</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(18.8</td><td style="text-align: left">)%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Permanent differences</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2.9</td><td style="text-align: left">%</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">2.0</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(29.0</td><td style="padding-bottom: 1.5pt; text-align: left">)%</td><td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">15.6</td><td style="padding-bottom: 1.5pt; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2pt">Tax (benefit) per financial statements</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 2pt; text-align: left">%</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">(25.6</td><td style="padding-bottom: 2pt; text-align: left">)%</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The provision for income tax
expense for the years ended December 31, 2020 and 2019 consisted of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Income tax expense &ndash; current</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="width: 76%; text-align: left; padding-bottom: 1.5pt">Income tax benefit &ndash; deferred</td><td style="width: 1%; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</td><td style="width: 1%; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">(3,024,807</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2pt">Total income tax benefit</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(3,024,807</td><td style="padding-bottom: 2pt; text-align: left">)</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>15. STOCK-BASED COMPENSATION PLAN</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Options to Employees and Directors</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On June 19, 2015, the stockholders
of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the &ldquo;Plan&rdquo;) at its annual meeting. The
total shares of Common Stock authorized for issuance during the term of the Plan is 124,626 (post-reverse stock split). The Plan was
effective immediately upon its adoption by the Board of Directors on April 24, 2015, subject to stockholder approval, and will terminate
on the earliest to occur of (i) the 10th anniversary of the Plan&rsquo;s effective date, or (ii) the date on which all shares available
for issuance under the Plan shall have been issued as fully-vested shares. The stockholders approved the Plan at their annual meeting
on June 19, 2015.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The following table summarizes
option activity with respect to employees and independent directors, and the number of options reflects the Reverse Stock Split effective
April 13, 2020:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of<BR> Shares</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average<BR> Exercise Price<BR>
    per Share (post-reverse stock split price)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted<BR> Average<BR> Remaining<BR>
    Contractual<BR> Term in Years</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Outstanding at January 1, 2019</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">900</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">54.3</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">5.41</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exercisable at January 1, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">900</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">54.3</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5.41</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Granted</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Exercised</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Forfeited</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Outstanding at December 31, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">900</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">54.3</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4.41</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Exercisable at December 31, 2019</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">900</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">54.3</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4.41</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Granted</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Exercised</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>Expired</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(400</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">102.0</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2pt">Outstanding at December 31, 2020</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">500</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16.1</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">6.32</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2pt">Exercisable at December 31, 2020</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">500</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">54.3</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 4pt double; text-align: right">6.32</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>16. STATUTORY RESERVES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">Pursuant to the corporate law
of the PRC effective January 1, 2006, the Company is only required to maintain one statutory reserve by appropriating from its after-tax
profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Surplus Reserve Fund</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company&rsquo;s Chinese subsidiaries
are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations, to a statutory surplus reserve
fund until such reserve balance reaches 50% of the Company&rsquo;s registered capital.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The surplus reserve fund is non-distributable
other than during liquidation and can be used to fund previous years&rsquo; losses, if any, and may be utilized for business expansion
or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the
par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of
the registered capital.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">During the year ended December
31, 2020, the Company transferred $629,330, which is 10% of Xi&rsquo;an TCH&rsquo;s net income to the statutory reverse. The maximum
statutory reserve amount has not been reached for any subsidiary. The table below discloses the statutory reserve amount in the currency
type registered for each Chinese subsidiary as of December 31, 2020 and 2019:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">Name&nbsp;of&nbsp;Chinese&nbsp;Subsidiaries</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Registered<BR> Capital</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Maximum<BR> Statutory&nbsp;<BR>
    Reserve<BR> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Statutory reserve at<BR> December 31,<BR>
    2020</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Statutory<BR> reserve at<BR> December 31,<BR>
    2019</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td colspan="2">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 24%; text-align: left">Shanghai TCH</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">29,800,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">14,900,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 1%">&nbsp;</td>
    <td style="text-align: center; width: 25%">&yen;6,564,303 ($1,003,859)</td><td style="width: 1%">&nbsp;</td>
    <td style="text-align: center; width: 25%">&yen;6,564,303 ($1,003,859)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Xi&rsquo;an TCH</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">202,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">101,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&yen;73,700,706 ($11,236,314)</td><td>&nbsp;</td>
    <td style="text-align: center">&yen;69,359,820 ($10,606,984)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Erdos TCH</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">120,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">60,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&yen;19,035,814 ($2,914,869)</td><td>&nbsp;</td>
    <td style="text-align: center">&yen;19,035,814 ($2,914,869)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Xi&rsquo;an Zhonghong</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">30,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">15,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">Did not accrue yet due to accumulated deficit</td><td>&nbsp;</td>
    <td style="text-align: center">Did not accrue yet due to accumulated deficit</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Shaanxi Huahong</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2,500,300</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">1,250,150</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">Did not accrue yet due to accumulated deficit</td><td>&nbsp;</td>
    <td style="text-align: center">Did not accrue yet due to accumulated deficit</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Zhongxun</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">35,000,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&yen;</td><td style="text-align: right">17,500,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: center">Did not accrue yet due to accumulated deficit</td><td>&nbsp;</td>
    <td style="text-align: center">Did not accrue yet due to accumulated deficit</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Common Welfare Fund</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The common welfare fund is a
voluntary fund to which the Company can transfer 5% to 10% of its net income. This fund can only be utilized on capital items for the
collective benefit of the Company&rsquo;s employees, such as construction of dormitories, cafeteria facilities, and other staff welfare
facilities. This fund is non-distributable other than upon liquidation. The Company does not participate in this fund.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>17. CONTINGENCIES</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">China maintains a &ldquo;closed&rdquo;
capital account, meaning companies, banks, and individuals cannot move money in or out of the country except in accordance with strict
rules. The People&rsquo;s Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate the flow of foreign exchange
in and out of the country. For inward or outward foreign currency transactions, the Company needs to make a timely declaration to the
bank with sufficient supporting documents to declare the nature of the business transaction. The Company&rsquo;s sales, purchases and
expense transactions are denominated in RMB and all of the Company&rsquo;s assets and liabilities are also denominated in RMB. The RMB
is not freely convertible into foreign currencies under the current law. Remittances in currencies other than RMB may require certain
supporting documentation in order to make the remittance.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company&rsquo;s operations
in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency
exchange. The Company&rsquo;s results may be adversely affected by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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    <!-- Field: /Page --><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>18. COMMITMENTS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Lease Commitment</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On November 20, 2017, Xi&rsquo;an
TCH entered into a lease for its office with a term from December 1, 2017 through November 30, 2020. The monthly rent is RMB 36,536 ($5,600)
with quarterly payment in advance. This lease was expired in November 2020. The Company entered a new lease contract for the same location
for a period from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536 ($5,600), to be paid every half year in advance.</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">For the years ended December
31, 2020 and 2019, the rental expense of the Company was $61,508 and $86,874 (including Beijing office rent of $19,674), respectively.&nbsp;</p>

<p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company adopted ASC 842 on
CFS on January 1, 2019. The components of lease costs, lease term and discount rate with respect of the office lease with an initial
term of more than 12 months are as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">Year Ended</td><td style="font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&nbsp;31,<BR> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-bottom: 2pt">Operating lease cost &ndash; amortization of ROU</td><td style="width: 1%; padding-bottom: 2pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">54,694</td><td style="width: 1%; padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2pt">Operating lease cost &ndash; interest expense on lease liability</td><td style="padding-bottom: 2pt">&nbsp;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">825</td><td style="padding-bottom: 2pt; text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Weighted Average Remaining Lease Term - Operating leases</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Weighted Average Discount Rate - Operating leases</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3</td><td style="text-align: left">%</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Employment Agreement</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On May 8, 2020, the Company entered
an employment agreement with Yongjiang Shi, the Company&rsquo;s CFO for a term of 24 months. The monthly salary is RMB 16,000 ($2,300).
The Company will grant the CFO no less than 5,000 shares of the Company&rsquo;s Common Stock annually.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I><U>Investment Banking Engagement Agreement</U></I></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">On October 10, 2019, the Company
entered an investment banking engagement agreement with an investment banker firm to engage them as the exclusive lead underwriter for
a registered securities offering of up to $20 million. The Company shall pay to the investment banker an equity retainer fee of 15,000
shares (post-reverse stock split) of the restricted Common Stock of the Company (10,000 shares was issued within 10 business days of
signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). The agreement expired in March 2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>19. SUBSEQUENT EVENTS</B></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">The Company follows the guidance
in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through&nbsp;the date the&nbsp;financial
statements were issued and determined the Company has the following material subsequent events:&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 23, 2021, the Company entered into
certain securities purchase agreements with several non-U.S. investors (the &ldquo;Purchasers&rdquo;), pursuant to which the Company
agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at&nbsp;$11.522 per share, which
is the five-day average closing price immediately prior to signing the Purchase Agreements.&nbsp;One of the purchaser is the Company&rsquo;s
CEO (also is the Company&rsquo;s Chairman), he purchased 1,000,000 common shares of the Company. On March 11, 2021, the Company received
approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase agreements, there was no any
fees paid in connection with this financing.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0; text-align: justify">&nbsp;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 2, 2021, the Company entered into a
Note Purchase Agreement with an institutional investor, pursuant to which the Company sold and issued to the Purchaser a Promissory Note
of $5,250,000. The Purchaser purchased the Note with an original issue discount of $250,000, which was recognized as a debt discount
and will be amortized using the interest method over the life of the note. The Note bears interest at 8% per annum and has a term of
24 months. All outstanding principal and accrued interest on the Note will become due and payable on April 1, 2023. The Company&rsquo;s
obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding
under the Note and being prepaid. Beginning on the date that is six months from the issue date of the Note, Purchaser shall have the
right to redeem any amount of this Note up to $825,000 per calendar month by providing written notice to the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 9, 20201, Xi&rsquo;an TCH, Xi&rsquo;an
Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement (termination agreement). Under the termination
agreement, the original buyback agreement entered on December 19, 2019 shall be terminated upon the effective date of the termination
agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from the buyers other than keeping
the CDQ WHPG station. The Company will record a gain of approximately $4.8 million from transferring the CDP WHPG station to HYREF as
partial repayment of the entrusted loan resulting from the termination of the buy-back agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</p>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>INDEX
TO FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; border-bottom: black 1.5pt solid; width: 9%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PAGE</B></FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#b_002">Consolidated
    Balance Sheets</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center">F-35</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#b_003">Consolidated
    Statements of Operations and Comprehensive Loss </A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center">F-36</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#b_004">Consolidated
    Statements of Stockholders&rsquo; Equity</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center">F-37</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#b_005">Consolidated
    Statements of Cash Flows</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center">F-38</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#b_006">Notes
    to Consolidated Financial Statements</A></FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="white-space: nowrap; text-align: center">F-39 - F-60</TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="b_002"></A>CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CONSOLIDATED
BALANCE SHEETS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">MARCH&nbsp;31, <BR>
    2021</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">DECEMBER&nbsp;31, <BR>
    2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>(UNAUDITED)</B></TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">CURRENT ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">144,071,303</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">107,804,013</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Accounts receivable, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">306,498</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">308,677</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">VAT receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">183,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,225</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,420</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Other receivables</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">30,513</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">35,687</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">144,646,517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108,203,797</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">NON-CURRENT ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Long term deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,680</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,799</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Operating lease right-of-use assets,
    net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">173,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Asset subject
    to buyback</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">28,712,742</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">28,916,924</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in; padding-bottom: 1.5pt">Total non-current
    assets</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">28,902,924</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">28,933,723</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">TOTAL ASSETS</TD><TD STYLE="font-weight: bold; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: right">173,549,441</TD><TD STYLE="padding-bottom: 2pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: right">137,137,520</TD><TD STYLE="padding-bottom: 2pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">LIABILITIES AND
    STOCKHOLDERS&rsquo; EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">CURRENT LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,537</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">76,074</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Taxes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,744,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,145,612</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Accrued interest on notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81,968</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,968</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Notes payable, net of unamortized
    OID of $125,605 and $144,355, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,024,395</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,005,645</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Accrued liabilities and other payables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">697,517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">726,696</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Operating lease liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">96,422</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Due to related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,466</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,440</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Interest payable on entrusted loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,072,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,144,228</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Entrusted loan
    payable</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">21,742,131</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">21,896,744</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,563,684</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,042,407</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">NONCURRENT LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Income tax payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,174,625</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,174,625</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Operating lease liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Long term payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">456,531</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">459,777</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Entrusted loan
    payable</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">304,354</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">306,518</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total noncurrent
    liabilities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">5,995,910</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">5,940,920</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,559,594</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,983,327</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">CONTINGENCIES AND COMMITMENTS (NOTE
    15 &amp; 16)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">STOCKHOLDERS&rsquo; EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Common stock, $0.001 par value; 10,000,000
    shares authorized, 3,177,050 shares issued and outstanding as of March 31, 2021 and December 31, 2020</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,177</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,177</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Shares to be issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">38,253,041</P></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119,748,999</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119,748,999</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Statutory reserve</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,156,580</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,155,042</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Accumulated other comprehensive income
    (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(866,723</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">273,440</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Accumulated
    deficit</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(43,305,227</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(43,026,465</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in; padding-bottom: 1.5pt">Total Company
    stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">128,989,847</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">92,154,193</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">TOTAL LIABILITIES
    AND EQUITY</TD><TD STYLE="font-weight: bold; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: right">173,549,441</TD><TD STYLE="padding-bottom: 2pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; font-weight: bold; text-align: right">137,137,520</TD><TD STYLE="padding-bottom: 2pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="b_003"></A>CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES<BR> </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(UNAUDITED)
</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">THREE MONTHS ENDED MARCH&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Contingent rental income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.25in">Interest income
    on sales-type leases</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total operating income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Operating expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 76%; text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">General
    and administrative</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">273,092</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">154,178</TD><TD STYLE="width: 1%; padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total operating
    expenses</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">273,092</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">154,178</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Loss from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(273,092</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(154,178</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Non-operating income (expenses)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Loss on note conversion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(103,167</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,696</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,006</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(82,086</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(355,244</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Other expense,
    net</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(617</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(12,968</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.375in; text-indent: -0.125in">Total non-operating
    income (expenses), net</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">993</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(444,373</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Loss before income tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(272,099</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(598,551</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Income tax
    expense</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">5,125</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Net loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(277,224</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(598,551</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Other comprehensive items</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.25in; text-indent: -0.125in">Foreign currency
    translation loss</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,140,163</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,341,276</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Comprehensive
    loss</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(1,417,387</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(1,939,827</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Basic and
    diluted weighted average shares outstanding</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">3,177,050</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">2,135,340</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; vertical-align: top; padding-left: 0.125in; text-indent: -0.125in">Basic and diluted
    loss per share</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(0.09</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(0.28</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD></TR>
</TABLE>


<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="b_004"></A>CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CONSOLIDATED
STATEMENTS OF STOCKHOLDERS&rsquo; EQUITY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>THREE
MONTHS ENDED MARCH 31, 2021 AND 2020</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(UNAUDITED)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Common Stock</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center"><B>Shares to</B></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Paid in</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Statutory</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Other Comprehensive (Loss) /</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Accumulated</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Shares</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><B>be issued</B></TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Capital</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Reserves</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Income</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Deficit</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 20%; text-align: left; text-indent: -0.125in; padding-left: 0.125in">Balance at December 31, 2020</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">3,177,050</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">3,177</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">119,748,999</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">15,155,042</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">273,440</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(43,026,465</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">92,154,193</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Net loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(277,224</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(277,224</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Shares to be issued</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,253,041</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,253,041</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Transfer to Statutory Reserves</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,538</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Foreign currency translation loss</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,140,163</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,140,163</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in">Balance at March 31, 2021</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3,177,050</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">3,177</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">38,253,041</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">199,748,999</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">15,156,580</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(866,723</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(43,305,227</TD><TD STYLE="padding-bottom: 4pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">128,989,847</TD><TD STYLE="padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>


<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 0.125in; text-indent: -0.125in"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Common Stock</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Paid in</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Statutory</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Other Comprehensive</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Accumulated</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 0.125in; text-indent: -0.125in"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Shares</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Amount</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Capital</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Reserves</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Loss</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Deficit</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; text-align: center"><B>Total</B></TD><TD STYLE="padding-bottom: 1.5pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 30%; text-align: left; padding-left: 0.125in; text-indent: -0.125in">Balance at December 31, 2019</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">2,032,721</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">2,033</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">116,682,374</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">14,525,712</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(6,132,614</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(46,447,959</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">78,629,546</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Net loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(598,551</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(598,551</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Issuance of common stock for stock compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,996</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,999</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Conversion of long-term notes into common shares</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">533,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">533,167</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">Foreign currency translation loss</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,341,276</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,341,276</TD><TD STYLE="text-align: left; padding-bottom: 1.5pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.125in; text-indent: -0.125in">Balance at March 31, 2020</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,179,387</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">2,179</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">117,226,394</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">14,525,712</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(7,473,890</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">(47,046,510</TD><TD STYLE="padding-bottom: 2pt; text-align: left">)</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">77,233,885</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;The accompanying notes are an integral part
of these consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="b_005"></A>CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>CONSOLIDATED
STATEMENTS OF CASH FLOWS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(UNAUDITED)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">THREE MONTHS ENDED MARCH&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">CASH FLOWS FROM OPERATING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 76%; text-align: left; padding-left: 0.25in; text-indent: -0.125in">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(277,224</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(598,551</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Adjustments to reconcile net loss to net cash provided
    by (used in) operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Amortization of OID and debt issuing costs of notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Stock compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,999</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Operating lease expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,903</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,374</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Loss on note conversion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,167</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.375in; text-indent: -0.125in">Changes in assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Collection of principal and interest on sales type leases
    for Pucheng systems</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,984,746</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,791,539</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,861</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">926</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Other receivables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,995</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">911</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Taxes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(587,673</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">818</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Payment of lease liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(33,807</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(15,705</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Interest payable on entrusted loan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">320,095</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.5in; text-indent: -0.125in">Accrued liabilities and other payables</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">38,139</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">22,701</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Net cash provided by (used in) operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(819,056</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,650,520</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in; text-indent: -0.125in">Shares to be issued</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">38,253,041</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in; text-indent: -0.125in">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">38,253,041</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in">EFFECT OF EXCHANGE RATE CHANGE
    ON CASH</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(1,166,695</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(843,328</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">NET INCREASE IN CASH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,267,290</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,807,192</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in">CASH, BEGINNING OF PERIOD</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">107,804,013</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">16,221,297</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.125in; text-indent: -0.125in">CASH, END OF PERIOD</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">144,071,303</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">55,028,489</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Supplemental cash flow data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.25in; text-indent: -0.125in">Income tax paid</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.25in; text-indent: -0.125in">Interest paid</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Supplemental disclosure of non-cash operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.25in; text-indent: -0.125in">Transfer of Tian&rsquo;an project
    from construction in progress to accounts receivable</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">23,814,532</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.25in; text-indent: -0.125in">Adoption of ASC 842-right-of-use asset</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">190,817</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.25in; text-indent: -0.125in">Adoption of ASC 842-operating lease
    liability</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">190,817</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in; text-indent: -0.125in">Supplemental disclosure of non-cash financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 4pt; padding-left: 0.25in; text-indent: -0.125in">Conversion of notes into common shares</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">430,000</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="b_006"></A>CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>MARCH
31, 2021 (UNAUDITED) AND DECEMBER 31, 2020 </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>1.
ORGANIZATION AND DESCRIPTION OF BUSINESS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
Recycling Energy Corporation (the &ldquo;Company&rdquo; or &ldquo;CREG&rdquo;) is incorporated in Nevada state. The Company, through
its subsidiaries, provides energy saving solutions and services, including selling and leasing energy saving systems and equipment to
customers, and project investment in the Peoples Republic of China (&ldquo;PRC&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s organizational chart as of March 31, 2021 is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_008.jpg" ALT="" STYLE="height: 521px; width: 750px"></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Erdos
TCH &ndash; Joint Venture</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 14, 2009, the Company formed a joint
venture (the &ldquo;JV&rdquo;) with Erdos Metallurgy Co., Ltd. (&ldquo;Erdos&rdquo;) to recycle waste heat from Erdos&rsquo; 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. (&ldquo;Erdos TCH&rdquo;) with a term of 20 years. Erdos contributed 7% of the total investment of the project, and Xi&rsquo;an
TCH Energy Technology Co., Ltd. (&ldquo;Xi&rsquo;an TCH&rdquo;) contributed 93%. On June 15, 2013, Xi&rsquo;an TCH and Erdos entered
into a share transfer agreement, pursuant to which Erdos sold its 7% ownership interest in the JV to Xi&rsquo;an TCH for $1.29 million
(RMB 8 million), plus certain accumulated profits. Xi&rsquo;an TCH paid the $1.29 million in July 2013 and, as a result, became the sole
stockholder of the JV. 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 started to charge Erdos
based on actual electricity sold at RMB 0.30 / KWH. The selling price of each KWH is determined annually based on prevailing market conditions.
Since May 2019, Erdos TCH has ceased its operations due to renovations and furnace safety upgrades of Erdos, and the Company initially
expected the resumption of operations in July 2020, but the resumption of operations was further delayed due to government&rsquo;s mandate
for Erdos to significantly lower its energy consumption per unit of GDP. Erdos and the municipal government are currently under discussion
for seeking the solution of achieving the energy saving target. During this period, Erdos will compensate Erdos TCH RMB 1 million ($145,460)
per month, until operations resume.&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, Erdos TCH has 30% ownership in DaTangShiDai (BinZhou) Energy Savings Technology Co., Ltd. (&ldquo;BinZhou Energy Savings&rdquo;),
30% ownership in DaTangShiDai DaTong Recycling Energy Technology Co., Ltd. (&ldquo;DaTong Recycling Energy&rdquo;), and 40% ownership
in DaTang ShiDai TianYu XuZhou Recycling Energy Technology Co, Ltd. (&ldquo;TianYu XuZhou Recycling Energy&rdquo;). These companies were
incorporated in 2012 but there have not been any operations since then nor has any registered capital contribution been made.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Shenqiu
Yuneng Biomass Power Generation Projects</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 28, 2011, Xi&rsquo;an TCH and Shenqiu entered into a BMPG Project Lease Agreement (the &ldquo;2011 Shenqiu Lease&rdquo;). Under
the 2011 Shenqiu Lease, Xi&rsquo;an TCH agreed to lease a set of 12 MW BMPG systems to Shenqiu at a monthly rental of $286,000 (RMB 1,800,000)
for 11 years.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 30, 2013, Xi&rsquo;an TCH and Shenqiu entered into a BMPG Project Lease Agreement (the &ldquo;2013 Shenqiu Lease&rdquo;). Under
the 2013 Shenqiu Lease, Xi&rsquo;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
repayment for a loan made by Xi&rsquo;an Zhonghong to Beijing Hongyuan Recycling Energy Investment Center, LLP (the &ldquo;HYREF&rdquo;)
on January 10, 2019 (see further discussion in Note 8); on January 4, 2019, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong
Bai (or &ldquo;Mr. Bai&rdquo;), a resident of China, entered into a Projects Transfer Agreement (the &ldquo;Agreement&rdquo;), pursuant
to which Xi&rsquo;an TCH transferred two BMGP in Shenqiu (&ldquo;Shenqiu Phase I and II Projects&rdquo;) to Mr. Bai for RMB 127,066,000
($18.55 million). As consideration for the transfer of the Shenqiu Phase I and II Projects to Mr. Bai (Note 8), Mr. Bai transferred all
the equity shares of his wholly owned company, Xi&rsquo;an Hanneng Enterprises Management Consulting Co. Ltd. (&ldquo;Xi&rsquo;an Hanneng&rdquo;)
to Beijing Hongyuan Recycling Energy Investment Center, LLP (the &ldquo;HYREF&rdquo;) as repayment for a loan made by Xi&rsquo;an Zhonghong
to HYREF on January 10, 2019. The transfer of the projects was completed on February 15, 2019. The Company recorded $208,359 loss from
the transfer during the year ended December 31, 2019. Xi&rsquo;an Hanneng was expected to own 47,150,000 shares of Xi&rsquo;an Huaxin
New Energy Co., Ltd for the repayment of Shenqiu system and Huayu system. However, Xi&rsquo;an Hanneng was not able to obtain all the
Huaxin shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 20, 2019, Mr. Bai and
all the related parties therefore agreed to have Mr. Bai instead make a payment in cash for the transfer price of Shenqiu (see Note 8
for detail).&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Chengli
Waste Heat Power Generation Projects</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 19, 2013, Xi&rsquo;an TCH formed a new company, &ldquo;Xi&rsquo;an Zhonghong New Energy Technology Co., Ltd.&rdquo; (&ldquo;Zhonghong&rdquo;),
of which it owns 90% of Zhonghong, with HYREF owning the other 10%. Zhonghong is engaged to provide energy saving solution and services,
including constructing, selling and leasing energy saving systems and equipment to customers. On December 29, 2018, Shanghai TCH entered
into a Share Transfer Agreement with HYREF, pursuant to which HYREF transferred its 10% ownership in Zhonghong to Shanghai TCH for RMB
3 million ($0.44 million). The transfer was completed on January 22, 2019.&nbsp;The Company owns 100% of Xi&rsquo;an Zhonghong after
the transaction.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 24, 2013, Zhonghong entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching Waste Heat Power Generation
Project) with Boxing County Chengli Gas Supply Co., Ltd. (&ldquo;Chengli&rdquo;). 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 &ldquo;Chengli Project&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 29, 2018, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed
Assets Transfer Agreement, pursuant to which Xi&rsquo;an Zhonghong transferred Chengli CDQ WHPG station (&ldquo;the Station&rdquo;) as
the repayment for the loan of RMB 188,639,400 ($27.54 million) to HYREF. Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, Guohua Ku and Chonggong
Bai also agreed to a Buy Back Agreement for the Station when certain conditions are met (see Note 8). The transfer of the Station was
completed January 22, 2019, at which time the Company recorded a $624,133 loss from this transfer. Since the original terms of the Buy
Back Agreement are still valid, and the Buy Back possibility could occur; therefore, the loan principal and interest and the corresponding
asset of the Station cannot be derecognized due to the existence of Buy Back clauses (see Note 8 for detail).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Tianyu
Waste Heat Power Generation Project</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 19, 2013, Zhonghong entered into a Cooperative Agreement (the &ldquo;Tianyu Agreement&rdquo;) for Energy Management of CDQ and CDQ
WHPG Projects with Jiangsu Tianyu Energy and Chemical Group Co., Ltd. (&ldquo;Tianyu&rdquo;). 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 &ndash; Xuzhou
Tian&rsquo;an Chemical Co., Ltd. (&ldquo;Xuzhou Tian&rsquo;an&rdquo;) and Xuzhou Huayu Coking Co., Ltd. (&ldquo;Xuzhou Huayu&rdquo;)
&ndash; to be located at Xuzhou Tian&rsquo;an and Xuzhou Huayu&rsquo;s respective locations (the &ldquo;Tianyu Project&rdquo;). 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 term of the Tianyu Agreement is 20 years. The construction of the Xuzhou Tian&rsquo;an Project is anticipated to be completed
by the second quarter of 2020. The Xuzhou Huayu Project has been on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd. and
local residents on certain pollution-related issues.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 4, 2019, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement (the &ldquo;Agreement&rdquo;),
pursuant to which Xi&rsquo;an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking
Co., Ltd. (&ldquo;Xuzhou Huayu Project&rdquo;) to Mr. Bai for RMB 120,000,000 ($17.52 million). Mr. Bai agreed that as consideration
for the transfer of the Xuzhou Huayu Project to him, as well as Shenqiu discussed above, he would transfer all the equity shares of his
wholly owned company, Xi&rsquo;an Hanneng, to HYREF as repayment for the loan made by Xi&rsquo;an Zhonghong to HYREF. (Note 8). The transfer
of the project was completed on February 15, 2019. The Company recorded $397,033 loss from this transfer during the year ended December
31, 2019.&nbsp;On January 10, 2019, Mr. Chonggong Bai transferred all the equity shares of his wholly owned company, Xi&rsquo;an Hanneng,
to HYREF as repayment for the loan. Xi&rsquo;an Hanneng was expected to own 47,150,000 shares of Xi&rsquo;an Huaxin New Energy Co., Ltd
for the repayment of Huayu system and Shenqiu system. As of September 30, 2019, Xi&rsquo;an Hanneng already owned 29,948,000 shares of
Huaxin, but was not able to obtain the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018
annual report. On December 20, 2019, Mr. Bai and all the related parties agreed to have Mr. Bai instead making a payment in cash for
the transfer price of Huayu (see Note 8 for detail).&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 10, 2020, Zhonghong, Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights
and interests of Xuzhou Tian&rsquo;an Project to Tianyu for RMB 170 million including VAT ($24.37 million) in three installment payments.
The 1st installment payment of RMB 50 million ($7.17 million) to be paid within 20 working days after the contract is signed. The 2nd
installment payment of RMB 50 million ($7.34 million) is to be paid within 20 working days after completion of the project construction
but no later than July 31, 2020. The final installment payment of RMB 70 million ($10.28 million) is to be paid before December 31, 2020.
The Company received the payment in full for Tian&rsquo;an Project as of December 31, 2020.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Zhongtai
Waste Heat Power Generation Energy Management Cooperative Agreement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 6, 2013, Xi&rsquo;an TCH entered into a CDQ and WHPG Energy Management Cooperative Agreement (the &ldquo;Zhongtai Agreement&rdquo;)
with Xuzhou Zhongtai Energy Technology Co., Ltd. (&ldquo;Zhongtai&rdquo;), a limited liability company incorporated in Jiangsu Province,
China.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Zhongtai Agreement, Xi&rsquo;an TCH was to 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&rsquo;an TCH is also to build a furnace to generate steam from the smoke pipeline&rsquo;s waste
heat and sell the steam to Zhongtai.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2016, Xi&rsquo;an TCH entered into a Transfer Agreement of CDQ and a CDQ WHPG system with Zhongtai and Xi&rsquo;an Huaxin (the
&ldquo;Transfer Agreement&rdquo;). Under the Transfer Agreement, Xi&rsquo;an TCH agreed to transfer to Zhongtai all of the assets associated
with the CDQ Waste Heat Power Generation Project (the &ldquo;Project&rdquo;), which is under construction pursuant to the Zhongtai Agreement.
Additionally, Xi&rsquo;an TCH agreed to transfer to Zhongtai the Engineering, Procurement and Construction (&ldquo;EPC&rdquo;) Contract
for the CDQ Waste Heat Power Generation Project which Xi&rsquo;an TCH had entered into with Xi&rsquo;an Huaxin in connection with the
Project. Xi&rsquo;an Huaxin will continue to construct and complete the Project and Xi&rsquo;an TCH agreed to transfer all its rights
and obligations under the EPC Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi&rsquo;an
TCH RMB 167,360,000 ($25.77 million) including (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&rsquo;an TCH according to the following schedule: (a) RMB 50,000,000 ($7.70 million) was to be paid within
20 business days after the Transfer Agreement was signed; (b) RMB 30,000,000 ($4.32 million) was to be paid within 20 business days after
the Project was completed, but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) was to be paid no later than July
30, 2017. Xuzhou Taifa Special Steel Technology Co., Ltd. (&ldquo;Xuzhou Taifa&rdquo;) guaranteed the payments from Zhongtai to Xi&rsquo;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&rsquo;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. The Company recorded a $2.82 million loss from this transaction in 2016. In 2016, Xi&rsquo;an
TCH had received the first payment of $7.70 million and the second payment of $4.32 million. However, the Company received a repayment
commitment letter from Zhongtai on February 23, 2018, in which Zhongtai committed to pay the remaining payment of RMB 87,360,000 ($13.45
million) no later than the end of July 2018; in July 2018, Zhongtai and the Company reached a further oral agreement to extend the repayment
term of RMB 87,360,000 ($13.45 million) by another two to three months. In January 2020, Zhongtai paid RMB 10 million ($1.41 million);
in March 2020, Zhongtai paid RMB 20 million ($2.82 million); in June 2020, Zhongtai paid RMB 10 million ($1.41 million); and in December
2020, Zhongtai paid RMB 30 million ($4.28 million), which was payment in full. Accordingly, the Company reversed the bad debt expense
of $5.80 million in 2020 which had been recorded earlier.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Formation
of Zhongxun</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 24, 2014, Xi&rsquo;an TCH incorporated a subsidiary, Zhongxun Energy Investment (Beijing) Co., Ltd. (&ldquo;Zhongxun&rdquo;) 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&rsquo;an
TCH and will be mainly engaged in project investment, investment management, economic information consulting, and technical services.
Zhongxun has not yet commenced operations nor has any capital contribution been made as of the date of this report.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Formation
of Yinghua</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 11, 2015, the Company incorporated a subsidiary, Shanghai Yinghua Financial Leasing Co., Ltd. (&ldquo;Yinghua&rdquo;) 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 nor
has any capital contribution been made as of the date of this report.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Reverse
Stock Split</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 13, 2020, the Company filed a certificate of change (&ldquo;Certificate of Change&rdquo;) with the Secretary of State of the State
of Nevada, pursuant to which, on April 13, 2020, the Company effected a reverse stock split of its Common Stock, at a rate of 1-for-10,
accompanied by a corresponding decrease in the Company&rsquo;s issued and outstanding shares of Common Stock (the &ldquo;Reverse Stock
Split&rdquo;). The accompanying consolidated financial statements and related disclosure in for periods prior to the Reverse Stock Split
have been retroactively restated to reflect this reverse stock split.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Other
Events</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2019, a novel strain of coronavirus
(COVID-19) was reported and the World Health Organization has declared the outbreak to constitute a &ldquo;Public Health Emergency of
International Concern.&rdquo; This pandemic, which continues to spread to additional countries, and is disrupting supply chains and affecting
production and sales across a range of industries as a result of quarantines, facility closures, and travel and logistics restrictions
in connection with the outbreak. However, as a result of PRC government&rsquo;s effort on disease control, most cities in China were
reopened, the outbreak in China is under the control. As of this report date, there are some new Covid-19 cases discovered in a few provinces
of China, however, the number of new cases is not significant due to PRC government&rsquo;s strict control.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 22, 2020, Shanghai TCH entered into an Equity Acquisition Agreement with Xi&rsquo;an Taiying Energy Saving Technology Co., Ltd.,
a PRC company (&ldquo;Xi&rsquo;an Taiying&rdquo;) and its three shareholders to purchase all of the issued and outstanding shares of
stock of Xi&rsquo;an Taiying. The purchase price for said shares shall consist of (i) 619,525 shares of common stock at an issuance price
of $4.37 per share, (ii) 60,000,000 shares of Series A convertible&nbsp;stock and (iii) a cash payment of RMB 1,617,867,026 (approximately
$247 million at a conversion rate of 1:6.55). The shares shall be issued within 15 business days after approval by the Board of Directors
and/or shareholders of the Company and Nasdaq approval and the cash shall be paid in three tranches &ndash; RMB 390 million (approximately
$59.5 million) within 10 days after the agreement is executed, RMB 300 million (approximately $45.8 million) by March 31, 2021 and RMB
927,867,026 (approximately $141.7 million) within 10 days after the shares of Xi&rsquo;an Taiying are registered to Buyer. As of the
date of this report, the Company has not obtained and there is no assurance that the Company will be able to obtain necessary approval
to proceed with the transaction. In addition, the Company is currently renegotiating the payment terms with the sellers for paying less
shares but does not know when the renegotiation will be completed.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Basis
of Presentation</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
accompanying unaudited financial information as of and for the three months ended March 31, 2021 and 2020 has been prepared in accordance
with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Quarterly Report
on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting
only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position
at such date and the operating results and cash flows for such periods. Operating results for the three months ended March 31, 2021 are
not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. The interim
consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the
Company&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, previously filed with the SEC on April 15, 2021.</FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Basis
of Consolidation</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
CFS include the accounts of CREG and its subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. (&ldquo;Yinghua&rdquo;) and Sifang
Holdings; Sifang Holdings&rsquo; wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. (&ldquo;Huahong&rdquo;) and Shanghai
TCH Energy Tech Co., Ltd. (&ldquo;Shanghai TCH&rdquo;); Shanghai TCH&rsquo;s wholly-owned subsidiary, Xi&rsquo;an TCH Energy Tech Co.,
Ltd. (&ldquo;Xi&rsquo;an TCH&rdquo;); and Xi&rsquo;an TCH&rsquo;s subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd (&ldquo;Erdos
TCH&rdquo;), 100% owned by Xi&rsquo;an TCH, 2) Zhonghong, 90% owned by Xi&rsquo;an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun,
100% owned by Xi&rsquo;an TCH. Substantially all the Company&rsquo;s revenues are derived from the operations of Shanghai TCH and its
subsidiaries, which represent substantially all the Company&rsquo;s consolidated assets and liabilities as of March 31, 2021. However,
there was no revenue for the Company for the three months ended March 31, 2021. All significant inter-company accounts and transactions
were eliminated in consolidation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Uses
and Sources of Liquidity</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the three months ended March 31, 2021, the
Company had a net loss of $0.28 million. For the three months ended March 31, 2020, the Company had net loss of $0.60 million. The Company
had an accumulated deficit of $43.31 million as of March 31, 2021. The Company disposed all of its systems and currently holds only five
power generating systems through Erdos TCH, the five power generating systems are currently ceased production for seeking the solution
of meeting the energy saving target. The Company is in the process of transforming and expanding into an energy storage integrated solution
provider. The Company plans to pursue disciplined and targeted expansion strategies for market areas the Company currently does not serve.
The Company actively seeks and explores opportunities to apply energy storage technologies to new industries or segments with high growth
potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations,&nbsp;remote islands
without electricity,&nbsp;and smart energy cities with multi-energy supplies.&nbsp;The Company had cash of $144.07 million as of March
31, 2021. The Company&rsquo;s cash flow forecast indicate it will have sufficient cash to fund its operations for the next 12 months
from the date of issuance of these financial statements.&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The historical operating results indicate the
Company has recurring losses from operations which rise the question related to the Company&rsquo;s ability to continue as a going concern.
However, the Company had $144.07 million cash on hand at March 31, 2021 as a result of collections of the full payments from all the
projects that had been disposed earlier.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
ability of the Company to continue as a going concern is dependent upon the Company&rsquo;s ability to further implement its business
plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering, or debt financing
including bank loans. The consolidated financial statements do not include any adjustments that might result from the outcome of these
uncertainties.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Use
of Estimates</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
preparing these CFS in accordance with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets
and liabilities in the balance sheets as well as revenues and expenses during the period reported. Actual results may differ from these
estimates.&nbsp;On an on-going basis, management evaluates their estimates, including those related to allowances for bad debt and inventory
obsolescence, impairment loss on fixed assets and construction in progress, income taxes, and contingencies and litigation. Management
bases their estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other resources.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Revenue
Recognition</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>A)</I>&nbsp;<I>Sales-type
Leasing and Related Revenue Recognition</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 1, 2019, the Company adopted Financial Accounting Standards Board (&ldquo;FASB&rdquo;) Accounting Standards Codification (&ldquo;ASC&rdquo;)
Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial
application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC Topic
842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under
Topic 840. (See Operating lease below as relates to the Company as a lessee). The Company&rsquo;s sales type lease contracts for revenue
recognition fall under ASC 842. During the three months ended March 31, 2021 and 2020, the Company did not sell any new power generating
projects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company constructs and leases waste energy recycling power generating projects to its customers. The Company typically transfers legal
ownership of the waste energy recycling power generating projects to its customers at the end of the lease. Prior to January 1, 2019,
the investment in these projects was recorded as investment in sales-type leases in accordance with ASC Topic 840<I>, &ldquo;Lease</I>s<I>,&rdquo;</I>&nbsp;and
its various amendments and interpretations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company finances construction of waste energy recycling power generating projects. The sales and cost of sales are recognized at the
inception of the lease, which is when the control is transferred to the lessee. The Company accounts for the transfer of control as a
sales type lease in accordance with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of
payments is probable. This is in accordance with the revenue recognition principle in ASC 606 - Revenue from contracts with customers.
The investment in sales-type leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated
executory cost. Minimum lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee).
The discount rate implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments
consist of the gross lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over
the lease term to produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception
of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction
of receivables. Revenue is recognized net of value-added tax.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><I>B)</I>&nbsp;<I>Contingent
Rental Income</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0">The Company records income from actual electricity
generated of each project in the period the income is earned, which is when the electricity is generated. Contingent rent is not part
of minimum lease payments.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Operating
Leases</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on
the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the
rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate
based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use
(&ldquo;ROU assets&rdquo;) assets represent the Company&rsquo;s right to control the use of an identified asset for the lease term and
lease liabilities represent the Company&rsquo;s obligation to make lease payments arising from the lease. ROU assets are generally recognized
based on the amount of the initial measurement of the lease liability. The lease has remaining lease term of approximately 2.75 years.
Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted
under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated
with the Company&rsquo;s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize
the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">ROU
assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject
to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">ROU
assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent
from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used,
which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets
and liabilities. At March 31, 2021, the ROU was $173,502.The Company recognized no impairment of ROU assets as of March 31, 2021.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
leases are included in operating lease right-of-use assets and operating lease liabilities (current and non-current), on the consolidated
balance sheets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Cash</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
include cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original
maturity of three months or less as of the purchase date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Accounts
Receivable</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition
of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends
and changes in customer payment patterns to evaluate the adequacy of these reserves.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2021 and December 31, 2020, the
Company had gross accounts receivable of $340,553 and $342,974 of Erdos TCH for electricity sold, respectively. As of March 31, 2021
and December 31, 2020, the Company had bad debt allowance of $34,055 and $34,297 for Erdos TCH due to the customer not making the payments
as scheduled, respectively.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Concentration
of Credit Risk</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash includes cash on hand and demand deposits
in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are covered by insurance
up to RMB 500,000 (US$76,000) per bank. Any balance over RMB 500,000 (US$76,000) per bank in PRC will not be covered. At March 31, 2021,
cash held in the PRC bank of $143,935,525 was not covered by such insurance. The Company has not experienced any losses in such accounts.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The
Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers&rsquo;
financial condition and customer payment practices to minimize collection risk on accounts receivable.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
operations of the Company are in the PRC. Accordingly, the Company&rsquo;s business, financial condition and results of operations may
be influenced by the political, economic and legal environments in the PRC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Property
and Equipment</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property
and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred;
additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method over the estimated lives as follows:&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; width: 89%; text-align: left; text-indent: -0.25in">Vehicles</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2
    - 5 years</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.25in">Office and Other Equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2
    - 5 years</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.25in">Software</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2
    - 3 years</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Impairment
of Long-lived Assets</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with FASB ASC Topic 360, <I>&ldquo;Property, Plant, and Equipment</I>,&rdquo; the Company reviews its long-lived assets, including
property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may
not be fully recoverable. If the total expected undiscounted future net cash flows are less than the carrying amount of the asset, a
loss is recognized for the difference between the fair value and carrying amount of the asset. The Company recorded $0 asset impairment
loss for the three months ended March 31, 2021 and 2020.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Cost
of Sales</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
of sales consists primarily of the direct material of the power generating system and expenses incurred directly for project construction
for sales-type leasing and sales tax and additions for contingent rental income.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Income
Taxes</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Income
taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences
in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets
and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated
with tax positions, accounting for income taxes in interim periods, and income tax disclosures.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination
by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position
that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more
than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits
in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling,
general and administrative expenses in the statement of income.&nbsp;At March 31, 2021 and December 31, 2020, the Company did not take
any uncertain positions that would necessitate recording a tax related liability.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Statement
of Cash Flows</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with FASB ASC Topic 230,&nbsp;<I>&ldquo;Statement of Cash Flows,&rdquo;</I>&nbsp;cash flows from the Company&rsquo;s operations
are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash
flows may not necessarily agree with changes in the corresponding balances on the balance sheet.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Fair
Value of Financial Instruments</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
certain of the Company&rsquo;s financial instruments, including cash and equivalents, restricted cash, accounts receivable, other receivables,
accounts payable, accrued liabilities and short-term debts, the carrying amounts approximate their fair values due to their short maturities.
Receivables on sales-type leases are based on interest rates implicit in the lease.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">FASB
ASC Topic 820,&nbsp;<I>&ldquo;Fair Value Measurements and Disclosures,&rdquo;</I>&nbsp;requires disclosure of the FV of financial instruments
held by the Company. FASB ASC Topic 825,&nbsp;<I>&ldquo;Financial Instruments,&rdquo;</I>&nbsp;defines FV, and establishes a three-level
valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported
in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable
estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and
their current market rate of interest. The three levels of valuation hierarchy are defined as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in; text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in; text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
    1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in; text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in; text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
    2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
    are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.</FONT></TD></TR>
</TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in; text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 0.25in; text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
    3 inputs to the valuation methodology are unobservable and significant to FV measurement.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
on January 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement: Disclosure Framework-Changes to the Disclosure Requirements
for Fair Value Measurement, which modifies the disclosure requirements for Level&nbsp;1, Level&nbsp;2 and Level&nbsp;3 instruments in
the FV hierarchy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC 480,&nbsp;<I>&ldquo;Distinguishing
Liabilities from Equity,&rdquo;</I>&nbsp;and ASC 815,&nbsp;<I>&ldquo;Derivatives and Hedging.&rdquo;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and December 31, 2020, the Company did not have any long-term debt obligations; and the Company did not identify any
assets or liabilities that are required to be presented on the balance sheet at FV.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Stock-Based
Compensation</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, &ldquo;Compensation &ndash;
Stock Compensation&rdquo;, which requires that share-based payment transactions with employees be measured based on the grant-date fair
value of the equity instrument issued and recognized as compensation expense over the requisite service period.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50,
&ldquo;Equity-Based Payments to Non-employees&rdquo;. Share-based compensation associated with the issuance of equity instruments to
non-employees is measured at the fair value of the equity instrument issued or committed to be issued, as this is more reliable than
the fair value of the services received. The fair value is measured at the date that the commitment for performance by the counterparty
has been reached or the counterparty&rsquo;s performance is complete.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
on January 1, 2020, the Company adopted ASU 2018-07, &ldquo;Compensation &ndash; Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting,&rdquo; which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods
and services from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance
on inputs to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based payment
transactions in which a grantor acquires goods or services to be used or consumed in a grantor&rsquo;s own operations by issuing share-based
payment awards. The adoption of ASU 2018-07 did not have an impact on the Company&rsquo;s financial statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Basic
and Diluted Earnings per Share</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company presents net income (loss) per share (&ldquo;EPS&rdquo;) in accordance with FASB ASC Topic 260,&nbsp;<I>&ldquo;Earning Per Share.&rdquo;</I>&nbsp;Accordingly,
basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of
shares outstanding, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income by the weighted-average
number of common shares outstanding as well as common share equivalents outstanding for the period determined using the treasury-stock
method for stock options and warrants and the if-converted method for convertible notes. The Company made an accounting policy election
to use the if-converted method for convertible securities that are eligible to receive common stock dividends, if declared. Diluted EPS
reflect the potential dilution that could occur based on the exercise of stock options or warrants or conversion of convertible securities
using the if-converted method.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended March 31, 2021 and 2020, the basic and diluted loss per share were the same due to the anti-dilutive features
of the warrants and options. For the three months ended March 31, 2021 and 2020, 31,311 shares purchasable under warrants and options
were excluded from the EPS calculation as these were not dilutive due to the exercise price was more than the stock market price.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Foreign
Currency Translation and Comprehensive Income (Loss)</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s functional currency is the Renminbi (&ldquo;RMB&rdquo;). For financial reporting purposes, RMB were translated into United
States Dollars (&ldquo;USD&rdquo; or &ldquo;$&rdquo;) as the reporting currency. Assets and liabilities are translated at the exchange
rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the
reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component
of stockholders&rsquo; equity as &ldquo;Accumulated other comprehensive income.&rdquo; Gains and losses resulting from foreign currency
transactions are included in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after
the balance sheet date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows FASB ASC Topic 220,&nbsp;<I>&ldquo;Comprehensive Income.&rdquo;</I>&nbsp;Comprehensive income is comprised of net income
and all changes to the statements of stockholders&rsquo; equity, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Segment
Reporting</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">FASB
ASC Topic 280,&nbsp;<I>&ldquo;Segment Reporting,&rdquo;</I>&nbsp;requires use of the &ldquo;management approach&rdquo; model for segment
reporting. The management approach model is based on the way a company&rsquo;s management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. FASB ASC Topic 280 has no effect on the Company&rsquo;s CFS
as substantially all of the Company&rsquo;s operations are conducted in one industry segment. All of the Company&rsquo;s assets are located
in the PRC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>New
Accounting Pronouncements</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial
assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill
impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting
unit&rsquo;s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on
a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting
periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting
this standard on its consolidated financial statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2020, the FASB issued ASU 2020-04,&nbsp;Reference Rate Reform (Topic 848)&nbsp;(&ldquo;ASU 2020-04&rdquo;). ASU 2020-04 contains
practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance
in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate
the impact of the guidance and may apply the elections as applicable as changes in the market occur.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
August 2020, the FASB issued ASU 2020-06,&nbsp;Debt - Debt with Conversion and Other Options (Subtopic 470- 20)&nbsp;and&nbsp;Derivatives
and Hedging - Contracts in Entity&rsquo;s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity&rsquo;s
Own Equity&nbsp;(&ldquo;ASU 2020-06&rdquo;), which simplifies the accounting for certain financial instruments with characteristics of
liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing
the existing guidance in ASC 470-20,&nbsp;Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial
conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises
the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both
indexed to the issuer&rsquo;s own stock and classified in stockholders&rsquo; equity, by removing certain criteria required for equity
classification; and (3) revises the guidance in ASC 260,&nbsp;Earnings Per Share, to require entities to calculate diluted earnings per
share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes
of calculating diluted EPS when an instrument may be settled in cash or shares.&nbsp;For SEC filers, excluding smaller reporting companies,
ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective
for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance
as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently
evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public
Accountants, and the SEC did not or are not believed by management to have a material impact on the Company&rsquo;s present or future
CFS.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>3.
OTHER RECEIVABLES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021, other receivables mainly consisted of (i) advances to third parties of $7,609, bearing no interest, payable upon demand,
ii) advance to employees of $7,584, iii) advance to suppliers of $2,737 and (iv) others of $12,583 including social insurance receivable
of $5,083.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2020, other receivables mainly consisted of (i) advances to third parties of $7,663, bearing no interest, payable upon
demand, ii) advance to employees of $11,011, iii) advance to suppliers of $4,791 and (iv) others of $12,222 including social insurance
receivable of $4,579.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>4.
ASSET SUBJECT TO BUYBACK </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and December 31, 2020, the Company had asset subject to buyback of $28.71 million and $28.92 million, respectively,
which was for the Chengli project.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Chengli project finished construction, and
was transferred to the Company&rsquo;s fixed assets at a cost of $35.24 million (without impairment loss) and ready to be put into operation
as of December 31, 2018. On January 22, 2019, Xi&rsquo;an Zhonghong completed the transfer of Chengli CDQ WHPG project as the partial
repayment for the loan and accrued interest of RMB 188,639,400 ($27.54 million) to HYREF (see Note 8). However, because the loan was
not deemed repaid due to the buyback provision (See Note 8 for detail), the Company kept the loan and the Chengli project recognized
in its CFS as of March 31, 2021 and December 31, 2020.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5.
TAXES PAYABLE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Taxes
payable consisted of the following as of March 31, 2021 and 2020:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.25in">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; width: 76%; text-align: left; text-indent: -0.25in">Income tax &ndash; current</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">2,744,539</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">2,746,757</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.25in">Value-added tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">322,652</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -0.25in">Other taxes</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">111</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">76,203</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.25in">Total &ndash; current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,744,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,145,612</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; padding-bottom: 4pt; text-indent: -0.25in">Income tax &ndash;
    noncurrent</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">5,174,625</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">5,174,625</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Income
tax payable included $7.61 million ($2.44 million included in current above and $5.17 million noncurrent) from recording the estimated
one-time transition tax on post-1986 foreign unremitted earnings under the Tax Cut and Jobs Act signed on December 22, 2017. An election
is available for the U.S. shareholders of a foreign company to pay the tax liability in installments over a period of eight years with
8% of net tax liability in the first five years, 15% in the sixth year, 20% in the seventh year, and 25% in the eighth year. The Company
made such an election.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>6.
ACCRUED LIABILITIES AND OTHER PAYABLES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accrued
liabilities and other payables consisted of the following as of March 31, 2021 and December 31, 2020:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="vertical-align: bottom; text-align: center; padding-left: 0.125in; text-indent: -0.125in">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; width: 76%; text-align: left; padding-left: 0.125in; text-indent: -0.125in">Education and union fund
    and social insurance payable</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">371,102</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">373,740</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left; padding-left: 0.125in; text-indent: -0.125in">Consulting and legal expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,090</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,090</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-align: left; padding-left: 0.125in; text-indent: -0.125in">Accrued payroll and welfare</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">253,597</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">255,278</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in">Other</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">41,728</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">66,588</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-align: left; padding-bottom: 4pt; padding-left: 0.125in; text-indent: -0.125in">Total</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">697,517</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">726,696</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>7.
DEFERRED TAX, NET</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred
tax assets resulted from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with
US GAAP, interest income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not
meet revenue recognition in accordance with US GAAP, accrued employee social insurance that can be deducted for tax purposes in the future,
and the difference between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part
of cost of systems in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net
investment in sales-type leases.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and December 31, 2020, deferred tax assets consisted of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 0.125in; vertical-align: top; text-align: left; text-indent: -0.125in">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; width: 76%; text-align: left; text-indent: -0.125in">Accrued expenses</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">69,525</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">70,019</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.125in">Write-off Erdos TCH net investment
    in sales-type leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,954,586</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,155,300</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.125in">US NOL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">310,424</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254,035</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in; vertical-align: top; text-align: left; text-indent: -0.125in">PRC NOL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,934,511</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,849,690</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; vertical-align: top; text-align: left; text-indent: -0.125in">Total deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,269,047</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,329,044</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.125in; vertical-align: top; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in">Less: valuation
    allowance for deferred tax assets</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(17,269,047</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(17,329,044</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.125in; vertical-align: top; text-align: left; padding-bottom: 4pt; text-indent: -0.125in">Deferred tax
    assets, net</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>8.
LOAN PAYABLE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Entrusted
Loan Payable (HYREF Loan)</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
HYREF Fund was established in July 2013 with a total fund size of RMB 460 million ($77 million) invested in Xi&rsquo;an Zhonghong for
Zhonghong&rsquo;s three new CDQ WHPG projects. The HYREF Fund invested RMB 3 million ($0.5 million) as an equity investment and RMB 457
million ($74.5 million) as a debt investment in Xi&rsquo;an Zhonghong; in return for such investments, the HYREF Fund was to receive
interest from Zhonghong for the HYREF Fund&rsquo;s debt investment. The loan was collateralized by the accounts receivable and the fixed
assets of Shenqiu Phase I and II power generation systems; the accounts receivable and fixed assets of Zhonghong&rsquo;s three CDQ WHPG
systems; and a 27 million RMB ($4.39 million) capital contribution made by Xi&rsquo;an TCH in Zhonghong. Repayment of the loan (principal
and interest) was also jointly and severally guaranteed by Xi&rsquo;an TCH and the Chairman and CEO of the Company. In the fourth quarter
of 2015, three power stations of Erdos TCH were pledged to Industrial Bank as an additional guarantee for the loan to Zhonghong&rsquo;s
three CDQ WHPG systems. In 2016, two additional power stations of Erdos TCH and Pucheng Phase I and II systems were pledged to Industrial
Bank as an additional guarantee along with Xi&rsquo;an TCH&rsquo;s equity in Zhonghong.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The term of this loan was for 60 months from
July 31, 2013 to July 30, 2018, with an interest rate of 12.5%. On August 6, 2016, Zhonghong was required to repay principal of RMB 280
million ($42.22 million), of which the Company paid RMB 50 million ($7.54 million); while on August 6, 2017, Zhonghong was initially
supposed to repay principal of RMB 100 million ($16.27 million) and on July 30, 2018, Zhonghong was initially supposed to repay the remainder
of RMB 77 million ($12.52 million). During the term, Zhonghong was to maintain a minimal funding level and capital level in its designated
account with the Supervising Bank to make sure it has sufficient funds to make principal payments when they are due. Notwithstanding
the requirements, the HYREF Fund and Supervising Bank verbally notified Zhonghong from the beginning that it was unlikely that they would
enforce these requirements for the purpose of the efficient utilization of working capital. The Company had paid RMB 50 million ($7.54
million) of the RMB 280 million ($42.22 million), and on August 5, 2016, the Company entered into a supplemental agreement with the lender
to extend the due date of the remaining RMB 230 million ($34.68 million) of the original RMB 280 million ($45.54 million) to August 6,
2017. During the year ended December 31, 2017, the Company negotiated with the lender again to further extend the remaining loan balance
of RMB 230 million ($34.68 million), RMB 100 million ($16.27 million), and RMB 77 million ($12.52 million) (which included investment
from Xi&rsquo;an TCH of RMB 75 million and was netted off with the entrusted loan payable of the HYREF Fund in the balance sheet). The
lender had tentatively agreed to extend the remaining loan balance until August 2019 with an adjusted annual interest rate of 9%, subject
to the final approval from its headquarters. The headquarters did not approve the extension proposal with an adjusted annual interest
rate of 9%; however, on December 29, 2018, the Company worked out with the lender an alternative repayment proposal as described below.
As of December 31, 2018, the entrusted loan payable had an outstanding balance of $59.29 million, of which, $10.92 million was from the
investment of Xi&rsquo;an TCH; accordingly, the Company netted the loan payable of $10.92 million with the long-term investment to the
HYREF Fund made by Xi&rsquo;an TCH. As of March 31, 2021, the interest payable for this loan was $10.07 million and the outstanding balance
for this loan was $22.05 million including a non-current portion of $0.30 million. As of December 31, 2020, the interest payable for
this loan was $10.14 million and the outstanding balance for this loan was $22.20 million including a non-current portion of $0.30 million.&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Repayment
of HYREF loan</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.&nbsp;Transfer
of Chengli project as partial repayment</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 29, 2018, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, HYREF, Guohua Ku, and Chonggong Bai entered into a CDQ WHPG Station Fixed
Assets Transfer Agreement, pursuant to which Xi&rsquo;an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan
of RMB 188,639,400 ($27.54 million) to HYREF, the transfer of which was completed on January 22, 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Xi&rsquo;an TCH is a secondary limited partner
of HYREF. The fair value of the CDQ WHPG station applied in the transfer was determined by the parties based upon the appraisal report
issued by Zhonglian Assets Appraisal Group (Shaanxi) Co., Ltd. as of August 15, 2018. However, per the discussion below, Xi&rsquo;an
Zhonghong, Xi&rsquo;an TCH, Guohua Ku and Chonggong Bai (the &ldquo;Buyers&rdquo;) entered into a Buy Back Agreement, also agreed to
buy back the Station when conditions under the Buy Back Agreement are met. Due to the Buy Back agreement, the loan was not deemed repaid,
and therefore the Company recognized Chengli project as assets subject to buyback and kept the loan payable remained recognized under
ASC 405-20-40-1 as of March 31, 2021 and December 31, 2020.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.&nbsp;Buy
Back Agreement</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 29, 2018, Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, HYREF, Guohua Ku, Chonggong Bai and Xi&rsquo;an Hanneng Enterprises Management
Consulting Co. Ltd. (&ldquo;Xi&rsquo;an Hanneng&rdquo;) entered into a Buy Back Agreement.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the Buy Back Agreement, the Buyers
jointly and severally agreed to buy back all outstanding capital equity of Xi&rsquo;an Hanneng which was transferred to HYREF by Chonggong
Bai (see 3 below), and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi&rsquo;an Zhonghong. The buy-back price
for the Xi&rsquo;an Hanneng&rsquo;s equity was based on the higher of (i) the market price of the equity shares at the time of buy-back;
or (ii) the original transfer price of the equity shares plus bank interest. The buy-back price for the Station was based on the higher
of (i) the fair value of the Station on the date transferred; or (ii) the loan balance at the date of the transfer plus interest accrued
through that date. HYREF could request that the Buyers buy back the equity shares of Xi&rsquo;an Hanneng and/or the CDQ WHPG station
if one of the following conditions is met: (i) HYREF holds the equity shares of Xi&rsquo;an Hanneng until December 31, 2021; (ii) Xi&rsquo;an
Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations Co., Ltd., a Chinese over-the-counter trading
system (the &ldquo;NEEQ&rdquo;); (iii) Xi&rsquo;an Huaxin New Energy, or any of the Buyers or its affiliates has a credit problem, including
not being able to issue an auditor report or standard auditor report or any control person or executive of the Buyers is involved in
crimes and is under prosecution or has other material credit problems, to HYREF&rsquo;s reasonable belief; (iv) if Xi&rsquo;an Zhonghong
fails to timely make repayment on principal or interest of the loan agreement, its supplemental agreement or extension agreement; (v)
the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment Agreement or its related transaction documents,
including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer Agreement, the Entrusted Loan Agreement and their
guarantee agreements and supplemental agreements.&nbsp;Due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report,
on December 19, 2019, Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all
outstanding capital equity of Xi&rsquo;an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was
RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi&rsquo;an TCH
on December 20, 2019.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Buy Back agreement related to the CDQ WHPG
station is still outstanding as of March 31, 2021. The Company might be contingently liable for the difference between the fair value
of the transferred asset and the loan and related interest if the fair value of the transferred asset at the time of the exercise of
the buyback option is higher than the loan and related accrued interest. Based on an appraisal, as of March 31, 2021, the asset was&nbsp;valued
at $27.77 million while the loan and related interest was $32.12 million.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 9, 2021, the Buyers and HYREF entered
a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement was terminated
upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from
the buyers other than keeping the CDQ WHPG station (also see Note 17).&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">3.Transfer of Xuzhou Huayu
Project and Shenqiu Phase I&nbsp;&amp; II project to Mr. Bai for partial repayment of HYREF loan</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 4, 2019, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement, pursuant to
which Xi&rsquo;an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co., Ltd.
(&ldquo;Xuzhou Huayu Project&rdquo;) to Mr. Bai for RMB 120,000,000 ($17.52 million) and Xi&rsquo;an TCH transferred two Biomass Power
Generation Projects in Shenqiu (&ldquo;Shenqiu Phase I and II Projects&rdquo;) to Mr. Bai for RMB 127,066,000 ($18.55 million). Mr. Bai
agreed to transfer all the equity shares of his wholly owned company, Xi&rsquo;an Hanneng, to HYREF as repayment for the RMB 247,066,000
($36.07 million) loan made by Xi&rsquo;an Zhonghong to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu
Phase I and II Projects.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 15, 2019, Xi&rsquo;an Zhonghong completed the transfer of the Xuzhou Huayu Project and Xi&rsquo;an TCH completed the transfer
of Shenqiu Phase I and II Projects to Mr. Bai, and on January 10, 2019, Mr. Bai transferred all the equity shares of his wholly owned
company, Xi&rsquo;an Hanneng, to HYREF as repayment of Xi&rsquo;an Zhonghong&rsquo;s loan to HYREF as consideration for the transfer
of the Xuzhou Huayu Project and Shenqiu Phase I and II Projects.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xi&rsquo;an
Hanneng is a holding company and was supposed to own 47,150,000 shares of Xi&rsquo;an Huaxin New Energy Co., Ltd. (&ldquo;Huaxin&rdquo;),
so that HYREF will indirectly receive and own such shares of Xi&rsquo;an Huaxin as the repayment for the loan of Zhonghong. Xi&rsquo;an
Hanneng already owned 29,948,000 shares of Huaxin; however, Xi&rsquo;an Hanneng was not able to obtain the remaining 17,202,000 shares
due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 19, 2019, Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all outstanding
capital equity of Xi&rsquo;an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506
($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi&rsquo;an TCH on December 20,
2019. On December 20, 2019, Mr. Bai, Xi&rsquo;an TCH and Xi&rsquo;an Zhonghong agreed to have Mr. Bai repay the Company in cash for the
transfer price of Xuzhou Huayu and Shenqiu in five installment payments. The 1<SUP>st</SUP>&nbsp;payment of RMB 50 million ($7.17 million)
is due on January 5, 2020, the 2<SUP>nd&nbsp;</SUP>payment of RMB 50 million ($7.17 million) was due on February 5, 2020, the 3<SUP>rd&nbsp;</SUP>payment
of RMB 50 million ($7.17 million) was due on April 5, 2020, the 4<SUP>th</SUP>&nbsp;payment of RMB 50 million ($7.17 million) is due
on June 30, 2020, and the final payment of RMB 47,066,000 ($6.75 million) is due on September 30, 2020. As of March 31, 2020, the Company
has received the full payment of RMB 247 million ($36.28 million) from Mr. Bai.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.
The lender agreed to extend the repayment of RMB 77.00 million ($11.04 million) to July 8, 2023; of which, RMB 75.00 million ($10.81
million) was Xi&rsquo;an TCH&rsquo;s investment into the HYREF fund as a secondary limited partner, and the Company netted off the investment
of RMB 75 million ($10.81 million) by Xi&rsquo;an TCH with the entrusted loan payable of the HYREF Fund.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>9.
RELATED PARTY TRANSACTIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021 and December 31, 2020, the Company had $28,466 and $28,440, respectively, in advances from the Company&rsquo;s management,
which bear no interest, are unsecured, and are payable upon demand.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 23, 2021, the Company entered into
certain securities purchase agreements with several non-U.S. investors (the &ldquo;Purchasers&rdquo;), pursuant to which the Company
agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at&nbsp;$11.522 per share.&nbsp;One
of the purchaser is the Company&rsquo;s CEO (also is the Company&rsquo;s Chairman), he purchased 1,000,000 common shares of the Company.
In April 2021, the Company&rsquo;s CEO amended the number of shares that he would purchase from 1,000,000 shares to 940,000 shares. The
Company returned $691,320 extra proceeds that were received earlier to the Company&rsquo;s CEO in April 2021 (see Note 11).&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>10.
NOTE PAYABLE, NET</B>&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Promissory
Notes in December 2020</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 4, 2020, the Company entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company sold
and issued to the Purchaser a Promissory Note of $3,150,000. The Purchaser purchased the Note with an original issue discount of $150,000,
which was recognized as a debt discount and will be amortized using the interest method over the life of the note. The Note bears interest
at 8% per annum and has a term of 24 months. All outstanding principal and accrued interest on the Note will become due and payable on
December 3, 2022. The Company&rsquo;s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company
would pay 125% of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date
of the Note, Purchaser shall have the right to redeem any amount of this Note up to $500,000 per calendar month by providing written
notice to the Company. During the three months ended March 31, 2021, the Company amortized OID of $18,750 and recorded $63,000 interest
expense on this Note.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>11.
SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Shares to be Issued for Equity Financing
in 2021</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 23, 2021, the Company entered into
certain securities purchase agreements with several non-U.S. investors (the &ldquo;Purchasers&rdquo;), pursuant to which the Company
agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at&nbsp;$11.522 per share, which
is the five-day average closing price immediately prior to signing the Purchase Agreements.&nbsp;One of the purchaser is the Company&rsquo;s
CEO (also is the Company&rsquo;s Chairman), he purchased 1,000,000 common shares of the Company. On March 11, 2021, the Company received
approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase agreements, there anywhere
no fees paid in connection with this financing. In April 2021, the Company&rsquo;s CEO amended the number of shares that he would purchase
from 1,000,000 shares to 940,000 shares; accordingly, total number of shares sold in this offering became 3,260,000 shares. The Company
returned $691,320 extra proceeds that were received earlier to the Company&rsquo;s CEO in April 2021.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Shares Issued for Equity Financing in 2020</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 24, 2020 and September 28, 2020, the
Company entered into Securities Purchase Agreements with the purchaser and offered and sold to such purchaser 265,250 shares of Common
Stock at&nbsp;negotiated purchase prices (132,000 shares at $2.15 per share and 133,250 shares at $2.34 per share)&nbsp;without reference
to the market price and received the net proceeds was $497,187 after deducting the placement agent commission and certain expenses. These
265,250 shares were offered and sold in a registered public offering pursuant to the prospectus supplement dated August 24, 2020, and
the original prospectus contained in an effective shelf registration statement on Form S-3 (the &ldquo;Registration Statement&rdquo;),
which was originally filed with the Securities and Exchange Commission on December 1, 2017, and was declared effective on December 8,
2017 (File No. 333-221868).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>Warrants</U></I></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Following
is a summary of the activities of warrants that were issued from equity financing (post-reverse stock split) for the three months ended
March 31, 2021</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Number of<BR>
    Warrants</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Average<BR>
    Exercise<BR> Price<BR> (post-reverse<BR> stock split<BR> price)</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Weighted<BR>
    Average<BR> Remaining<BR> Contractual<BR> Term in<BR>
    Years</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 63%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Outstanding
    at January 1, 2021</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">30,411</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">14.0</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">3.21</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercisable
    at January 1, 2021</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.21</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Granted</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exchanged</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Forfeited</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expired</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Outstanding
    at March 31, 2021</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.96</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercisable
    at March 31, 2021</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.96</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Shares
Issued for Stock Compensation</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2020, the Company&rsquo;s Board of Director agreed to issue 3,333 shares of the Company&rsquo;s Common Stock (post-reverse
stock split) to the Company&rsquo;s law firm. The shares are earned in full and non-refundable as of March 9, 2020. The FV of these shares
are $10,999 on March 9, 2020.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>12.
INCOME TAX</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s Chinese subsidiaries are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally
subject to tax at 25% on income reported in the statutory financial statements after appropriate tax adjustments. Under Chinese tax law,
the tax treatment of finance and sales-type leases is similar to US GAAP. However, the local tax bureau continues to treat the Company&rsquo;s
sales-type leases as operating leases. Accordingly, the Company recorded deferred income taxes.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s subsidiaries generate all of their income from their PRC operations. All of the Company&rsquo;s Chinese subsidiaries&rsquo;
effective income tax rate for 2021 and 2020 was 25%. Yinghua, Shanghai TCH, Xi&rsquo;an TCH, Huahong, Zhonghong and Erdos TCH file separate
income tax returns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no income tax for companies domiciled in the Cayman Islands. Accordingly, the Company&rsquo;s CFS do not present any income tax provisions
related to Cayman Islands tax jurisdiction, where Sifang Holding is domiciled.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
US parent company, CREG is taxed in the US and, as of March 31, 2021, had net operating loss (&ldquo;NOL&rdquo;) carry forwards for income
taxes of $1.48 million; for federal income tax purposes, the NOL arising in tax years beginning after 2017 may only reduce 80% of a taxpayer&rsquo;s
taxable income, and may be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (&ldquo;the CARES
Act&rdquo;) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period
and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The management believes the realization of benefits
from these losses may be uncertain due to the US parent company&rsquo;s continuing operating losses. Accordingly, a 100% deferred tax
asset valuation allowance was provided.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 31, 2021, the Company&rsquo;s PRC subsidiaries had $43.74 million NOL that can be carried forward to offset future taxable income
for five years from the year the loss is incurred. The NOL was mostly from Xi&rsquo;an TCH, Erdos TCH and Zhonghong. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
After consideration of all the information available, management believes that significant uncertainty exists with respect to future
realization of the deferred tax assets due to the recurring losses from operations of these entities, accordingly, the Company recorded
a 100% deferred tax valuation allowance for PRC NOL.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table reconciles the U.S. statutory rates to the Company&rsquo;s effective tax rate for the three months ended March 31, 2021
and 2020, respectively:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 76%; text-align: left">U.S. statutory rates</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">(21.0</TD><TD STYLE="width: 1%; text-align: left">)%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">(21.0</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Tax rate difference &ndash; current
    provision</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2.3</TD><TD STYLE="text-align: left">)%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Permanent differences</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.4</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.0</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Change in valuation allowance</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">21.3</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">19.30</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Tax expense per financial statements</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">1.9</TD><TD STYLE="padding-bottom: 2pt; text-align: left">%</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">%</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
provision for income tax expense for the three months ended March 31, 2021 and 2020 consisted of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 76%; text-align: left">Income tax expense &ndash;
    current</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">5,125</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Income tax benefit &ndash; deferred</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Total income tax expense</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">5,125</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>13.
STOCK-BASED COMPENSATION PLAN</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Options
to Employees and Directors</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 19, 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the &ldquo;Plan&rdquo;)
at its annual meeting. The total shares of Common Stock authorized for issuance during the term of the Plan is 124,626 (post-reverse
stock split). The Plan was effective immediately upon its adoption by the Board of Directors on April 24, 2015, subject to stockholder
approval, and will terminate on the earliest to occur of (i) the 10th anniversary of the Plan&rsquo;s effective date, or (ii) the date
on which all shares available for issuance under the Plan shall have been issued as fully-vested shares. The stockholders approved the
Plan at their annual meeting on June 19, 2015.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes option activity with respect to employees and independent directors for the three months ended March 31, 2021,
and the number of options reflects the Reverse Stock Split effective April 13, 2020:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Number of<BR>
    Shares</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Average<BR>
    Exercise Price<BR> per Share (post-reverse stock split price)</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Weighted<BR>
    Average<BR> Remaining<BR> Contractual<BR> Term in<BR>
    Years</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 63%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Outstanding
    at January 1, 2021</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">16.1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">6.32</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercisable
    at January 1, 2021</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">54.3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.32</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Granted</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercised</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Forfeited</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Outstanding
    at March 31, 2021</FONT></TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">500</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">16.1</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">6.07</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercisable
    at March 31, 2021</FONT></TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">500</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">54.3</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">6.07</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>14.
STATUTORY RESERVES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the corporate law of the PRC effective January 1, 2006, the Company is only required to maintain one statutory reserve by appropriating
from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Surplus
Reserve Fund</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s Chinese subsidiaries are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations,
to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company&rsquo;s registered capital.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years&rsquo; losses, if any,
and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion
to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance
after such issue is not less than 25% of the registered capital.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three months ended March 31, 2021, the Company transferred $1,538, which is 10% of Xi&rsquo;an TCH&rsquo;s net income to the statutory
reverse. The maximum statutory reserve amount has not been reached for any subsidiary. The table below discloses the statutory reserve
amount in the currency type registered for each Chinese subsidiary as of March 31, 2021 and December 31, 2020:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: left">Name&nbsp;of&nbsp;Chinese&nbsp;Subsidiaries</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Registered<BR>
    Capital</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Maximum<BR>
    Statutory<BR> Reserve<BR> Amount</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Statutory <BR>
    reserve at<BR> March&nbsp;31,<BR> 2021</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">Statutory<BR> reserve
    at<BR> December&nbsp;31,<BR> 2020</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 38%; text-align: left">Shanghai TCH</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; vertical-align: bottom">$</TD><TD STYLE="width: 8%; text-align: right; vertical-align: bottom">29,800,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; vertical-align: bottom">$</TD><TD STYLE="width: 8%; text-align: right; vertical-align: bottom">14,900,000</TD><TD STYLE="width: 2%; text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 18%; text-align: center">&yen;6,564,303 ($1,003,859)</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 18%; text-align: center">&yen;6,564,303 ($1,003,859)</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Xi&rsquo;an TCH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: bottom">&yen;</TD><TD STYLE="text-align: right; vertical-align: bottom">202,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: bottom">&yen;</TD><TD STYLE="text-align: right; vertical-align: bottom">101,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&yen;73,710,678 ($11,237,852)</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&yen;73,700,706 ($11,236,314)</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Erdos TCH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: bottom">&yen;</TD><TD STYLE="text-align: right; vertical-align: bottom">120,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: bottom">&yen;</TD><TD STYLE="text-align: right; vertical-align: bottom">60,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&yen;19,035,814 ($2,914,869)</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&yen;19,035,814 ($2,914,869)</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Xi&rsquo;an Zhonghong</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&yen;</TD><TD STYLE="text-align: right">30,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&yen;</TD><TD STYLE="text-align: right">15,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">Did not accrue yet due to accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">Did not accrue yet due to accumulated deficit</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Shaanxi Huahong</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,500,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,250,150</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">Did not accrue yet due to accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">Did not accrue yet due to accumulated deficit</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Zhongxun</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&yen;</TD><TD STYLE="text-align: right">35,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&yen;</TD><TD STYLE="text-align: right">17,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">Did not accrue yet due to accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">Did not accrue yet due to accumulated deficit</TD>
    <TD>&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Common
Welfare Fund</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
common welfare fund is a voluntary fund to which the Company can transfer 5% to 10% of its net income. This fund can only be utilized
on capital items for the collective benefit of the Company&rsquo;s employees, such as construction of dormitories, cafeteria facilities,
and other staff welfare facilities. This fund is non-distributable other than upon liquidation. The Company does not participate in this
fund.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>15.
CONTINGENCIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
maintains a &ldquo;closed&rdquo; capital account, meaning companies, banks, and individuals cannot move money in or out of the country
except in accordance with strict rules. The People&rsquo;s Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate
the flow of foreign exchange in and out of the country. For inward or outward foreign currency transactions, the Company needs to make
a timely declaration to the bank with sufficient supporting documents to declare the nature of the business transaction. The Company&rsquo;s
sales, purchases and expense transactions are denominated in RMB and all of the Company&rsquo;s assets and liabilities are also denominated
in RMB. The RMB is not freely convertible into foreign currencies under the current law. Remittances in currencies other than RMB may
require certain supporting documentation in order to make the remittance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&rsquo;s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies
in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments
and foreign currency exchange. The Company&rsquo;s results may be adversely affected by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among
other things.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>16.
COMMITMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Lease
Commitment</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 20, 2017, Xi&rsquo;an TCH entered into a lease for its office with a term from December 1, 2017 through November 30, 2020. The
monthly rent is RMB 36,536 ($5,600) with quarterly payment in advance. This lease was expired in November 2020. The Company entered a
new lease contract for the same location for a period from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536
($5,600), to be paid every half year in advance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended March 31, 2021 and 2020, the rental expense of the Company was $16,903 and $16,374, respectively.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
components of lease costs, lease term and discount rate with respect of the office lease with an initial term of more than 12 months
are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; font-weight: bold; text-align: center">Three Months Ended</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">March&nbsp;31,<BR>
    2021</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; width: 88%; text-align: left">Operating lease cost
    &ndash; amortization of ROU</TD><TD STYLE="width: 1%; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; width: 1%; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; width: 9%; text-align: right">14,989</TD><TD STYLE="width: 1%; padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Operating lease cost &ndash; interest
    expense on lease liability</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">1,914</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Weighted Average Remaining Lease
    Term - Operating leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.75 years</TD><TD STYLE="text-align: left"></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Weighted Average Discount Rate -
    Operating leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"></TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">%</TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: left"></TD><TD STYLE="text-align: center; vertical-align: bottom"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="vertical-align: bottom; text-align: center"><B>Three Months Ended</B></TD><TD STYLE="text-align: center; vertical-align: bottom"><B>&nbsp;</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: center">March&nbsp;31,<BR>
    2020</TD><TD STYLE="text-align: center; font-weight: bold; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 88%; text-align: left">Operating lease cost
    &ndash; amortization of ROU</TD><TD STYLE="width: 1%; padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; width: 1%; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; width: 9%; text-align: right">15,987</TD><TD STYLE="width: 1%; padding-bottom: 4pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Operating lease cost &ndash; interest
    expense on lease liability</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">387</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Weighted Average Remaining Lease
    Term - Operating leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0.67
                                            years</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">Weighted Average Discount Rate -
    Operating leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">%</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a schedule, by years, of maturities of the office lease liabilities as of March 31, 2021</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="vertical-align: bottom; font-weight: bold; text-align: center; padding-bottom: 1.5pt; padding-left: 10pt"></TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><B>&nbsp;</B></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; vertical-align: bottom; text-align: center"><B>Operating <BR>
    Leases</B></TD><TD STYLE="vertical-align: bottom; padding-bottom: 1.5pt; text-align: center"><B>&nbsp;</B></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; width: 88%; text-align: left">For the years ended March
    31, 2022,</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">66,720</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">For the years ended March 31, 2023</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,720</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">For the years ended March 31, 2024</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">33,360</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Total undiscounted cash flows</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166,800</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Less: imputed interest</TD><TD STYLE="padding-bottom: 1.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1.5pt solid; text-align: right">(9,978</TD><TD STYLE="padding-bottom: 1.5pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-indent: -0.125in; padding-left: 0.125in; text-align: left">Present value of lease liabilities</TD><TD STYLE="padding-bottom: 4pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 4pt double; text-align: right">156,822</TD><TD STYLE="padding-bottom: 2pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Employment
Agreement</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 8, 2020, the Company entered an employment agreement with Yongjiang Shi, the Company&rsquo;s CFO for a term of 24 months. The monthly
salary is RMB 16,000 ($2,300). The Company will grant the CFO no less than 5,000 shares of the Company&rsquo;s Common Stock annually.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Investment
Banking Engagement Agreement</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm to engage them as the
exclusive lead underwriter for a registered securities offering of up to $20 million. The Company shall pay to the investment banker
an equity retainer fee of 15,000 shares (post-reverse stock split) of the restricted Common Stock of the Company (10,000 shares was issued
within 10 business days of signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). The agreement
expired in March 2021.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>17.
SUBSEQUENT EVENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through&nbsp;the
date the&nbsp;financial statements were issued and determined the Company has the following material subsequent events:&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 2, 2021, the Company entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company sold
and issued to the Purchaser a Promissory Note of $5,250,000. The Purchaser purchased the Note with an original issue discount of $250,000,
which was recognized as a debt discount and will be amortized using the interest method over the life of the note. The Note bears interest
at 8% per annum and has a term of 24 months. All outstanding principal and accrued interest on the Note will become due and payable on
April 1, 2023. The Company&rsquo;s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company
would pay 125% of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date
of the Note, Purchaser shall have the right to redeem any amount of this Note up to $825,000 per calendar month by providing written
notice to the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 9, 2021, Xi&rsquo;an TCH, Xi&rsquo;an Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement
(termination agreement). Under the termination agreement, the original buyback agreement entered on December 19, 2019 shall be terminated
upon the effective date of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional
payment from the buyers other than keeping the CDQ WHPG station. The Company will record a gain of approximately $3.1 million from transferring
the CDP WHPG station to HYREF as partial repayment of the entrusted loan resulting from the termination of the buy-back agreement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2021, the Company&rsquo;s CEO amended
the number of shares that he would purchase from 1,000,000 shares (under the securities purchase agreement entered on February 23, 2021)
to 940,000 shares. The Company returned $691,320 extra proceeds that were received earlier to the Company&rsquo;s CEO in April 2021 (see
Note 11).&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 2, 2021, the Company entered an agreement with an investment banker with the intension to raise approximately $10,000,000 from either
a public offering or a private placement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_015.jpg" ALT="" STYLE="height: 96px; width: 100px"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 14pt"><B>CHINA
RECYCLING ENERGY CORPORATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Shares
of Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Warrants
to Purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares of Common Stock</B></FONT></P>

<P STYLE="text-indent: 0.25in; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PROSPECTUS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2021</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Through
and including &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>, </B>2021 (the
25<SUP>th </SUP>day after the date of this offering), all dealers effecting transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition to a dealer&rsquo;s obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or subscription.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PART
II &mdash; INFORMATION NOT REQUIRED IN THE PROSPECTUS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Item
13. Other Expenses of Issuance and Distribution.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Set forth below is an itemization
of the total expenses, excluding underwriter&rsquo; discounts, that we expect to incur in connection with this offering. With the exception
of the SEC registration fee, the FINRA filing fee and the Nasdaq listing fee, all amounts are estimates.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Securities
    and Exchange Commission Registration Fee</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                            <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Nasdaq
    Listing Fee</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                            <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">FINRA</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                            <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Legal
    Fees and Expenses</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                            <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accounting
    Fees and Expenses</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                            <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Printing
    and Engraving Expenses</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                            <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Miscellaneous
    Expenses</FONT></TD><TD STYLE="padding-bottom: 1.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; padding-bottom: 1.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                                                   <TD STYLE="border-bottom: Black 1.5pt solid; padding-bottom: 1.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2pt; text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left; width: 88%"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 4pt double; text-align: left; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
                                                                 <TD STYLE="border-bottom: Black 4pt double; text-align: right; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
amounts are estimates other than the SEC&rsquo;s registration fee. We are paying all expenses of the offering listed above.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Item
14. Indemnification of Directors and Officers.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&rsquo;s or officer&rsquo;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&rsquo;s or officer&rsquo;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&rsquo; 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&rsquo;s conduct
was unlawful.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Item
15. Recent Sales of Unregistered Securities.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following list sets forth information regarding all unregistered securities sold or issued by us in the three years preceding the date
of this registration statement. In each of the transactions described below the recipients of securities represented their intention
to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate
legends were affixed to the securities issued in these transactions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 11, 2018, China Recycling Energy Corporation, a Nevada corporation (the &ldquo;Company&rdquo;), entered into a Securities Purchase
Agreement (the &ldquo;Purchase Agreement&rdquo;) with Iliad Research and Trading, L.P., a Utah limited partnership (the &ldquo;Purchaser&rdquo;),
pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note (the &ldquo;Note&rdquo;) in the amount of
$1,070,000. The Purchaser purchased the Note with an original issue discount of $50,000, and the Company agreed to pay to the Purchaser
$20,000 for fees and costs incurred by Purchaser in connection with the consummation of the Purchase Agreement. The Note was sold to
the Purchaser pursuant to an exemption from registration under Regulation D, promulgated under the Securities Act of 1933, as amended.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Note bears interest at the rate of 8% per annum. All outstanding principal and accrued interest on the Note will become due and payable
on July 11, 2020, subject to a potential one-year extension period during which interest would not accrue. The Company&rsquo;s obligations
under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding under
the Note. Amounts outstanding under the Note may be converted at any time, at the Lender&rsquo;s option, into shares of the Company&rsquo;s
common stock at a conversion price of $3.00 per share, subject to certain adjustments. During the term of the Note, the Company shall
not, without the prior written consent of the Purchaser, enter into or effect certain fundamental business transactions. The Purchaser
has the option to redeem the Note at any time after the six month anniversary of the date when the purchase price is delivered to the
Company (&ldquo;Purchase Price Date&rdquo;) in the amounts of up to 50% of the amount outstanding during the nine month period after
Purchase Price Date or any percentage of the amount outstanding under the Note at any time after the nine month anniversary of Purchase
Price Date, with such redemption amounts paid in cash or shares of the Company&rsquo;s common stock, or a combination thereof, at the
Company&rsquo;s election.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 29, 2018, China Recycling Energy Corporation (the &ldquo;Company&rdquo;) entered into a Securities Purchase Agreement with certain
purchasers (the &ldquo;Purchasers&rdquo;), pursuant to which the Company issued to the Purchasers 1,985,082 warrants in the aggregate
(each, a &ldquo;October Warrant&rdquo;, and collectively, the &ldquo;October Warrants&rdquo;), for a purchase price of $0.125 per October
Warrant and aggregate gross proceeds to the Company of approximately $250,000, before deducting fees to the placement agent and other
estimated offering expenses payable by the Company. The October Warrants are exercisable on the date of issuance at an initial exercise
price of $1.3725 per share and expire on the five and a half year anniversary of the date of issuance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
October Warrants and the shares of the Company&rsquo;s common stock issuable upon the exercise of the October Warrants (the &ldquo;October
Warrant Shares&rdquo;) were not registered under the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), pursuant
to the Company&rsquo;s Registration Statement, and were instead offered pursuant to the exemption provided in Section 4(a)(2) under the
Securities Act. Each Purchaser is either (i) an &ldquo;accredited investor&rdquo; as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
or (a)(8) under the Securities Act or (ii) a &ldquo;qualified institutional buyer&rdquo; as defined in Rule 144A(a) under the Securities
Act. Each Purchaser, either alone or together with its representatives, has enough knowledge and experience to be considered a sophisticated
investor, has access to the type of information normally provided in a prospectus for a registered securities offering, and has agreed
not to resell or distribute the October Warrants or the October Warrant Shares to the public except pursuant to sales registered or exempted
under the Securities Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">H.C.
Wainwright &amp; Co., LLC acted as the Company&rsquo;s exclusive placement agent in connection with the offerings under the Purchase
Agreement and received warrants to purchase our common stock in an amount equal to 138,956 shares, on substantially the same terms as
the October Warrants, with an initial exercise price of $1.875 per share and expiration date of October 29, 2023 (the &ldquo;October
Placement Agent Warrants&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 13, 2019, the Company entered into a Securities Purchase Agreement (the &ldquo;Agreement&rdquo;) with Great Essential Investment,
Ltd., a company incorporated in the British Virgin Islands (the &ldquo;Purchaser&rdquo;), pursuant to which the Company agreed to sell
to the Purchaser in a private placement 1,600,000 shares (the &ldquo;Shares&rdquo;) of the Company&rsquo;s common stock, par value $0.001
per share, at a purchase price of $1.013 per share for an aggregate offering price of $1,620,800 (the &ldquo;Private Placement&rdquo;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
each of January 31, 2019 and February 27, 2019, the Company entered into a Securities Purchase Agreement (together, the &ldquo;Purchase
Agreements&rdquo;) with Iliad Research and Trading, L.P., a Utah limited partnership (the &ldquo;Purchaser&rdquo;), pursuant to which
the Company sold and issued to the Purchaser an aggregate of two Convertible Promissory Notes (the &ldquo;Original Notes&rdquo;), each
in the principal amount of $1,050,000. The Purchaser purchased each of the Original Notes with an original issue discount of $50,000.
The Original Notes were sold to the Purchaser pursuant to an exemption from registration under Regulation D, promulgated under the Securities
Act of 1933, as amended.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Original Notes bore interest at the rate of 8% per annum. All outstanding principal and accrued interest on the Original Notes would
have become due and payable on January 31, 2021 and February 27, 2021, respectively, in each case subject to a potential one-year extension
period during which interest would not accrue. The Company&rsquo;s obligations under the Original Notes could be prepaid at any time,
provided that in such circumstance the Company would have paid 125% of any amounts outstanding under the Original Notes. Amounts outstanding
under the Original Notes could have been converted at any time, at the Lender&rsquo;s option, into shares of the Company&rsquo;s common
stock at a conversion price of $3.00 per share, subject to certain adjustments. During the terms of the Original Notes, the Company could
not, without the prior written consent of the Purchaser, enter into or effect certain fundamental business transactions. The Purchaser
had the option to redeem the Original Notes at any time after the six month anniversary of the date when the purchase price for an Original
Note is delivered to the Company (each, a &ldquo;Purchase Price Date&rdquo;) in the amounts of up to 50% of the amount outstanding during
the nine month period after the applicable Purchase Price Date or any percentage of the amount outstanding under such Original Note at
any time after the nine month anniversary of the applicable Purchase Price Date, with such redemption amounts paid in cash or shares
of the Company&rsquo;s common stock, or a combination thereof, at the Company&rsquo;s election.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to an Exchange Agreement dated April 14, 2019 (the &ldquo;Exchange Agreement&rdquo;), the Company and the Purchaser agreed to exchange
the Original Notes with two new promissory notes with a principal amount of $1,173,480 and $1,165,379.18, respectively (the &ldquo;Exchange
Notes&rdquo;). All outstanding principal and accrued interest on the Exchange Notes will become due and payable on January 31, 2021 and
February 27, 2021, respectively. The Exchange Notes bear interest at the rate of 8% per annum and do not have conversion options in favor
of the Purchaser. The Company&rsquo;s obligations under the Exchange Notes may be prepaid at any time, provided that in such circumstance
the Company must pay 125% of any amounts outstanding under the Exchange Notes. Beginning on the date that is six (6) months from the
issue date of the respective Original Notes (the &ldquo;Issue Dates&rdquo;) and at any time thereafter until the Exchange Notes are paid
in full, Purchaser shall have the right to redeem up to $750,000 of the outstanding balance during months six to eight following the
respective Issue Date and any amount thereafter.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 15, 2019, the Company entered into a Securities Purchase Agreement (the &ldquo;Purchase Agreement&rdquo;) with certain purchasers
(the &ldquo;Purchasers&rdquo;), pursuant to which the Company issued 1,769,454 warrants in the aggregate (each, a &ldquo;April Warrant&rdquo;,
and collectively, the &ldquo;April Warrants&rdquo;) to the Purchaser. The April Warrants are exercisable beginning on the six month anniversary
of the date of issuance at an initial exercise price of $0.9365 per share and expire on the five and one-half year anniversary of the
date of issuance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
April Warrants and the shares of the Company&rsquo;s common stock issuable upon the exercise of the April Warrants (the &ldquo;Warrant
Shares&rdquo;) were not registered under the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), pursuant to the Company&rsquo;s
Registration Statement, and were instead offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act. Each
Purchaser was either (i) an &ldquo;accredited investor&rdquo; as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a &ldquo;qualified institutional buyer&rdquo; as defined in Rule 144A(a) under the Securities Act. Each Purchaser,
either alone or together with its representatives, had sufficient knowledge and experience to be considered a sophisticated investor,
had access to the type of information normally provided in a prospectus for a registered securities offering, and agreed not to resell
or distribute the April Warrants or the April Warrant Shares to the public except pursuant to sales registered or exempted under the
Securities Act.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">H.C.
Wainwright &amp; Co., LLC acted as the Company&rsquo;s exclusive placement agent in connection with the offerings under the Purchase
Agreement and received warrants to purchase our common stock in an amount equal to 165,149 shares of common stock (the &ldquo;April Placement
Agent Warrants&rdquo;), on substantially the same terms as the April Warrants, except that the Placement Agent Warrants have an initial
exercise price of $1.00 per share, are exercisable commencing on the later of (i) six months of the issuance date or (ii) the date on
which the Company increases the number of its authorized shares, and expire on April 15, 2024.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm, engaging that firm as
the exclusive lead underwriter for a registered securities offering. Pursuant to the terms of this engagement agreement, the Company
issued 10,000 shares of its unregistered and restricted common stock to an investment banker firm within 10 days from the date of the
execution of the engagement agreement, and the remaining 5,000 shares will be paid upon completion of the offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 11, 2019, the Company entered a consulting agreement with a consulting company to advise the Company on an acquisition project.
Pursuant to the terms of this consulting agreement, the Company issued 31,250 shares of the Company&rsquo;s unregistered and restricted
common stock to this consulting company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 16, 2020, the Company&rsquo;s
Board of Director agreed to issue 3,333 shares of the Company&rsquo;s common stock (post-reverse stock split) to the Company&rsquo;s
law firm. The shares are earned in full and non-refundable as of March 9, 2020. The fair value of these shares was $10,999 on March 9,
2020.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 24, 2020 and September 28, 2020, the Company entered into Securities Purchase Agreements with the purchaser and offered and sold
to such purchaser 265,250 shares of common stock at&nbsp;negotiated purchase prices (132,000 shares at $2.15 per share and 133,250 shares
at $2.34 per share)&nbsp;without reference to the market price and received the net proceeds was $497,187 after deducting the placement
agent commission and certain expenses. These 265,250 shares were offered and sold in a registered public offering pursuant to the prospectus
supplement dated August 24, 2020, and the original prospectus contained in an effective shelf registration statement on Form S-3 (the
&ldquo;Registration Statement&rdquo;), which was originally filed with the Securities and Exchange Commission on December 1, 2017, and
was declared effective on December 8, 2017 (File No. 333-221868).&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors, pursuant to which
the Company agreed to sell to the purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at&nbsp;$11.522
per share, which is the five-day average closing price immediately prior to signing the Purchase Agreements.&nbsp;One of the purchasers
is the Company&rsquo;s CEO (also is the Company&rsquo;s Chairman), he purchased 1,000,000 common shares of the Company. On March 11,
2021, the Company received approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase
agreements, there anywhere no fees paid in connection with this financing. In April 2021, the Company&rsquo;s CEO amended the number
of shares that he would purchase from 1,000,000 shares to 940,000 shares; accordingly, total number of shares sold in this offering became
3,260,000 shares. The Company returned $691,320 extra proceeds that were received earlier to the Company&rsquo;s CEO in April 2021.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 16, 2021, the Company
issued 31,250 shares of the Company&rsquo;s common stock to the Company&rsquo;s investor relationship management firm as compensation
for the advisory service the firm provided to the company. The shares were valued at $100,000 in total.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I><U>Warrants</U></I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Following
is a summary of the activities of warrants that were issued from equity financing (post-reverse stock split) for the three months ended
March 31, 2021</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number of<BR> Warrants</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Average<BR> Exercise<BR> Price<BR>
    (post-reverse<BR> stock split<BR> price)</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted<BR> Average<BR> Remaining<BR>
    Contractual<BR> Term in<BR> Years</TD><TD STYLE="padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; width: 64%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Outstanding
    at January 1, 2021</FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">30,411</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">14.0</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">3.21</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercisable
    at January 1, 2021</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.21</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Granted</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exchanged</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Forfeited</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expired</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Outstanding
    at March 31, 2021</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.96</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercisable
    at March 31, 2021</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,411</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.96</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0">&nbsp;</P>


<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Item
16. Exhibits.</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>


<P STYLE="margin: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Exhibit<BR>
    Number</B></FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Description</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1*</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underwriting
    Agreement</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</FONT></P></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000101054902000036/boulder10ksbex35123101.txt">Articles
    of Incorporation (filed as Exhibit 3.05 to the Company&rsquo;s Form 10-KSB for the fiscal year ended December 31, 2001).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420409062755/v168008_ex3-1.htm">Fourth
    Amended and Restated Bylaws (filed as Exhibit 3.1 to the Company&rsquo;s Current Report on Form 8-K dated November 25, 2009).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.3</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390016013887/f8k052416ex3vi_chinarecycl.htm">Certificate
    of Change (filed as Exhibit 3.6 to the Company&rsquo;s Current Report on Form 8-K dated May 24, 2016).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">3.4</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><A HREF="https://www.sec.gov/Archives/edgar/data/721693/000121390021039079/ea144920ex3-1_chinarecycling.htm" STYLE="-sec-extract: exhibit">Certificate of Change (filed as Exhibit 3.1 to the Company&rsquo;s Current Report on Form 8-K dated July 28, 2021)</A></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1*</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Specimen
    Common Stock Certificate</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2*</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Specimen
    Warrant Certificate</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3*</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Specimen
    Underwriter Warrant Certificate</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.1*</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Opinion
    of Ortoli Rosenstadt LLP, as to the validity of the common stock and the warrants</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.1&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420410013721/v177357_ex10-27.htm">Supplementary
    Agreement by and between Inner Mongolia Erdos TCH Energy Saving Development Co., Ltd. And Inner Mongolia Erdos Metallurgy Co., Ltd.,
    dated December 1, 2009 (filed as Exhibit 10.27 to the Company&rsquo;s Form 10-K for the year ended December 31, 2009).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.2</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420409044764/v158587_ex10-1.htm">Joint
    Operation Agreement by and between Xi&rsquo;an TCH Energy Technology Co., Ltd., a wholly owned subsidiary of the Company, and Inner
    Mongolia Erdos Metallurgy Co., Ltd., dated January 20, 2009 (filed as Exhibit 10.1 to the Company&rsquo;s Form 10-Q for the quarterly
    period ended June 30, 2009).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.3</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420410005575/v173285_ex10-28.htm">Form
    of Independent Director Agreement. (filed as Exhibit 10.28 on the Company&rsquo;s Registration Statement on Form 10, filed on February
    5, 2010).</A> </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.4</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420410005575/v173285_ex10-29.htm">Employment
    Agreement between the Company and Guohua Ku (filed as Exhibit 10.29 on the Company&rsquo;s Registration Statement on Form 10, filed
    on February 5, 2010).</A> </FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.5</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413050847/v355125_ex10-1.htm">Biomass
    Power Generation Asset Transfer Agreement (filed as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated September
    16, 2013).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.6</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413050847/v355125_ex10-2.htm">Biomass
    Power Generation Project Lease Agreement (filed as Exhibit 10.2 to the Company&rsquo;s Current Report on Form 8-K dated September
    16, 2013).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.7</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413061948/v360178_ex10-1.htm">Partnership
    Agreement of Beijing Hongyuan Recycling Energy Investment Center, LLP, dated July 18, 2013 (filed as Exhibit 10.1 to the Company&rsquo;s
    Form 10-Q for the quarterly period ended September 30, 2013).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.8</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413061948/v360178_ex10-3.htm">EPC
    Contract for Boxing CDQ Waste Heat Power Generation Project, dated July 22, 2013, by and between Xi&rsquo;an Zhonghong New Energy
    Technology Co., Ltd and Xi&rsquo;an Huaxin New Energy Co., Ltd (filed as Exhibit 10.3 to the Company&rsquo;s Form 10-Q for the quarterly
    period ended September 30, 2013).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.9</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413061948/v360178_ex10-4.htm">EPC
    Contract for CDQ Power Generation Project of Xuzhou Tianyu Group, dated July 22, 2013, by and between Xi&rsquo;an Zhonghong New Energy
    Technology Co., Ltd and Xi&rsquo;an H201uaxin New Energy Co., Ltd. (filed as Exhibit 10.4 to the Company&rsquo;s Form 10-Q for the
    quarterly period ended September 30, 2013).</A></FONT></TD></TR>
</TABLE>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10,10</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413061948/v360178_ex10-5.htm">Cooperation
    Agreement, dated July 22, 2013, by and between Xi&rsquo;an Zhonghong New Energy Technology Co., Ltd. And Jiangsu Tianyu Energy and
    Chemical Group Co., Ltd (filed as Exhibit 10.5 to the Company&rsquo;s Form 10-Q for the quarterly period ended September 30, 2013).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.11</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413066288/v362538_ex10-1.htm">Waste
    Heat Power Generation Energy Management Cooperative Agreement with Zhongtai (filed as Exhibit 10.1 to the Company&rsquo;s Current
    Report on Form 8-K dated December 6, 2013).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.12</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420413067584/v363208_ex10-1.htm">CDQ
    Power Generation Energy Management Cooperative Agreement with Rongfeng (filed as Exhibit 10.1 to the Company&rsquo;s Current Report
    on Form 8-K dated December 17, 2013).</A></FONT></TD></TR>
<TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD></TR>

<TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.13</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420415026577/v408892_def14a.htm">China
    Recycling Energy Corporation Omnibus Equity Plan (Incorporated by reference from Appendix A to the Company&rsquo;s Definitive Schedule
    14A filed on April 30, 2015).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.14</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420415067187/v425367_ex10-1.htm">Transfer
    Agreement of CDQ&nbsp;&amp; Waste Heat Power Generation, dated November 16, 2015, by and between Xi&rsquo;an TCH Energy Technology
    Co., Ltd and Tangshan Rongfeng Iron&nbsp;&amp; Steel Co., Ltd. And Xi&rsquo;an Huaxin New Energy Co., Ltd. (filed as Exhibit 10.1
    to the Company&rsquo;s Current Report on Form 8-K dated November 20, 2015).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.15</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420416088880/v434699_ex10-1.htm">Xuzhou
    Zhongtai CDQ and Waste Heat Power Generation System Transfer Agreement, dated March 14, 2016, by Xi&rsquo;an TCH Energy Technology
    Co., Ltd, Xuzhou Zhongtai Energy Technology Co., Ltd. And Xi&rsquo;an Huaxin New Energy Co., Ltd. (filed as Exhibit 10.1 to the Company&rsquo;s
    Current Report on Form 8-K dated March 18, 2016).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.16</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390016015889/f10q0616ex10i_chinarecycling.htm">Repurchase
    Agreement for Coking Coal Gas Power Generation Project, dated June 22, 2016, by and between Xi&rsquo;an TCH Energy Technology Co.,
    Ltd., and Qitaihe City Boli Yida Coal Selection Co., Ltd. (filed as Exhibit 10.1 to the Company&rsquo;s Quarterly Report on Form
    10-Q dated August 15, 2016).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.17</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390018009306/f8k071118ex10-1_china.htm">Securities
    Purchase Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P., dated July 11, 2018 (filed
    as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated July 17, 2018).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.18</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390018009306/f8k071118ex10-2_china.htm">Convertible
    Promissory Note, issued by China Recycling Energy Corporation to Iliad Research and Trading, L.P., dated July 11, 2018 (filed as
    Exhibit 10.2 to the Company&rsquo;s Current Report on Form 8-K dated July 17, 2018).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390018013365/f8k093018ex10-1_chinarecycl.htm">Equity
    Purchase Agreement by and between Shanghai TCH Energy Technology Co., Ltd. And Jinhua Wang, dated September 30, 2018 (filed as Exhibit
    10.1 to the Company&rsquo;s Current Report on Form 8-K dated September 30, 2018).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.20</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390018016526/f8k112118ex10-1_china.htm">Agreement
    of Supplementary and Amendment by and between Shanghai TCH Energy Technology Co., Ltd. And Jinhua Wang, dated November 21, 2018 (filed
    as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated November 26, 2018).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.21</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019006487/f10k2018ex10-21_china.htm">CDQ
    WHPG Station Fixed Assets Transfer Agreement, dated December 29, 2018, by and among Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, the HYREF,
    Guohua Ku and Chonggong Bai (filed as Exhibit 10.21 to the Company&rsquo;s Annual Report on Form 10-K dated for the year ended December
    31, 2018 filed on March 16, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.22</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019006487/f10k2018ex10-22_china.htm">Buy-Back
    Agreement, dated December 29, 2018, by and among HYREF, Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, Guohua Ku, Chonggong Bai and Xi&rsquo;an
    Hanneng (filed as Exhibit 10.22 to the Company&rsquo;s Annual Report on Form 10-K dated for the year ended December 31, 2018 filed
    on March 16, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.23</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019006487/f10k2018ex10-23_china.htm">Equity
    Transfer Agreement, dated December 29, 2018, by and between Xi&rsquo;an TCH and Hongyuan Huifu. (filed as Exhibit 10.23 to the Company&rsquo;s
    Annual Report on Form 10-K dated for the year ended December 31, 2018 filed on March 16, 2019)&dagger;</A></FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.24</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019006487/f10k2018ex10-24_china.htm">Equity
    Transfer Agreement, dated December 29, 2018, by and between Shanghai TCH and HYREF.&nbsp;(filed as Exhibit 10.24 to the Company&rsquo;s
    Annual Report on Form 10-K dated for the year ended December 31, 2018 filed on March 16, 2019)&dagger;</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.25</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019006487/f10k2018ex10-25_china.htm">Supplementary
    Agreement of Equity Transfer Agreement, dated December 29, 2018, by and among Xi&rsquo;an TCH, Hongyuan Huifu, and the Fund Management
    Company.&nbsp;(filed as Exhibit 10.25 to the Company&rsquo;s Annual Report on Form 10-K dated for the year ended December 31, 2018
    filed on March 16, 2019)&dagger;</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.26</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019006487/f10k2018ex10-26_china.htm">Projects
    Transfer Agreement by and among Xi&rsquo;an Zhonghong, Xi&rsquo;an TCH, and Mr. Chonggong Bai, dated January 4, 2019 (filed as Exhibit
    10.26 to the Company&rsquo;s Annual Report on Form 10-K dated for the year ended December 31, 2018 filed on March 16, 2019).&dagger;</A></FONT></TD></TR>
<TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD></TR>

<TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.27</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019002847/f8k021319ex10-1_chinarecycl.htm">Securities
    Purchase Agreement by and between China Recycling Energy Corporation and Great Essential Investment, Ltd, dated February 13, 2019
    (filed as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated February 19, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.28</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019005609/f8k032919ex10-1_china.htm">Termination
    of Equity Purchase Agreement and Supplementary Amendment Agreement by and between Shanghai TCH and Mr. Jihua Wang, dated March 29,
    2019 (filed as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated February 19, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.29</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019018290/f8k091119ex10-1_china.htm">Forebearance
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated September 11, 2019 (filed
    as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated September 11, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.30</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019018731/f8k091919ex10-1_china.htm">Forebearance
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated September 19, 2019 (filed
    as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated September 19, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.31</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019019522/f8kl092919ex10-1_chinarecy.htm">Termination
    Agreement of Lease Agreement of Biomass Power Generation Project by and between Xi&rsquo;an TCH Energy Technology Co., Ltd. And Pucheng
    Xin Heng Yuan Biomass Power Generation Co., Ltd. Dated September 29, 2019 (filed as Exhibit 10.1 to the Company&rsquo;s Current Report
    on Form 8-K dated September 29, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.32</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019020817/f8k101619ex10-1_china.htm">Exchange
                                            Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading,
                                            L.P. dated October 16, 2019 (filed as Exhibit 10.1 to the Company&rsquo;s Current Report
                                            on Form 8-K dated October 16, 2019).</A></FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.33</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019020817/f8k101619ex10-1_china.htm">Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated October 16, 2019 (filed as
    Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated October 16, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.34</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390019026702/f8k121619aex10-1_china.htm">Amendment
    to Forebearance Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated December 16,
    2019 (filed as Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated December 16, 2019).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.35</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020000526/f8k010320ex10-1_china.htm">Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated January 3, 2020 (filed as
    Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated January 3, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.36</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020001199/f8k011320ex10-1_chinarecy.htm">Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated January 13, 2020 (filed as
    Exhibit 10.1 to the Company&rsquo;s Current Report on Form 8-K dated January 13, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.37</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020010899/ea121350ex10-30_chinarecy.htm">Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated May 4, 2020 (filed as Exhibit
    10.30 to the Company&rsquo;s Current Report on Form 8-K, dated May 4, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.38</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020012170/f10k2019ex10-38_china.htm"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employment Agreement by and between China Recycling Energy Corporation and Yongjiang (Jackie) Shi, dated May 8, 2020 (filed as Exhibit 10.38 to the Company&rsquo;s annual report on Form 10-K, dated May 14, 2020)</FONT></A></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.39</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020013242/ea122236ex10-39_chinarecy.htm">Exchange
    Agreement dated as of May 15, 2020 by and between China Recycling Energy Corporation and Lliad Research and Trading, L.P. (filed
    as Exhibit 10.39 to the Company&rsquo;s Current Report on Form 8-K, dated May 21, 2020).</A></FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.40</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020013242/ea122236ex10-40_chinarecy.htm">Forbearance
    Agreement dated as of May 15, 2020 by and between China Recycling Energy Corporation and Lliad Research and Trading, L.P. (filed
    as Exhibit 10.40 to the Company&rsquo;s Current Report on Form 8-K, dated May 21, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.41</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020014076/ea122601ex10-41_chinarecy.htm">Exchange
    Agreement dated as of May 29, 2020 by and between China Recycling Energy Corporation and Lliad Research and Trading, L.P. (filed
    as Exhibit 10.41 to the Company&rsquo;s Current Report on Form 8-K, dated June 4, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.42</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020044933/ea132303ex10-43_china.htm">Equity
    Acquisition Agreement dated as of December 22, 2020 by and between China Recycling Energy Corporation and Shanghai TCH Energy Technology
    Co., Ltd., Zheng Feng, Yinhua Zhang, Weidong Xu and Xi&rsquo;an Taiying Energy Saving Technology Co., Ltd. (filed as Exhibit 10.43
    to the Company&rsquo;s Current Report on Form 8-K, dated December 29, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&nbsp;</TD></TR>

<TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif; width: 9%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">14.1</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 90%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000114420409062755/v168008_ex14-1.htm">Code
    of Ethics (filed as Exhibit 14.1 to the Company&rsquo;s Current Report on Form 8-K dated December 2, 2009).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">21.1
    </FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="http://www.sec.gov/Archives/edgar/data/721693/000121390020012170/f10k2019ex21-1_china.htm">Subsidiaries
    (filed as Exhibit 21.1 to the Company&rsquo;s Annual Report on Form 10-K dated May 14, 2020).</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; vertical-align: top">&nbsp;</TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; vertical-align: top">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.1&dagger;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="ea143624ex23-1_chinarecycl.htm">Consent of Prager Metis</A></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.2*</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent
    of Ortoli Rosenstadt LLP (included in Exhibit 5.1).</FONT></TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<!-- Field: Rule-Page --><DIV STYLE="margin-top: 3pt; margin-bottom: 3pt; width: 15%"><DIV STYLE="font-size: 1pt; border-top: Black 1.5pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="margin-top: 0; margin-bottom: 0"></P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&dagger;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filed
    herewith.</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    be filed by amendment.</FONT></TD></TR>
  </TABLE>
<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Item
17. Undertakings.</B></FONT></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
undersigned Registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 foregoing provisions, 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
undersigned registrant hereby undertakes:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:</FONT></TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    reflect in the prospectus any facts or events arising after the effective date of the 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 the registration statement. Notwithstanding the foregoing, any increase or decrease in 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 a 20 percent change in the maximum aggregate offering
    price set forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement;</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    include any material information with respect to the plan of distribution not previously disclosed in the registration statement
    or any material change to such information in the registration statement;</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">That
    for the purpose of determining any liability under the Securities Act of 1933 each such 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 that time shall
    be deemed to be the initial bona fide offering thereof.</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

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<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
    for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule
    424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other
    than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of
    the date it is first used after effectiveness. 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 first use, 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 date of first use.</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">That,
    for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
    of the securities:</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-left: 1in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
    preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
    424;</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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</FONT></TD></TR>
  </TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iv)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
    other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)
    </FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    undersigned Registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates
    in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. </FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(7)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 provisions described in Item 14 above, 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.</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(8)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    undersigned Registrant hereby undertakes:</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">That
    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.</FONT></TD></TR>
  </TABLE>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 1in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; width: 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">That
    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 this offering of such securities
    at that time shall be deemed to be the initial bona fide offering thereof.</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SIGNATURES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Shanghai, China on July 28, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>China
    Recycling Energy Corporation</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 60%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 4%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left; width: 36%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
    July 28, 2021</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Guohua Ku</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guohua
    Ku</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chairman
    of the Board and Chief Executive Officer<BR>
    (Principal Executive Officer)</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
    July 28, 2021</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Yongjiang Shi</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yongjiang
    Shi</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Financial Officer<BR>
    (Principal Financial and Accounting Officer)</FONT></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the requirements of the Exchange Act, this registration statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif; width: 40%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Signature</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 40%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Title</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: center; font: 10pt Times New Roman, Times, Serif; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 18%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Date</B></FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Guohua Ku</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chairman
    of the Board of Directors and&nbsp;Chief Executive Officer </FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">July
                                            28, 2021</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guohua
    Ku</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">(Principal
    Executive Officer)</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
                                            Yongjiang Shi</FONT></P></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Financial Officer</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">July
                                            28, 2021</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yongjiang
    Shi</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"></TD>
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Principal
    Financial and Accounting Officer)</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Xiaoping Guo</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">July
                                            28, 2021</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xiaoping
    Guo</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Yan Zhan</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">July
                                            28, 2021</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yan
    Zhan</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    LuLu Sun</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">July
                                            28, 2021</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">LuLu
    Sun</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
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    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD></TR>
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    <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Zhongli Liu</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif; text-align: center"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif">July
                                            28, 2021</FONT></P></TD></TR>
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <TD STYLE="vertical-align: top; text-align: left; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhongli
    Liu</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></TD>
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[{"type": "S-1", "sequence": "1", "filename": "ea143624-s1_chinarecycling.htm", "description": "REGISTRATION STATEMENT", "secsgml_size_bytes": 1989703}]
{"company-data": {"conformed-name": "CHINA RECYCLING ENERGY CORP", "cik": "0000721693", "assigned-sic": "7389", "irs-number": "900093373", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-258232", "film-number": "211123319"}, "business-address": {"street1": "4/F, TOWER C, RONG CHENG YUN GU BUILDING", "street2": "KEJI 3RD ROAD, YANTA DISTRICT", "city": "XI'AN CITY, SHAANXI PROVINCE", "state": "F4", "zip": "710075", "phone": "86-29-8765-1097"}, "mail-address": {"street1": "4/F, TOWER C, RONG CHENG YUN GU BUILDING", "street2": "KEJI 3RD ROAD, YANTA DISTRICT", "city": "XI'AN CITY, SHAANXI PROVINCE", "state": "F4", "zip": "710075"}, "former-company": [{"former-conformed-name": "CHINA DIGITAL WIRELESS INC", "date-changed": "20040810"}, {"former-conformed-name": "BOULDER ACQUISITIONS  INC", "date-changed": "20020430"}, {"former-conformed-name": "BOULDER BREWING CO", "date-changed": "19920703"}]}
As
filed with the U.S. Securities and Exchange Commission on July 28, 2021
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
China
Recycling Energy Corporation
(Exact
name of registrant as specified in its charter)
Nevada
2870
90-1137640
(State
    or other jurisdiction of
incorporation or organization)
(Primary
    Standard Industrial
Classification Code Number)
(I.R.S.
    Employer
Identification Number)
4/F,
Tower C
Rong Cheng Yun Gu Building Keji 3rd Road, Yanta District
Xi An City, Shaan Xi Province, China
(86)
29-8765-1098
(Address,
including zip code, and telephone number, including area code, of registrant's principal executive offices)
National
Registered Agents, Inc.
701
S Carson St., Ste 200
Carson
City, NV 89701, USA
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
William
                                            S. Rosenstadt, Esq.
Mengyi
    "Jason" Ye, Esq.
Ortoli
    Rosenstadt LLP
366
    Madison Avenue, 3
rd
Floor
New
    York, NY 10017
Telephone:
    +1-212-588-0022
Ying
                                            Li, Esq.
Guillaume
    de Sampigny, Esq.
Lisa
    Forcht, Esq.
Hunter
    Taubman Fischer & Li LLC
800
    Third Avenue, Suite 2800
New
    York, NY 10022
Telephone:
    +1-212-530-2206
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
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 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 post-effective amendment filed pursuant to Rule 462(d) 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. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
in Rule 12b2 of the Exchange Act.
Large
    accelerated filer
☐
Accelerated
    filer
☐
Non-accelerated
    filer
☐
Smaller
    reporting company
☒
Emerging
    growth company
☐
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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
pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION
OF REGISTRATION FEE
Title
    of Class of Securities to be Registered
Proposed
Maximum
Aggregate
Offering
Price
(1)
Amount
    of
Registration
Fee
Common
    stock, par value $0.001 per share
(2)
$
11,500,000
$
1254.65
Warrants
    to purchase shares of common stock
(3)
—
—
Common
    stock, par value $0.001 per share, issuable upon exercise of Warrants
(4)
$
11,500,000
$
1264.65
Underwriter
    Warrants
(3)
—
—
Common
    stock, par value $0.001 per share, issuable upon exercise of Underwriter Warrants
(5)
$
575,000
62.73
Total
$
23,575,000
$
2572.03
(1)
The
    registration fee for securities is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, assuming
    the sale of the maximum number of shares at the highest expected offering price, and such estimate is solely for the purpose of calculating
    the registration fee pursuant to Rule 457(o). Includes the offering price attributable to additional shares that the Underwriter
    has the option to purchase to cover over-allotments, if any.
(2)
In
    accordance with Rule 416(a), the Registrant is also registering an indeterminate number of additional shares of common stock that
    shall be issuable pursuant to Rule 416 to prevent dilution resulting from share splits, share dividends or similar transactions.
(3)
Pursuant
    to Rule 457(g) under the Securities Act, no separate registration fee is required for the Warrants registered hereby.
(4)
Based
    on a per share exercise price for the Warrants of not less than 100% of the public offering price per share of common stock in this
    offering.
(5)
The
    Registrant will issue to the Underwriter warrants to purchase that number of shares of common stock equal to an aggregate of five
    percent (5%) of the shares of common stock (the "Underwriter Warrants") sold in the offering. The exercise price of the
    Underwriter Warrants is equal to 100% of the offering price of the shares of common stock offered hereby. The Underwriter Warrants
    are exercisable commencing six months from the closing date of the offering at any time, and from time to time, in whole or in part,
    for a period of five years from the date of commencement of sales of the offering
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 of 1933 or until the registration statement shall become effective on such date
as the 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.
PRELIMINARY
    PROSPECTUS
SUBJECT
    TO COMPLETION, DATED JULY 28, 2021
CHINA
RECYCLING ENERGY CORPORATION
Shares
of Common Stock
Warrants
to purchase up to        Shares of Common Stock
China
Recycling Energy Corporation is offering up to an aggregate of shares of        common stock, par
value $0.001 per share, and warrants to purchase up to an aggregate of        shares of common stock
(the "Warrants"), at an aggregate assumed offering price of $        per share of common
stock and Warrant which is based on the last reported closing trading price of our common stock on Nasdaq on       
, 2021. The shares of common stock and Warrants will be separately issued, but the shares of common stock and Warrants will be issued
and sold in a combination of [one] share of common stock and [one] Warrant to purchase [one] share of common stock for a combined offering
price of $        . Each Warrant will be immediately exercisable for one share of common stock at
an exercise price of $        per share (not less than 100% of the public offering price of per share
of common stock and Warrant sold in this offering) and expire         years after the issuance date.
The offering is being made on a "firm commitment" basis by the underwriter. See "Underwriting."
Our common stock is currently
traded on the Nasdaq Capital Market under the symbol "CREG." On July 27, 2021, the last reported sales price for our common
stock was $7.07 per share. As of July 27, 2021, there were 6,583,327 shares of our common stock outstanding. We do not intend to apply
to list the Warrants on any security exchange.
Investing
in our securities involves a high degree of risks See "Risk Factors" beginning on page 6.
Per Share
of
Common
Stock
and
related
Warrant
Total
Without
Over-Allotment
Option
Total
With Full
Over-Allotment
Option
Assumed public offering price
(2)
$
$
10,000,000
$
11,500,000
Underwriting discounts
(2)(3)
$
$
800,000
$
920,000
Proceeds to us, before expenses
(4)
$
$
9,200,000
$
10,580,000
(1)
Assumes
    that the Underwriter does not exercise any portion of its over-allotment option.
(2)
The
    public offering price and underwriting discount in respect of each share of common stock and accompanying Warrant corresponds to
    a public offering price of $    .
(3)
Under
    the underwriting agreement, upon the closing of the IPO, we will pay Univest Securities, LLC (the "Underwriter" or "Univest")
    a discount equal to eight percent (8%) of the gross proceeds raised in the offering, a non-accountable expense allowance equal
    to one percent (1%) of the gross proceeds of the offering, as well as underwriter warrants to purchase that number of shares of common
    stock and accompanying Warrants equal to five percent (5%) of the shares of common stock and Warrants sold in the offering, including
    upon exercise by the Underwriter of its over-allotment option ("Underwriter Warrants"). The Underwriter Warrants shall
    be exercisable at any time, and from time to time, in whole or in part, during the period commencing 180 days from the date of commencement
    of sales of the offering, which period shall not extend further than five years from the date of commencement of sales of the offering
    in compliance with FINRA Rule 5110(g)(8)(A). The Underwriter Warrants are exercisable at a per share price of $     ,
    which is 100% of the public offering price. See "underwriting" in this prospectus for more information regarding our
    arrangements with the underwriter.
(4)
The
    total estimated expenses related to this offering are set forth in the section entitled "Expenses Relating to This Offering".
The
offering is being underwritten on a firm commitment basis. We have granted the Underwriter an option exercisable within 45 days from
the date of this prospectus to purchase up to an additional           shares of common
stock and/or Warrants from us at a price of $ per share and/or up to an additional           
Warrants at a price of $           per Warrant, less, in each case, underwriting discounts.
Neither
the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The
Underwriter expects to deliver the shares of common stock and accompanying Warrants against payment as set forth under "Underwriting",
on or about                , 2021.
The
date of this prospectus is          , 2021
TABLE
OF CONTENTS
Page
Prospectus
    Summary
1
Risk
    Factors
6
Special
    Note Regarding Forward-Looking Statements
22
Use
    of Proceeds
23
Dividend
    Policy
24
Capitalization
25
Dilution
26
Management's
    Discussion and Analysis of Financial Condition and Results of Operations
27
Business
36
Management
63
Executive
    Compensation
67
Principal
    Shareholders
70
Related
    Party Transactions
71
Description
    of Securities
72
Market
    Price and Dividend on Our Common Stock and Related Stockholder Matters
73
Shares
    Eligible for Future Sale
74
Underwriting
76
Legal
    Matters
81
Experts
81
Where
    You Can Find Additional Information
81
Index
    to Financial Statements
F-1
You
should rely only on the information contained in this prospectus. Neither we, nor the Underwriter, have authorized anyone to provide
you with any information other than that contained in this prospectus, and neither we, nor the Underwriter, take responsibility for any
other information others may give you. We are offering to sell, and seeking offers to buy, shares of common stock and Warrants only in
jurisdictions where such offers and sales are permitted. The information in this prospectus is accurate only as of its date, regardless
of its time of delivery or the time of any sale of shares of common stock and Warrants. Our business, financial condition, results of
operations and prospects may have changed since that date.
i
Conventions
that Apply to this Prospectus
Unless
otherwise indicated or the context requires otherwise, references in this prospectus to, references to:
●
"Affiliated
                                            Entities" are to our wholly-owned subsidiaries, Yinghua. Sifeng, Sifeng's wholly-owned
                                            subsidiaries, Huahong and Shanghai TCH, Shanghai TCH's wholly-owned subsidiary Xi'an
                                            TCH, Xi'an TCH's wholly-owned subsidiary, Erdos TCH, Xi'an TCH's
                                            90% owned and Shanghai TCH's 10% owned subsidiary, Xi'an Zhonghong New Energy
                                            Technology Co., Ltd., and Xi'an TCH' wholly-owned subsidiary, Zhongxun;
●
"China"
                                            or the "PRC" are to the People's Republic of China, excluding Taiwan and
                                            the special administrative regions of Hong Kong and Macau for the purposes of this prospectus
                                            only;
●
"Erdos
                                            TCH" are to Erdos TCH Energy Saving Development Co., Ltd., a PRC company and wholly-
                                            owned subsidiary of Xi'an TCH;
●
"Huahong"
                                            are to Shanghai TCH Energy Technology Co., Ltd., a PRC company and wholly- owned subsidiary
                                            of Sifeng;
●
"Shanghai
                                            TCH" are to Huahong New Energy Technology Co., Ltd., a PRC company and wholly- owned
                                            subsidiary of Sifeng;
●
"Sifeng"
                                            are to Sifeng Holdings Co., Ltd., a limited liability company organized under the laws of
                                            the PRC, which is wholly-owned by the Company;
●
"we,"
                                            "us," or "the Company" are to one or more of China Recycling Energy
                                            Corporation and its subsidiaries, as the case may be;
●
"Xi'an
                                            TCH" are to Xi'an TCH Energy Technology Co., Ltd., a PRC company and wholly-
                                            owned subsidiary of Shanghai TCH;
●
"Yinghua"
                                            are to Shanghai Yinghua Financial Leasing Co., LTD., a limited liability company organized
                                            under the laws of PRC; and
●
"Zhongxun"
                                            are to Zhongxun Energy Investment (Beijing) Co., Ltd., a PRC company and wholly- owned subsidiary
                                            of Xi'an TCH.
Our
business is conducted by our subsidiaries, using Renminbi, or RMB, the official currency of China. Our consolidated financial statements
are presented in United States dollars. In this prospectus, we refer to assets, obligations, commitments and liabilities in our consolidated
financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars
("$" or "US$"), determined as of a specific date or for a specific period. Changes in the exchange rate will
affect the amount of our obligations and the value of our assets in terms of United States dollars, which may result in an increase or
decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed
in dollars).
ii
PROSPECTUS
SUMMARY
This
summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain
all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before
making an investment in our shares of common stock. You should carefully consider, among other things, our consolidated financial statements
and the related notes and the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus.
Overview
We
are a pioneer in waste energy recycling and a developer of energy efficiency solutions for various energy intensive industries in China.
We use 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 which 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 nonferrous metal plants. We construct our projects at our customer's facility and the electricity
produced is used on-site by the customer.
We
develop fully customized projects across several verticals to better meet customer's energy recovery needs. 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 by 5% to 20%, lower their
operating costs, and in optimal circumstances, extend the life of primary manufacturing equipment, while still complying with government
regulations on emissions. Specifically, our power generation systems use the waste heat and pressure of flue gas generated during customers'
daily course of energy usage, such as manufacturing, and carry out necessary dust removal and desulfurization process afterwards, before
putting the renewed energy back into use. The purified flue gas can reduce the wear and corrosion of pipes, valves and fans on the original
production line, so as to improve the service life of these 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 designed to be 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 20 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 provide the
initial capital investment for customers in exchange for a long-term production agreement with attractive returns on investment. We in
turn efficiently recapture our costs through the stream of lease payments.
We
are headquartered in China. Our principal executive offices are located at 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd Road,
Yanta District, Xi'an City, Shaanxi Province, China, and our telephone number at this location is +86-29-8765-1098.
Corporate
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, in the Peoples Republic
of China ("PRC").
1
Our
business is primarily conducted through our wholly-owned subsidiaries, Yinghua and Sifang, Sifang's wholly-owned subsidiaries,
Huahong and Shanghai TCH, Shanghai TCH's wholly-owned subsidiaries, Xi'an TCH, Xi'an TCH's wholly-owned subsidiary,
Erdos TCH and Xi'an TCH's 90% owned and Shanghai TCH's 10% owned subsidiary, Xi'an Zhonghong New Energy Technology
Co., Ltd., and Zhongxun. Shanghai TCH was established as a foreign investment enterprise in Shanghai under the laws of the PRC on May
25, 2004, and currently has registered capital of $29.80 million. Xi'an TCH was incorporated in Xi'an, Shaanxi Province under
the laws of the PRC in November 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 owns 90% and Shanghai TCH owns 10% of Zhonghong.
Zhonghong provides 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.
In
addition to its existing power supply business, the Company is in the process of transforming and expanding into an energy storage integrated
solution provider. We plan to pursue disciplined and targeted expansion strategies for market areas we currently do not serve by acquiring
certain target energy storage companies. We actively seek and explore opportunities to apply energy storage technologies to new industries
or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations, remote
islands without electricity, and cities with multi-energy supplies. We intend to commence these acquisitions upon obtaining approval
from Nasdaq and completion of this offering.
The
Company's organizational chart as of the date of this prospectus is as follows:
2
Risk
Factor Summary
Investing
in our securities involves a high degree of risk. Below is a summary of material factors that make an investment in our securities speculative
or risky. Importantly, this summary does not address all of the risks that we face. Please refer to the information contained in and
incorporated by reference under the heading "Risk Factors" on page 6 of this prospectus for additional discussion of the
risks summarized in this risk factor summary as well as other risks that we face. These risks include, but are not limited
to, the following:
●
the
    economic, financial, and other impacts of the COVID-19 pandemic;
●
increased
    competition in the business and industry that we are involved in;
●
reliance
    on a limited number of customers;
●
technology
    and cyber security risk;
●
our
    ability to successfully expand in our existing market segments and penetrate new market segments;
●
our
    financial performance, including our revenues, cost of revenues, operating expenses, and our ability to attain and sustain profitability
●
our
    ability to generate and sustain positive cash flow;
●
our
    ability to attract and retain qualified employees and key personnel;
●
general
    business, economic conditions in China where all of our operations are located;
●
the
    uncertainty of the political and regulatory development in China;
●
the
    occurrence of natural and unnatural catastrophic events and claims resulting from such events;
●
volatility
    in our common stock price;
●
dilution
    to existing holders of our common stock;
Implications
of Being a Smaller Reporting Company
We
qualify as an "smaller reporting company" as defined in Rule 405 of the Securities Act and Item 10 of Regulation S-K. A smaller
reporting company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public
companies. These provisions include:
●
the
    ability to include only two years of audited financial statements and only two years of related management's discussion
    and analysis of financial condition and results of operations disclosure;
●
the reduced
    disclosure obligation regarding executive compensation under Item 402 of Regulation S-K;
●
an
    exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to
    the Sarbanes-Oxley Act of 2002.
We
may take advantage of these provisions for so long as we remain a smaller reporting company. We may continue to be a smaller
reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million
or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of
our stock held by non-affiliates is less than $700 million.
Corporate
Information
Our
principal executive office is located at 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd Road, Yanta District, Xi'an City, Shaanxi
Province, China. The telephone number of our principal executive offices is (86) 29-8769-1097. Investors should submit any inquiries
to the address and telephone number of our principal executive offices. Our corporate website is www.creg-cn.com. The information contained
on our websites is not a part of this prospectus. Our agent for service of process in the United States is National Registered Agents,
Inc., located at 701 S Carson St., Suite 200, Carson City, NV 89701, USA.
3
The
Offering
Shares
    Offered by us:
shares
    of common stock (excluding the over-allotment option)
Shares
    of Common Stock Outstanding Prior to Completion of Offering:
6,583,327 shares of common stock*
Shares
    of Common Stock to be Outstanding after Offering:
shares
    of common stock, excluding shares of common stock underlying the Warrants and the Underwriter Warrants.
Over-Allotment
                                            Option:
We have granted to the underwriter the option, exercisable for 45 days
from the date of closing of this offering, to purchase up to an additional 15% of the total number of shares of common stock to be offered
by the Company in this offering.
Warrants
    Offered by us:
Warrants
    to purchase    of our shares of common stock (or     shares of common stock if the underwriter
    exercises its option to purchase such additional Warrants in full). Each Warrant will have an exercise price of US$          per
    share of common stock, exercisable commencing on the date of issuance and will expire in five years from the date of issuance. The
    terms of the Warrants will be governed by a warrant agent agreement, dated as of the closing date of this offering, that we expect
    to be entered into among us and American Stock Transfer & Trust Company LLC, or the Warrant Agent. This prospectus also relates
    to the offering of the shares of common stock issuable upon exercise of the Warrants. For additional information regarding the Warrants,
    see "Description of Share Capital."
The
    shares of common stock and Warrants will be separately issued, but the shares of common stock and Warrants will be issued and sold
    to purchasers in a combination of one share of common stock and one Warrant to purchase one share of common stock for a combined
    offering price of US$            .
Assumed
    Offering Price per Share and related Warrant:
$      per
    share of common stock and Warrant
Gross
    Proceeds to us Before Expenses:
approximately
    $10,000,000, or $11,500,000 if the underwriter exercises its over-allotment
option in full, less underwriter discounts and estimated offering expenses. See "Underwriting."
Trading
    Symbol:
"CREG"
Transfer
    Agent:
Securities
                                            Transfer Corporation
2901
    Dallas Pkwy Suite 380
Plano,
    TX 75093
Risk
    Factors:
Investing
    in these securities involves a high degree of risk. As an investor, you should be able to bear a complete loss of your investment.
    You should carefully consider the information set forth in the "Risk Factors" section of this prospectus before deciding
    to invest in our shares of common stock.
Use
    of Proceeds:
We
    expect to receive net proceeds of approximately US$    from this offering, based on an assumed public offering
    price of US$    per or share of common stock and Warrant and assuming the underwriter(s) do not exercise their
    option to purchase additional shares of common stock or Warrants and excluding the shares of common stock issuable upon the exercise
    of the Warrants or other outstanding warrants, after deducting underwriting discounts  and estimated offering expenses
    payable by us.
Lock-up
We,
                                            our directors and executive officers, and our existing beneficial owners of 5% or more of
                                            our outstanding shares of common stock have agreed with the Underwriter, subject to certain
                                            exceptions, not to sell, transfer or otherwise dispose of any shares of common stock for
                                            a period ending 6 months after the closing of the offering. See "Underwriting"
                                            for more information.
*
Not
                                            including 30,411 shares of common stock issuable upon exercise of issued and outstanding
                                            warrants.
4
Summary
Financial Information
In
the table below, we provide you with historical selected financial data for the fiscal years ended December, 31, 2020 and December 31,
2019 and for the three months ended March 31, 2021 and 2020. This information is derived from our consolidated financial statements included
elsewhere in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period.
When you read this historically selected financial data, it is important that you read it along with the historical financial statements
and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus.
For the Fiscal Years Ended
December 31,
2020
2019
US$
US$
Statement of operation data:
Revenues
$
-
$
867,431
Operating (income) expenses
$
(5,827,019
)
$
9,974,519
Income/(Loss) from operations
$
5,827,019
$
(9,107,088
)
Income Tax Benefit
$
-
$
(3,024,807
)
Net income/(Loss)
$
4,050,824
$
(8,772,757
)
Earnings per share, basic and diluted
$
1.58
$
(5.61
)
Weighted average shares of common stock outstanding
2,564,373
1,564,940
Balance sheet data
Current assets
$
108,203,797
$
64,619,204
Total assets
$
137,137,520
$
123,845,141
Current liabilities
$
39,042,407
$
36,250,800
Total liabilities
$
44,983,327
$
45,215,595
Total equity
$
92,154,193
$
78,629,546
For the Three
    Months Ended
December 31,
2021
2020
US$
US$
Statement of operation
    data:
Revenues
$
-
$
-
Operating (income) expenses
$
273,092
$
154,178
Income/(Loss) from operations
$
(273,092
)
$
(154,178
)
Income Tax Payable
$
5,125
$
-
Net income/(Loss)
$
(277,224
$
(598,551
)
Earnings per share, basic and diluted
$
(0.09
)
$
(0.28
)
Weighted average shares of common
    stock outstanding
3,177,050
2,135,340
Balance sheet
    data
Current assets
$
144,646,517
$
108,203,797
Total assets
$
173,549,441
$
137,137,520
Current liabilities
$
38,563,684
$
39,042,407
Total liabilities
$
44,559,594
$
44,983,327
Total equity
$
128,989,847
$
92,154,193
5
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider
carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled
"Management's Discussion and Analysis of Financial Condition and Results of Operation" and our consolidated financial
statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash
flow could be materially and adversely affected, which could cause the trading price of our shares of common stock to decline, resulting
in a loss of all or part of your investment. The risks described below and in the sections referenced above are not the only ones that
we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only
consider investing in our shares of common stock if you can bear the risk of loss of your entire investment.
Risks
Related to Our Business Operations
In
recent years, the growth of Chinese economy has experienced slowdown, and if the growth of the economy continues to slow or if the economy
contracts, our financial condition may be materially and adversely affected.
The
rapid growth of the PRC economy has historically resulted in widespread growth opportunities in industries across China. As a result
of the global financial crisis and the inability of enterprises to gain comparable access to the same amounts of capital available in
past years, the business climate has changed and growth of private enterprise in the PRC have slowed down. An economic slowdown could
have an adverse effect on our financial condition. Further, if economic growth slows, and if, in conjunction, inflation is allowed to
proceed unchecked, our costs would likely increase, and there can be no assurance that we would be able to increase our prices to an
extent that would offset the increase in our expenses.
We
depend on the waste energy of our customers to generate electricity
.
We
acquire waste pressure, heat and gases from steelworks, cement, coking or metallurgy plants and use these to generate power. Therefore,
our power generating capacity depends on the availability of an adequate supply of our "raw materials" from our customers.
If we do not have enough supply, power generated for those customers will be impeded. Since our contracts are often structured so that
we receive compensation based on the amount of energy we supply, a reduction in production may negatively affect our revenues and results
of operations.
Our
revenue depends on gaining new customers and project contracts and purchase commitments from customers
.
Currently
and historically, we have only had a limited number of projects in process at any time. Thus, our revenues have historically resulted,
and are expected to continue in the immediate future to result, primarily from the sale and operation of our waste energy recycling projects
that, once completed, typically produce ongoing revenues from energy production. Customers may change or delay orders for any number
of reasons, such as force majeure or government approval factors that are unrelated to us. As a result, in order to maintain and expand
our business, we must continue to develop and obtain new orders. However, it is difficult to predict whether and when we will receive
such orders or project contracts, due to the lengthy process, which may be affected by factors that we do not control, such as market
and economic conditions, financing arrangements, commodity prices, environmental issues and government approvals.
We
may require additional funds to run our business and may be required to raise these funds on terms which are not favorable to us or which
reduce our stock price.
We
may need to complete additional equity or debt financings to fund our operations. Our inability to obtain additional financing could
adversely affect our business. Financings may not be available at all or on terms favorable to us. In addition, these financings, if
completed, may not meet our capital needs and could result in substantial dilution to our stockholders.
6
Adverse
changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth
of China, which could reduce the demand for our products and services and materially and adversely affect our competitive position.
Substantially
all of our business operations are conducted in China. Accordingly, our business, results of operations, financial condition and prospects
are subject to economic, political and legal developments in China. Although the Chinese economy is no longer a planned economy, the
PRC government continues to exercise significant control over China's economic growth through direct allocation of resources, monetary
and tax policies, and a host of other government policies such as those that encourage or restrict investment in certain industries by
foreign investors, control the exchange between RMB and foreign currencies, and regulate the growth of the general or specific market.
These
government involvements have been instrumental in China's significant growth in the past 30 years. In response to the recent global
and Chinese economic downturn, the PRC government has adopted policy measures aimed at stimulating the economic growth in China. If the
PRC government's current or future policies fail to help the Chinese economy achieve further growth or if any aspect of the PRC
government's policies limits the growth of our industry or otherwise negatively affects our business, our growth rate or strategy,
our results of operations could be adversely affected as a result.
Additionally,
the slow growth of global economy has also resulted in tighter credit conditions, which may lead to higher financing costs. Although
poor market conditions can act as an incentive for our customers to reduce their energy costs, if the global economic slowdown persists
and has material adverse effects on our customers' business, our customers may delay or cancel their plan of installing waste energy
recycling projects.
Decreases
in the price of coal, oil and gas or a decline in support for "green" energy technologies could reduce demand for our waste
energy recycling projects, which could materially harm our ability to grow our business
.
Higher
coal, oil and gas prices provide incentives for customers to invest in "green" energy technologies such as our waste energy
recycling projects that reduce their need for fossil fuels. Conversely, lower coal, oil and gas prices would tend to reduce the incentive
for customers to invest in capital equipment to produce electric power or seek out alternative energy sources. Demand for our projects
and services depends in part on the current and future commodity prices of coal, oil and gas. We have no control over the current or
future prices of these commodities.
In
addition, support by governments, corporations and individuals for "green" energy technologies may change. Because of the
ongoing development of, and the possible change in support for, "green" energy technologies, we cannot assure you that negative
changes to this industry will not occur. Changes in government or popular support for "green" energy technologies could have
a material adverse effect on our business, prospects and results of operations.
Changes
in the growth of demand for or pricing of electricity could reduce demand for our waste energy recycling projects, which could materially
harm our ability to grow our business
.
Our
revenues are dependent on the ability to provide savings on energy costs for our clients. According to the National Bureau of Statistics
of the PRC, China's total electricity consumption in 2020 was 7.511 trillion kilowatt-hours, up 3.1 percent year on year. Electricity
consumption increases due to the continued development of the Chinese economy. However, such growth is unpredictable and depends on general
economic conditions and consumer demand, both of which are beyond our control. Furthermore, pricing of electricity in the PRC is set
in advance by the state or local electricity administration and may be artificially depressed by governmental regulation or influenced
by supply and demand imbalances. If these changes reduce the cost of electricity from traditional sources of supply, the demand for our
waste energy recycling projects could be reduced, and therefore, could materially harm our ability to grow our business.
7
We
are not enrolled in the PRC's employee's housing funds program, and as a result, Xi'an Erdos and its subsidiary may
be subject to future additional requirements should local government regulations on housing funds change.
Pursuant
to the Social Security Law of the PRC, or the Social Security Law, which was promulgated by the SCNPC on October 28, 2010 and amended
on December 29, 2018, employers shall pay the basic pension insurance, medical insurance, work-related injury insurance, unemployment
insurance and maternity insurance for employees. We have been complying with local regulations regarding social security and employee
insurance. We have not received any notification or warning from PRC authorities. We have not provided employees with housing funds.
Additionally, the central government promulgated rules regarding employees housing funds. For example, in accordance with the Regulations
on Management of Housing Provident Fund (the "Regulations of HPF"), which were promulgated by the PRC State Council on April
3, 1999, and last amended on March 24, 2002, employers must register at the designated administrative centers and open bank accounts
for employees' housing funds deposits. Employers and employees are also required to pay and deposit housing funds in an amount
no less than 5% of the monthly average salary of each of the employees in the preceding year in full and on time. Our operating subsidiaries
had not opened such bank accounts or deposited its employees' housing funds. We believe that we are currently not in violation
of the housing funds. However, if local government adopts new rules requiring employers to provide housing funds to employees in the
future, we will be required to provide housing funds to our employees, failing which we may be subject to administrative and monetary
penalties.
A
lack of insurance coverage could expose us to significant costs and business disruption.
We
have not acquired insurance to cover assets, property and potential liability of our business. The lack of insurance could leave our
business inadequately protected from loss. If we were to incur substantial losses or liabilities due to fire, explosions, floods, other
natural disasters or accidents or business interruption, our results of operations could be materially and adversely affected.
A
downturn in the Chinese economy may slow down our growth and profitability
.
The
growth of the Chinese economy has been uneven across geographic regions and economic sectors. There is no assurance that growth of the
Chinese economy will be steady or that any downturn will not have a negative effect on our business. Our profitability will decrease
if less energy is consumed due to a downturn in the Chinese economy.
Our
heavy reliance on the experience and expertise of our management may cause adverse impacts on us if a management member departs
.
We
depend on key personnel for the success of our business. Our business may be severely disrupted if we lose the services of our key executives
and employees or fail to add new senior and middle managers to our management. We do not maintain key person life insurance policies
on any of our employees. The loss of one or more of our key employees or groups could seriously harm our business.
Our
future success is heavily dependent upon the continued service of our key executives. We also rely on a number of key technology staff
for the operation of our company. Our future success is also dependent upon our ability to attract and retain qualified senior and middle
managers to our management team. If one or more of our current or future key executives or employees are unable or unwilling to continue
in their present positions, we may not be able to easily replace them, and our business may be severely disrupted. In addition, if any
of these key executives or employees joins a competitor or forms a competing company, we could lose customers and suppliers and incur
additional expenses to recruit and train personnel. We do not maintain key-man life insurance for any of our key executives.
We
may need more capital for the operation and failure to raise capital we need may delay the development plan and reduce the profits
.
If
we do not have adequate income or capital to meet our needs for expansion of our operations, we will need to seek financing to continue
our business development. If we fail to acquire adequate financial resources at acceptable terms, we might have to postpone our proposed
business development plans and reduce projections of our future incomes.
8
Our
use of a "Build-Operate-Transfer" model requires us to invest substantial financial and technical resources in a project
before we deliver a waste energy recycling project
.
We
use a "Build-Operate-Transfer" model to provide our waste energy recycling projects to our customers. This process requires
us to provide significant capital at the beginning of each project. The design, construction and completion of a waste energy recycling
project is highly technical and the time necessary to complete a project can take anywhere from three to 12 months without any delays,
including delays outside our control such as from the result of customer's operations, and we incur significant expenses as part
of this process. Our initial cash outlay and the length of the delivery time makes us particularly vulnerable to the loss of a significant
customer or contract because we may be unable to quickly replace the lost cash flow.
Our
BOT model and the accounting for our projects as sales-type leases could result in a difference between our revenue recognition and our
cash flows
.
While
we recognize a large portion of the revenue from each project when it goes on-line, all of the cash flow from the project is received
in even monthly payments across the term of the lease. Specifically, upon the completion of a project construction, a one-time sale is
recorded with approximately 30% margin and income is recognized from the recurring cash lease payments over the course of the lease term
at a constant periodic rate. On the other hand, contingent rental income is recognized when the actual electricity production is in excess
of the minimum lease payments. Although our revenues may be high, the initial cash outlay required for each project is substantial and
even with the recovery of this cost in the early years of each lease, we may need to raise additional capital resulting in a dilution
in your holdings. This discrepancy between revenue recognition and cash flow could also contribute to volatility in our stock price.
There
is collection risk associated with payments to be received over the terms of agreements with customers of our waste energy recycling
projects
.
We
are dependent in part on the viability of our customers for collections under our BOT model. Customers may experience financial difficulties
that could cause them to be unable to fulfill their contractual payment obligations to us. Although our customers are required to provide
deposits or other guarantees to secure their obligations to provide us the minimum payments from leasing our waste energy recycling apparatuses,
there is no guarantee that such collateral will be sufficient to meet all obligations under the respective contract. As a result, our
future revenues and cash flows could be adversely affected.
We
may not be able to assemble and deliver our waste energy recycling projects as quickly as customers may require which could cause us
to lose sales and could harm our reputation
.
We
may not be able to assemble our waste energy recycling projects and deliver them to our customers at the times they require.
Manufacturing
delays and interruptions can occur for many reasons, including, but not limited to:
●
the
    failure of a supplier to deliver needed components on a timely basis or of acceptable quality;
●
equipment
    failures;
●
personnel
    shortage;
●
labor
    disputes; or
●
transportation
    disruptions.
Assembly
of our waste energy recycling projects is complex. If we fail to assemble and deliver our waste energy recycling projects in a timely
fashion, our reputation may be harmed, we may jeopardize existing orders and lose potential future sales, and we may be forced to pay
penalties to our customers.
9
We
operate in an emerging competitive industry and if we are unable to compete successfully our revenue and profitability will be adversely
affected
.
Currently,
the PRC waste energy recycling market is fragmented but competitive. As the industry evolves, we anticipate that competition will increase.
We currently face competition primarily from companies that focus on one type of waste energy recycling project or one industry in the
waste energy recycling market, some of which may have more expertise in their area of focus than we do. We also compete against companies
that have substantial competitive advantages because of longer operating histories and larger marketing budgets, as well as substantially
greater financial and other resources than us. Our largest potential clients may choose to build their own systems. National or global
competitors could enter the market with more substantial financial and workforce resources, stronger existing customer relationships,
and greater name recognition or could choose to target medium to small companies in our traditional markets. Competitors could focus
their substantial resources on developing a more attractive solution set than ours or products with technologies that reduce demand for
energy beyond what our solutions can provide and at cheaper prices. Competition also places downward pressure on our contract prices
and profit margins, which presents us with significant challenges in our ability to maintain strong growth rates and acceptable profit
margins. If we are unable to meet these competitive challenges, we could lose market share to our competitors and experience an overall
reduction in our profits.
If
we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages and compelled to defend against
litigation
.
If
our waste energy recycling projects, methods, processes and other technologies infringe proprietary rights of other parties, we may have
to obtain licenses (which may not be available on commercially reasonable terms, if at all), redesign our waste energy recycling projects
or processes, stop using the subject matter claimed in the asserted patents, pay damages, or defend litigation or administrative proceedings,
which may be costly whether we win or lose. All of the above could result in a substantial diversion of valuable management resources
and we could incur substantial costs.
We
believe we have taken reasonable steps, including prior patent searches, to ensure we have the freedom to operate under our intellectual
property rights, and that our development and commercialization efforts can be carried out as planned without infringing others'
proprietary rights. However, a third-party patent may have been filed or will be filed that may contain subject matter of relevance to
our development, causing a third-party patent holder to claim infringement. Resolution of such issues sometimes results in lengthy and
costly legal proceedings, the outcome of which we cannot predict accurately.
We
may not be able to adequately respond to changes in technology affecting the waste energy recycling industry
.
Our
industry could experience rapid technological changes and new product introductions. Current competitors or new market entrants could
introduce new or enhanced products with features which render the systems used in our projects obsolete or less marketable. Our future
success will depend, in part, on our ability to respond to changing technology and industry standards in a timely and cost-effective
manner. We may not be successful in effectively using new technologies, developing new systems or enhancing our existing systems and
technology on a timely basis. Our new technologies or enhancements may not achieve market acceptance. Our pursuit of new technologies
may require substantial time and expense. We may need to license new technologies to respond to technological change. These licenses
may not be available to us on terms that we can accept. Finally, we may not succeed in adapting our projects to new technologies as they
emerge.
We
are dependent on third parties for manufacturing key components and delays by third parties may cause delays in assembly and increased
costs to us
.
We
rely upon third parties for the manufacture of key components. Delays and difficulties in the manufacturing of our waste energy recycling
projects could substantially harm our revenues. There are limited sources of supply for some key waste energy recycling project components.
Business disruptions, financial difficulties of the manufacturers or suppliers of these components, or raw material shortages could increase
our costs, reduce the availability of these components or delay our delivery of projects to customers. To date, we have been able to
obtain adequate supplies of these key components. If we are unable to obtain a sufficient supply of required components, we could experience
significant delays in construction, which could result in the loss of orders and customers, and could materially and adversely affect
our business, financial condition and results of operations. If the cost of components increases, we may not be able to pass on price
increases to our customers if we are to remain competitively priced. This would reduce profit, which in turn would reduce the value of
your investment.
10
Increases
in income tax rates, changes in income tax laws or disagreements with tax authorities could adversely affect our business, financial
condition or results of operations.
We
are subject to income taxes in the United States and in certain foreign jurisdictions in which we operate. Increases in income tax rates
or other changes in income tax laws that apply to our business could reduce our after-tax income from such jurisdiction and could adversely
affect our business, financial condition or results of operations. Our operations outside the United States generate a significant portion
of our income. In addition, the United States and many of the other countries in which our products are distributed or sold, including
countries in which we have significant operations, have recently made or are actively considering changes to existing tax laws. For example,
the Tax Cuts and Jobs Act (the "TCJ Act") was signed into law in the United States in 2017. The changes in the TCJ Act are
broad and complex and we are continuing to examine the impact the TCJ Act may have on our business and financial results. This provisional
expense is subject to change, possibly materially, due to, among other things, changes in estimates, interpretations and assumptions
we have made, changes in Internal Revenue Service (IRS) interpretations, the issuance of new guidance, legislative actions, changes in
accounting standards or related interpretations in response to the TCJ Act and future actions by states within the United States that
have not yet adopted state-level laws similar to the TCJ Act.
Additional
changes in the U.S. tax regime or in how U.S. multinational corporations are taxed on foreign earnings, including changes in how existing
tax laws are interpreted or enforced, could adversely affect our business, financial condition or results of operations.
We
are also subject to regular reviews, examinations and audits by the IRS and other taxing authorities with respect to income and non-income
based taxes both within and outside the United States. Economic and political pressures to increase tax revenues in jurisdictions in
which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and
the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in
an adverse impact on our business, financial condition or results of operations. In addition, in connection with the Organization for
Economic Co-operation and Development Base Erosion and Profit Shifting project, companies are required to disclose more information to
tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries.
Risks
Related to the People's Republic of China
Impact
of Current Coronavirus (COVID-19) Pandemic on the Company
In
December 2019, a novel strain of coronavirus (COVID-19) was reported and the World Health Organization has declared the outbreak to constitute
a "Public Health Emergency of International Concern." This contagious disease outbreak, which continues to spread to additional
countries, and is disrupting supply chains and affecting production and sales across a range of industries as a result of quarantines,
facility closures, and travel and logistics restrictions in connection with the outbreak. As to the Company, there was a significant
stagnation of the accounts receivable in 2020 because businesses were mandated by the federal and local government to halt operation.
Although the accounts receivable as of 2021 have been restored to normal, we cannot guarantee that our operations will be not be similarly
impacted in the future.
Adverse
changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth
of China, which could materially and adversely affect the demand for our projects and our business
.
Currently,
all of our operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are
affected significantly by economic, political and legal developments in China. The PRC economy differs from the economies of most developed
countries in many respects, including:
●
the
    amount of government involvement;
●
the
    level of development;
●
the
    growth rate;
●
the
    control of foreign exchange; and
●
the
    allocation of resources.
11
While
the PRC economy has grown significantly since the late 1970s, the growth has been uneven, both geographically and among various sectors
of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures benefit the overall PRC economy, but may also have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that
are applicable to us.
The
PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has in recent
years implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in
China is still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC
government could materially and adversely affect our business. The PRC government also exercises significant control over economic growth
in China through the allocation of resources, controlling payment of foreign currency- denominated obligations, setting monetary policy
and providing preferential treatment to particular industries or companies. Efforts by the PRC government to slow the pace of growth
of the PRC economy could result in decreased capital expenditure by energy users, which in turn could reduce demand for our products.
In addition, the PRC government, which regulates the power industry in China, has adopted laws related to renewable energy, and has adopted
policies for the accelerated development of renewable energy as part of a Development Plan promulgated on August 31, 2007.
Any
adverse change in the economic conditions or government policies in China could have a material adverse effect on the overall economic
growth and the level of energy investments and expenditures in China, which in turn could lead to a reduction in demand for our products
and consequently have a material adverse effect on our business and prospects.
Restrictions
under PRC law on our subsidiaries' ability to make dividends and other distributions could materially and adversely affect our
ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct
our business
.
We
conduct all of our business through our consolidated subsidiaries and affiliated companies operating in the PRC. We rely on dividends
paid by these consolidated subsidiaries for our cash needs, including the funds necessary to pay any dividends and other cash distributions
to our stockholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities established
in the PRC is subject to limitations imposed by government regulations. Regulations in the PRC currently permit payment of dividends
only out of accumulated profits as determined in accordance with accounting standards and regulations in the PRC, subject to certain
statutory procedural requirements and these may not be calculated in the same manner as US GAAP. In addition, each of our subsidiaries
in China is required to set aside a certain amount of its after-tax profits each year, if any, to fund certain statutory reserves. These
reserves are not distributable as cash dividends. Furthermore, if our subsidiaries in China incur debt on their own behalf in the future,
the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitations on the ability
of our PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions
that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.
Fluctuation
in the value of the Renminbi may have a material adverse effect on your investment
.
The
value of the Renminbi ("RMB") against the US Dollar and other currencies may fluctuate and is affected by, among other things,
changes in China's political and economic conditions. The conversion of RMB into foreign currencies, including US Dollars, has
historically been set by the People's Bank of China. On March 17, 2014, the PRC government changed its policy of pegging the value
of the RMB to the US Dollar. Under the new policy, the RMB is permitted to fluctuate within a band against a basket of certain foreign
currencies, determined by the Bank of China, against which it can rise or fall by as much as 2% each day. Since the adoption of this
new policy, the value of the RMB against the US Dollar has fluctuated on a daily basis within narrow ranges, but overall has strengthened
against the US Dollar. There remains significant international pressure on the PRC government to further liberalize its currency policy,
which could result in a further and more significant appreciation in the value of the RMB against the US Dollar. Appreciation or depreciation
in the value of the RMB relative to the US Dollar would affect our financial results reported in US Dollar terms even if there is no
underlying change in our business or results of operations. In addition, if we decide to convert our RMB into US Dollars for the purpose
of making payments for dividends on our common stock or for other business purposes, appreciation of the US Dollar against the RMB would
have a negative effect on the US Dollar amount available to us.
12
The
PRC currency is not a freely convertible currency, which could limit our ability to obtain sufficient foreign currency to support our
business operations in the future. In addition, changes in foreign exchange regulations in the PRC may affect our ability to pay dividends
in foreign currency or conduct other foreign exchange business
.
The
PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency
out of the PRC. We receive substantially all of our revenues in RMB, which is currently not a freely convertible currency. Shortages
in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise
satisfy foreign currency-denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items,
including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior
approval from the PRC State Administration of Foreign Exchange, or the SAFE, by complying with certain procedural requirements. However,
approval from appropriate governmental authorities is required where RMB are to be converted into foreign currency and remitted out of
China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.
The
PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the
foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be
able to pay certain of our expenses as they come due.
There
are significant uncertainties under the Enterprise Income Tax Law regarding our PRC enterprise income tax liabilities, such as tax on
dividends paid to us by our PRC subsidiaries and tax on any dividends we pay to our non-PRC stockholders
.
The
Enterprise Income Tax Law, also known as the EIT Law, provides that enterprises established outside of the PRC whose "de facto
management bodies" are located in the PRC are considered as a "tax-resident enterprise" and are generally subject to
the uniform 25.0% enterprise income tax rate on global income. Under the implementation regulations to EIT Law, "de facto management
body" refers to a managing body that in practice exercises overall management control over the production and business, personnel,
accounting and assets of an enterprise. In addition, on April 22, 2009, the State Administration of Taxation of the PRC issued the
Notice
on the Issues Regarding Recognition of Overseas Incorporated Enterprises that are Domestically Controlled as PRC Resident Enterprises
Based on the De Facto Management Body Criteria
, which was retroactively effective as of January 1, 2008. This notice provides that
an overseas incorporated enterprise that is controlled domestically will be recognized as a "tax-resident enterprise" if
it satisfies all of the following conditions: (i) the senior management responsible for daily production/business operations are primarily
located in the PRC, and the location(s) where such senior management execute their responsibilities are primarily in the PRC; (ii) strategic
financial and personnel decisions are made or approved by organizations or personnel located in the PRC; (iii) major properties, accounting
ledgers, company seals and minutes of board meetings and stockholder meetings, etc., are maintained in the PRC; and (iv) 50.0% or more
of the board members with voting rights or senior management habitually reside in the PRC.
In
addition, dividends paid by us to our non-PRC stockholders as well as gains realized by such stockholders from the sale or transfer of
our stock may be subject to a PRC tax under the EIT Law, and we may be required to withhold PRC tax on dividends paid to our non-PRC
stockholders.
PRC
regulation of loans to and direct investment by offshore holding companies in PRC entities may delay or prevent us from making loans
or additional capital contributions to our PRC operating companies, which could materially and adversely affect our liquidity and ability
to fund and expand our business
.
As
an offshore holding company of PRC operating companies, we may make loans or additional capital contributions to our PRC operating companies.
Any loans to our PRC operating companies are subject to PRC regulations. For example, loans to our operating companies in China to finance
their activities may not exceed statutory limits and must be registered with SAFE. If we decide to make capital contributions to our
operating entities in the PRC, the PRC Ministry of Commerce, or MOFCOM, (or MOFCOM's local counterpart, depending on the amount
involved) may need to approve these capital contributions. We cannot assure you that we will be able to obtain these government approvals
on a timely basis, if at all, with respect to any such capital contributions. If we fail to receive such approvals, our ability to capitalize
our PRC operations may be negatively affected, which could adversely affect our ability to fund and expand our business.
13
We
may face PRC regulatory risks relating to our equity incentive plan
.
On
March 28, 2007, the SAFE promulgated a notice requiring PRC individuals who are granted stock options and other types of stock-based
awards by an overseas publicly-listed company to obtain approval from the local SAFE branch through an agent of the overseas publicly-listed
company (generally its PRC subsidiary or a financial institution).
We
urged our PRC management personnel, directors, employees and consultants who were granted stock options under our Incentive Plan to register
them with the local SAFE pursuant to the said regulation. However, we cannot ensure that each of these individuals have carried out all
of the required registration procedures.
If
we, or any of these persons, fail to comply with the relevant rules or requirements, we may be subject to penalties, and may become subject
to more stringent review and approval processes with respect to our foreign exchange activities, such as our PRC subsidiaries'
dividend payment to us or borrowing foreign currency loans, all of which may adversely affect our business and financial condition.
The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities
.
The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures
and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular
regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
For example, the Chinese cybersecurity
regulator announced on July 2 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the
company's app be removed from smartphone app stores.
As such, the Company's
business segments may be subject to various government and regulatory interference in the provinces in which they operate. The Company
could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government
sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties
for any failure to comply. The Company's operations could be adversely affected, directly or indirectly, by existing or future laws
and regulations relating to its business or industry.
Uncertainties
with respect to the PRC legal system could adversely affect us and we may have limited legal recourse under PRC law if disputes arise
under our contracts with third parties
.
Since
1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in
China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently
cover all aspects of economic activities in China in particular, because these laws and regulations are relatively new, and because of
the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations
involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are
not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these
policies and rules until some time after violation.
The
Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign
investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations
is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. The resolution of these
matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the
legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance, or
to seek an injunction under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the
Chinese legal system, we may be unable to prevent others from violating our rights. The occurrence of any such events could have a material
adverse effect on our business, financial condition and results of operations.
14
We
must comply with the Foreign Corrupt Practices Act and Chinese anti-corruption laws
.
We
are required to comply with the United States Foreign Corrupt Practices Act, or FCPA, which prohibits US companies from engaging in bribery
or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some
of our competitors, are not subject to these prohibitions. The PRC also strictly prohibits bribery of government officials. Certain of
our suppliers are owned by the PRC government and our dealings with them are likely to be considered to be with government officials
for these purposes. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in China.
It is our policy to prohibit our employees, and to discourage our agents, representatives and consultants, from engaging in such practices.
If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors
an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put
us at a disadvantage. Our employees, agents, representatives and consultants may not always be subject to our control. If any of them
violates FCPA or other anti-corruption law, we might be held responsible. We could suffer severe penalties in that event. In addition,
the US government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or which
we acquire.
We
may have difficulty maintaining adequate management, legal and financial controls in the PRC
.
The
PRC historically has been deficient in western style management and financial reporting concepts and practices, as well as in modern
banking, and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work
in the PRC. As a result of these factors, and especially since we are a publicly listed company in the US and subject to regulation as
such, we may experience difficulty in maintaining management, legal and financial controls, collecting financial data and preparing financial
statements, books of account and corporate records and instituting business practices that meet western standards. We may have difficulty
establishing adequate management, legal and financial controls in the PRC. Therefore, we may, in turn, experience difficulties in implementing
and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, and other applicable
laws, rules and regulations. This may result in significant deficiencies or material weaknesses in our internal controls which could
impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements
of the Sarbanes-Oxley Act of 2002. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on
our business and the market price of our stock.
If
we fail to maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our
financial results or prevent fraud may be adversely affected and investor confidence and the market price of our common stock may be
adversely impacted
.
As
directed by SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company's internal
controls over financial reporting in their annual reports. Our management may conclude that our internal controls over our financial
reporting are not effective, which could result in an adverse reaction in the financial marketplace due to a loss of investor confidence
in the reliability of our reporting processes, which could adversely impact the market price of our common stock.
Your
ability to bring an action against us or against our directors and officers, or to enforce a judgment against us or them, will be limited
because we conduct substantially all of our operations in the PRC and because the majority of our directors and officers reside outside
of the United States
.
We
are a Nevada corporation but nearly all of our assets are located outside of the US. Most of our current operations are conducted in
the PRC. In addition, most of our directors and officers are nationals and residents of the PRC. A substantial portion of the assets
of these persons is located outside the US. As a result, it may be difficult for you to effect service of process within the United States
upon these persons. It may also be difficult for you to enforce in US courts judgments on the civil liability provisions of the US federal
securities laws against us and our officers and directors. In addition, there is uncertainty as to whether the courts of the PRC would
recognize or enforce judgments of US courts. The recognition and enforcement of foreign judgments are provided for under the
PRC
Civil Procedures Law
. Courts in the PRC may recognize and enforce foreign judgments in accordance with the requirements of the
PRC
Civil Procedures Law
based on treaties between the PRC and the country where the judgment is made or on reciprocity between
jurisdictions. The PRC does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of
foreign judgments with the United States. In addition, according to the
PRC Civil Procedures Law
, courts in the PRC will
not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of
PRC law or national sovereignty, security or the public interest. So it is uncertain whether a PRC court would enforce a judgment rendered
by a court in the US.
15
A
failure by our stockholders or beneficial owners who are PRC residents to comply with certain PRC foreign exchange regulations could
restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liability under
PRC laws, which could adversely affect our business and financial condition
.
On
October 21, 2005, the State Administration of Foreign Exchange ("SAFE") issued the Notice on Relevant Issues Concerning Foreign
Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Offshore Special Purpose Vehicles, or State
Administration of Foreign Exchange of China Circular 75 ("SAFE Circular 75"). SAFE Circular 75 states that PRC residents
(including both legal persons and natural persons) must register with SAFE or its local branch in connection with their establishment
or control of an offshore entity established for the purpose of overseas equity financing involving a roundtrip investment whereby the
offshore entity acquires or controls onshore assets or equity interests held by the PRC residents. In addition, such PRC residents must
update their SAFE registrations when the offshore SPV undergoes material events relating to increases or decreases in investment amount,
transfers or exchanges of shares, mergers or divisions, long-term equity or debt investments, external guarantees, or other material
events that do not involve roundtrip investments. To further clarify the implementation of SAFE Circular 75, the General Affairs Department
of SAFE issued SAFE Circular 106 on May 29, 2007. Under SAFE Circular 106, PRC subsidiaries of an offshore company governed by SAFE Circular
75 are required to coordinate and supervise the filing of SAFE registrations in a timely manner by the offshore holding company's
shareholders who are PRC residents. If these shareholders fail to comply, the PRC subsidiaries are required to report to the local SAFE
authorities. If our shareholders who are PRC residents do not complete their registration with the local SAFE authorities, our PRC subsidiaries
will be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and
we may be restricted in our ability to contribute additional capital to our PRC subsidiaries.
On
July 14, 2014, SAFE promulgated the Circular Relating to Foreign Exchange Administration of Offshore Investment, Financing and Return
Investment by Domestic Residents Utilizing Special Purpose Vehicles ("SAFE Circular 37"). Replacing an earlier circular published
by SAFE in 2005 (Circular 75), SAFE Circular 37 further simplifies the registration process for Chinese residents seeking the round-trip
investment transactions where Chinese companies (Domestic Entities) are re-organized to create an offshore holding company (the SPV)
that will control the Domestic Entities and seek offshore financing. Also, for the first time overseas investments by Chinese individuals
are formally legalized under SAFE Circular 37.
We
are committed to complying with, and to ensuring that our shareholders who are PRC residents comply with, the SAFE Circular 37 requirements.
We believe that all of our PRC resident shareholders and beneficial owners have completed their required registrations with SAFE, or
are otherwise in the process of registering. However, we may not at all times be fully aware or informed of the identities of all our
beneficial owners who are PRC residents, and we may not always be able to compel our shareholders to comply with the SAFE Circular 37
requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents will at all times
comply with, or in the future make or obtain any applicable registrations or approvals required by, SAFE Circular 37 or other related
regulations. Failure by any such shareholders or beneficial owners to comply with SAFE Circular 37 could subject us to fines or legal
sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries' ability to make distributions or
pay dividends or affect our ownership structure, which could adversely affect our business and prospects.
PRC
regulations involve complex procedures for acquisitions conducted by foreign investors that could make our restructuring or an offering
subject to government approval
.
Pursuant
to the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors ("M&A Rule"), effective as
of September 8, 2006 and revised as of June 22, 2009, additional procedures and requirements were established that are expected to make
merger and acquisition activities in China by foreign investors more time-consuming and complex, including requirements in some instances
that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise,
or that the approval from MOFCOM be obtained in circumstances where overseas companies established or controlled by PRC enterprises or
residents acquire affiliated domestic companies and special anti-monopoly submissions for parties meeting certain reporting thresholds.
16
The
M&A Rules require offshore companies formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled
by PRC companies or individuals to obtain the approval of MOFCOM prior to a cross-border share swap and the CSRC prior to the public
listing of their securities on an overseas stock exchange through share swap. On September 21, 2006, pursuant to the M&A Rule and
other PRC Laws, the CSRC published on its official website relevant guidance with respect to the listing and trading of PRC domestic
enterprises' securities on overseas stock exchanges ("Related Clarifications"), including a list of application materials
regarding the listing on overseas stock exchange by special purpose vehicles, however, the CSRC currently has not issued any definitive
rule concerning whether an offering, is subject to the M&A Rule and Related Clarifications.
There
are substantial uncertainties regarding the interpretation and application of the above rules, and MOFCOM and CSRC have yet to promulgate
any written provisions or formally to declare or state whether the overseas listing of a PRC related company similar to us will be subject
to approvals from MOFCOM and CSRC with respect to any offering or a failure to maintain an offering. If MOFCOM and CSRC approvals are
required in connection with our previous restructuring, our failure to obtain or delay in obtaining such approval could result in penalties
imposed by MOFCOM, CSRC and other PRC regulatory agencies. These penalties could include fines and penalties on our operations in China,
restriction or limitation on remitting dividends outside of China, and other forms of sanctions that may cause a material and adverse
effect on our business, operations and financial conditions.
Notwithstanding
those provisions, we are advised by our PRC counsel, Shaanxi Yan Tan Law Firm, MOFCOM and CSRC approvals are not required in the context
of our previous restructuring, because our previous restructuring does not constitute a cross-border share swap contemplated by the M&A
Rule. However, we cannot assure you that the relevant PRC government agencies, including MOFCOM and CSRC, would reach the same conclusion,
and we still cannot rule out the possibility that MOFCOM and CSRC may deem our listing structure as circumventing the M&A Rule and
Related Clarifications, in particular in consideration of the fact that our restructuring was completed through several steps. Please
refer to the Company History section about our restructuring.
Recently, the General Office
of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe
and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized
the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies.
These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the
risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection.
Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective)
on July 10, 2021, which requires operators with personal information of more than 1 million users who want to list abroad to
file a cybersecurity review with the Office of Cybersecurity Review. The aforementioned policies and any related implementation rules
to be enacted may subject us to additional compliance requirement in the future. As these opinions were recently issued, official guidance
and interpretation of the opinions remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain
fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all.
PRC
regulations also involve complex procedures for acquisitions conducted by foreign investors that could make it more difficult for us
to grow through acquisitions
.
We
may grow our business in part by acquiring other companies in the PRC. Complying with the requirements of the M&A Rule to complete
such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit
our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Our
labor costs may increase due to the implementation of the PRC Labor Contract Law
.
The
PRC Labor Contract Law was adopted by the Standing Committee of the National People's Congress of PRC in June 2007 and became effective
on January 1, 2008. The Implementation Rules of the PRC Labor Contract Law were passed by the PRC State Council in September 2008 and
became effective that same month. The implementation of the new law and its Implementation Rules, particularly the following provisions,
may increase our labor costs: (a) an employer shall make monetary compensation, which shall be based on the number of an employee's
working years with the employer at the rate of one month's wage for each year, to the employee upon termination of an employment
contract with certain exceptions (for example, in circumstances where the term of a fixed-term employment contract expires and the employee
does not agree to renew the contract even though the conditions offered by the employer are the same as or better than those stipulated
in the current contract); (b) the wages of an employee who is on probation may not be less than the lowest wage level for the same job
with the employer or less than 80% of the wage agreed upon in the employment contract, and may not be less than the local minimum wage
rate; (c) if an employee has been working for the employer for a consecutive period of not less than 10 years, or if a fixed-term employment
contract with an employee was entered into on two consecutive occasions, generally the employer should enter into an open-ended employment
contract with such employee, unless the employee requests a fixed-term employment contract; (d) if an employer fails, in violation of
the related provisions, to enter into an open-ended employment contract with an employee, it shall in each month pay to the employee
twice his/her wage, starting from the date on which an open-ended employment contract should have been entered into; (e) if an employer
fails to enter into a written employment contract with an employee more than one month but less than one year after the date on which
it started employing him/her, it shall in each month pay to the employee twice his/her wage; and (f) if an employer hires an employee
whose employment contract with another employer has not yet been terminated or ended, causing the other employer to suffer a loss, the
later hiring employer shall be jointly and severally liable with the employee for the compensation for such loss. Our labor costs may
increase due to the implementation of the PRC Labor Contract Law and the Implementation Rules of the PRC Labor Contract Law and our business
and results of operations may be materially and adversely affected.
17
It is unclear whether we will be subject
to the oversight of the Cyberspace Administration of China (CAC) and how such oversight may impact us. Our business could be interrupted
or we could be subject to liabilities which may materially and adversely affect the results of our operation and the value of your investment.
Pursuant to the PRC Cybersecurity
Law and the Measures for Cybersecurity Censorship (the "Cybersecurity Review Measures"), if a critical information infrastructure
operator purchases internet products and services that affect or may affect national security, it should be subject to cybersecurity review
by the CAC. Any internet product or service that affects or may affect national security as deemed by the cybersecurity review authorities
may be subject to cybersecurity review. According to the Cybersecurity Review Measures, a critical information infrastructure operator
refers to any operator identified by an authority for the protection of critical information infrastructures. As of the date hereof, we
have not received any notice from such authorities identifying us as a critical information infrastructure operator or requiring us to
going through cybersecurity review by the CAC.
On July 10, 2021, the
CAC publicly issued the Measures for Cybersecurity Censorship (Revised Draft for Comments) ("Draft Measures") to collect public
comments. The deadline for collecting comments was July 25, 2021. According to the Draft Measures, the scope of cybersecurity reviews
is extended to data processing operators engaging in data processing activities that affect or may affect national security. The Draft
Measures further requires that any operator applying for listing on a foreign exchange must go through cybersecurity review if it possesses
personal information of more than one million users. According to the Draft Measures, a cybersecurity review assesses potential national
security risk that may be brought about by any procurement, data processing, or overseas listing. The review focuses on several factors,
including, among others, (i) the risk of theft, leakage, corruption, illegal use or export of any core or important data, or a large amount
of personal information, and (ii) the risk of any critical information infrastructure, core or important data, or a large amount of personal
information being affected, controlled or maliciously exploited by a foreign government after a company is listed overseas. While the
Draft Measures had been released for consultation purpose, there is still uncertainty regarding the Draft Measures as to its final content,
its adoption timeline or effective date, its final interpretation and implementation, and other aspects.
If the Draft Measures is enacted
as proposed, we believe we may not be subject to the cybersecurity review by the CAC for this offering, given that: (i) our products and
services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of
personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security
and thus may not be classified as core or important data by the authorities. However, there remains uncertainty as to how the Draft Measures
will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules,
or detailed implementation and interpretation related to the Draft Measures. If any such new laws, regulations, rules, or implementation
and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of
such laws on us.
We cannot assure you that PRC
regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply
with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC,
we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty,
we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and
adversely affect our business, financial condition, and results of operations.
18
Risks
Relating to Securities and This Offering
The
market price for our common stock may be volatile
.
The
market price for our common stock is highly volatile and subject to wide fluctuations in response to factors including the following:
●
actual
    or anticipated fluctuations in our quarterly operating results;
●
announcements
    of new services by us or our competitors;
●
announcements
    by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
●
changes
    in financial estimates by securities analysts;
●
conditions
    in the energy recycling market;
●
changes
    in the economic performance or market valuations of other companies involved in the same industry;
●
changes
    in accounting standards, policies, guidance, interpretation or principles;
●
loss
    of external funding sources;
●
failure
    to maintain compliance with Nasdaq listing rules;
●
additions
    or departures of key personnel;
●
potential
    litigation;
●
conditions
    in the market; or
●
relatively
    small size of shares of our common stock available for purchase.
In
addition, the securities markets from time to time experience significant price and volume fluctuations that are not related to the operating
performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common
stock.
You
will experience immediate and substantial dilution in the net tangible book value per share of common stock you purchase.
Because
the public offering price per share of common stock and Warrant being offered is substantially higher than the net tangible book value
per share of our common stock, you will suffer substantial dilution in the net tangible book value of the shares of common stock you
purchase in this offering. If you purchase in this offering at an assumed public offering price of US$        
per share of common stock and Warrant, you will suffer immediate and substantial dilution of approximately US$        per
share of common stock in the net tangible book value of the Units. See "Dilution."
There
is no public market for the Warrants.
There
is no established public trading market for the Warrants, and we do not expect a market to develop. In addition, we do not intend to
apply to list the Warrants on any national securities exchange or other nationally recognized trading system, including Nasdaq. Without
an active market, the liquidity of the Warrants will be limited.
19
The
Warrants in this offering are speculative in nature.
The
Warrants in this offering do not confer any rights of common stock ownership on their holders, but rather merely represent the right
to acquire shares of common stock at a fixed price. In addition, following this offering, the market value of the warrants, if any, is
uncertain and there can be no assurance that the market value of the Warrants will equal or exceed their imputed offering price. The
Warrants will be not listed or quoted for trading on any market or exchange.
Holders
of the Warrants will not have rights of holders of our common stock until such Warrants are exercised.
Until
holders of Warrants acquire shares of common stock upon exercise of the Warrants, holders of Warrants will have no rights with respect
to the shares of common stock underlying such warrants.
We
have no present intention to pay dividends
.
We
have not paid dividends or made other cash distributions on our common stock during any of the past three years, and we do not expect
to declare or pay any dividends in the foreseeable future. We intend to retain any future earnings for working capital and to finance
current operations and expansion of our business.
A
large portion of our common stock is controlled by a small number of shareholders
.
A
large portion of our common stock is held by a small number of shareholders. As a result, these shareholders are able to influence the
outcome of shareholder votes on various matters, including the election of directors and extraordinary corporate transactions, including
business combinations. In addition, the occurrence of sales of a large number of shares of our common stock, or the perception that these
sales could occur, may affect our stock price and could impair our ability to obtain capital through an offering of equity securities.
Furthermore, the current ratios of ownership of our common stock reduce the public float and liquidity of our common stock, which can
in turn affect the market price of our common stock.
We
may be unable to maintain compliance with Nasdaq Marketplace Rules which could cause our common stock to be delisted from the Nasdaq
Capital Market. This could result in the lack of a market for our common stock, cause a decrease in the value of our common stock, and
adversely affect our business, financial condition and results of operations.
Under
the Nasdaq Marketplace Rules our common stock must maintain a minimum price of $1.00 per share for continued inclusion on the Nasdaq
Capital Market. The per share price of our common stock has fluctuated significantly. We cannot guarantee that our stock price will remain
at or above $1.00 per share and if the price again drops below $1.00 per share, our common stock could become subject to delisting. If
our common stock is delisted, trading of the stock will most likely take place on an over-the-counter market established for unlisted
securities. An investor is likely to find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common
stock on an over-the-counter market, and many investors may not buy or sell our common stock due to difficulty in accessing over-the-counter
markets, or due to policies preventing them from trading in securities not listed on a national exchange or other reasons. For these
reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of
an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations by limiting
our ability to attract and retain qualified executives and employees and limiting our ability to raise capital.
On
November 26, 2019, we received a written notification from the Nasdaq Stock Market Listing Qualifications Staff (the "Staff")
indicating that the Company had been granted until May 25, 2020, to regain compliance with the $1.00 minimum closing bid price requirement
for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule (the "Minimum Bid Price Requirement").
That notification provided that if at any time the closing bid price of the Company's securities is at least $1.00 per share for
a minimum of 10 consecutive business days, Nasdaq will provide written confirmation of compliance and this matter will be closed. On
April 29, 2020, the Company received a letter from Nasdaq confirming that the Company regained compliance with the Minimum Bid Price
Requirement. For ten consecutive business days, beginning from April 15, 2020 to April 28, 2020, the closing bid price of the Company's
common stock had been at $1.00 per share or greater, and therefore the Company regained compliance with the Minimum Bid Price Requirement.
20
The
offering price for our securities may not be indicative of prices that will prevail in the trading market and such market prices may
be volatile.
The
offering price for our securities will be determined by negotiations between us and the Underwriter and does not bear any relationship
to our earnings, book value or any other indicia of value. We cannot assure you that the market price of our shares of common stock will
not decline significantly below the offering price. The financial markets in the United States and other countries have experienced significant
price and volume fluctuations in the last few years. Volatility in the price of our shares of common stock may be caused by factors outside
of our control and may be unrelated or disproportionate to changes in our results of operations.
Our
management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance
our results of operations or the price of our shares of common stock.
We
anticipate that we will use the net proceeds from this offering for working capital and other corporate purposes. Our management will
have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not
improve our results of operations or enhance the market price of our shares of common stock.
Our
financial and opera
ting
performance may be adversely affected by general economic conditions, natural catastrophic events,
epidemics, public health crises.
Our
operating results will be subject to fluctuations based on general economic conditions. Deterioration in economic conditions could cause
decreases in both volume and reduce and/or negatively impact our short-term ability to grow our revenues. Further, any decreased collectability
of accounts receivable or early termination of agreements due to deterioration in economic conditions could negatively impact our results
of operations.
Our
business is subject to the impact of natural catastrophic events such as earthquakes, floods or power outages, political crises such
as terrorism or war, and public health crises, such as disease outbreaks, epidemics, or pandemics in the U.S. and global economies, our
markets and business locations.
Similarly,
natural disasters, wars (including the potential of war), terrorist activity (including threats of terrorist activity), social unrest
and heightened travel security measures instituted in response, and travel-related accidents, as well as geopolitical uncertainty and
international conflict, will affect travel volume and may in turn have a material adverse effect on our business and results of operations.
In addition, we may not be adequately prepared in contingency planning or recovery capability in relation to a major incident or crisis,
and as a result, our operational continuity may be adversely and materially affected, which in turn may harm our reputation.
21
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward looking statements that involve risks and uncertainties, principally in the sections entitled "Description
of Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results
of Operations." All statements other than statements of historical fact contained in this prospectus, including statements regarding
future events, our future financial performance, business strategy and plans and objectives of management for future operations, are
forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates,"
"believes," "can," "continue," "could," "estimates," "expects,"
"intends," "may," "plans," "potential," "predicts," "should,"
or "will" or the negative of these terms or other comparable terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including the risks outlined under "Risk Factors" or
elsewhere in this prospectus, which may cause our or our industry's actual results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment.
New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors
on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from
those contained in any forward-looking statements. All forward-looking statements included in this document are based on information
available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.
You
should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus. Before
you invest in our securities, you should be aware that the occurrence of the events described in the section entitled "Risk Factors"
and elsewhere in this prospectus could negatively affect our business, operating results, financial condition and stock price. Except
as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this
prospectus to conform our statements to actual results or changed expectations.
22
USE
OF PROCEEDS
After
deducting the estimated underwriting discounts, non-accountable expense allowance and other offering expenses payable by us, we expect
to receive net proceeds of approximately $10,000,000 from this offering. The net proceeds from this offering must be remitted to China
before we will be able to use the funds to grow our business.
We
plan to use the net proceeds of this offering for working capital needs, including devoting further resources to the below use of proceeds,
which may include investment in product development, sales and marketing activities, acquisition of other companies, technology infrastructure,
team development, capital expenditures, improvement of corporate facilities and other general and administrative matters. The foregoing
represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering.
Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen
event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.
We
intend to use the net proceeds of this offering as follows after we complete the remittance process, and we have ordered the specific
uses of proceeds in order of priority.
Description of Use
Estimated
Amount of
Net
Proceeds
$
Research and development of energy storage
    technologies, such as large scale photovoltaic and wind power stations
30
%
Working Capital
70
%
Total
$
100
%
Pending
other uses, we intend to invest the proceeds to us in investment-grade, interest-bearing securities such as money market funds, certificates
of deposit, or direct or guaranteed obligations of the U.S. government, or hold as cash. We cannot predict whether the proceeds invested
will yield a favorable return. Our management will have broad discretion in the application of the net proceeds we receive from this
offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds.
In
using the proceeds of this offering, we are permitted under PRC laws and regulations as an offshore holding company to provide funding
to our wholly foreign-owned subsidiary in China only through loans or capital contributions and to our consolidated variable interest
entity only through loans, subject to the filings with government authorities and limitations on the amount of capital contributions
and loans. Subject to completion of applicable government filing and registration requirements, we may extend inter-company loans to
our wholly foreign-owned subsidiary in China or make additional capital contributions to our wholly-foreign-owned subsidiary to fund
its capital expenditures or working capital. If we provide funding to our wholly foreign-owned subsidiary through loans, the total amount
of such loans may not exceed the difference between the entity's total investment as approved by the foreign investment authorities
and its registered capital. Such loans must be registered with SAFE or its local branches, which usually takes up to 20 working days
to complete. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at
all.
23
DIVIDEND
POLICY
We
plan to retain any earnings for the foreseeable future for our operations. We have never paid any dividends on our common stock and do
not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion
of our Board of Directors and will depend on our financial condition, operating results, capital requirements and such other factors
as our Board of Directors deems relevant.
If
we determine to pay dividends on our common stock in the future, as a holding company, we will be dependent on receipt of funds from
our subsidiaries.
Current
PRC regulations permit our indirect PRC subsidiaries to pay dividends only out of their accumulated profits, if any, determined in accordance
with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10%
of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each
of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although
the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be
used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective
companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.
The
value of the Renminbi fluctuates and is affected by, among other things, changes in China's political and economic conditions.
The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the
PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency
for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their
own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our
subsidiaries are unable to receive all of the revenue from our operations through the current contractual arrangements, we may be unable
to pay dividends on our common stock.
Cash
dividends, if any, on our common stock, will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes,
any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding
tax at a rate of up to 10.0%. See "Taxation — People's Republic of China Taxation."
24
CAPITALIZATION
The
following tables set forth our capitalization as of March 31, 2021 on a pro forma as adjusted basis giving effect to the completion of
the firm commitment offering at an assumed public offering price of $ per share of common stock and Warrant and to reflect the application
of the proceeds after deducting the estimated underwriting discounts, non-accountable expense allowance and other estimated offering
expenses. You should read this table in conjunction with our financial statements and related notes appearing elsewhere in this prospectus
and "Use of Proceeds" and "Description of Securities."
●
On
                                            an actual basis;
●
On
                                            a pro forma basis to give effect to the issuance and sale of       shares
                                            of common stock and Warrants offered hereby, based on an assumed offering price of $        per
                                            share of common stock and related Warrant (assuming the sale of all of the shares of common
                                            stock and related Warrants we are offering, and assuming the Underwriter does not exercise
                                            its option to purchase additional shares or Warrants and excluding the shares of common stock
                                            issuable upon the exercise of the Warrants and Underwriter Warrants), and (2) the application
                                            of the net proceeds after deducting the estimated 8.0% underwriting discounts, the Underwriter's
                                            1.0% non-accountable expense allowance, and approximately $           million
                                            of estimated offering expenses payable by us.
You
should read this capitalization table together with our consolidated financial statements and the related notes appearing elsewhere in
this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section
and other financial information included elsewhere in this prospectus.
As of March 31, 2021
Actual
Pro
    forma
(1)
Assets:
Current Assets
Right of use assets
Intangible assets
Property
Goodwill
Deferred tax asset
Total Assets
Liabilities:
Current Liabilities
Other Liabilities
Total Liabilities
Shareholder's Equity:
Common stock, $0.001 par value, 10,000,000 shares authorized,
    6,437,050 and shares issued and outstanding
Additional
    paid-in capital
(2)
Accumulated deficit
Accumulated other comprehensive income (loss)
Noncontrolling interest
Total shareholders' equity
Total Liabilities and Shareholders'
    Equity
(1)
Gives
    effect to the completion of the firm commitment offering at an assumed public offering price of $     per
    share of common stock and Warrant, and reflects the application of the proceeds after deducting the estimated underwriting discounts,
    the non accountable expense allowance and our estimated offering expenses.
(2)
Pro
    forma adjusted for the offering additional paid in capital reflects the net proceeds we expect to receive, after deducting underwriting
    discounts, underwriter non-accountable expense allowance and approximately $     in other expenses. We expect
    to receive net proceeds of approximately $     ($10,000,000 offering, less underwriting discount of $800,000,
    non-accountable expense allowance equal to 1% of the gross proceeds and accountable expense allowance of up to $150,000, as well
    as $     in other offering expenses).
25
DILUTION
If
you invest in our shares of common stock, your interest will be diluted to the extent of the difference between the offering price per
share and the pro forma net tangible book value per share after the offering. Dilution results from the fact that the per share offering
price is substantially in excess of the book value per share attributable to the existing shareholders for our presently outstanding
shares of common stock. Our net tangible book value attributable to shareholders at March 31, 2021 was $      or
approximately $      per share. Net tangible book value per share as of March 31, 2021 represents the amount
of total assets less intangible assets (but includes land use right) and total liabilities, divided by the number of shares outstanding.
Upon
the firm commitment offering is completed, we will have      shares of common stock outstanding upon completion
of the offering. Our post offering pro forma net tangible book value, which gives effect to receipt of the net proceeds from the offering
and issuance of additional shares in the offering, but does not take into consideration any other changes in our net tangible book value
after March 31, 2021, will be approximately $      or approximately $      per share.
This would result in dilution to investors in this offering of approximately $     per share or approximately
     % from the assumed offering price of $     per share. Net tangible book value
per share would increase to the benefit of present shareholders by $      per share attributable to the purchase
of the shares by investors in this offering.
The
following table sets forth the estimated net tangible book value per share after the offering and the dilution to persons purchasing
shares.
Firm Commitment
Offering
Assumed offering price
    per share
$
Net tangible book value per share
    as of March 31, 2021
$
Increase in net tangible book value
    per share after this offering
$
Net tangible book value per share
    after the offering
$
Dilution per share to new investors
$
26
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This
prospectus contains or may contain forward-looking statements and information that are based upon beliefs of, and information currently
available to, Company's management as well as estimates and assumptions made by Company's management. Readers are cautioned
not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When
used in the filings, the words "may", "will", "should", "would", "anticipate",
"believe", "estimate", "expect", "future", "intend", "plan",
or the negative of these terms and similar expressions as they relate to Company or Company's management identify forward-looking
statements. Such statements reflect the current view of Company with respect to future events and are subject to risks, uncertainties,
assumptions, and other factors (including the statements in the section "results of operations" below), and any businesses
that Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove
incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although
the Company believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, the Company cannot
guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities
laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to
actual results. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of annual report,
which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations,
and prospects.
Our
financial statements are prepared in US Dollars and in accordance with accounting principles generally accepted in the United States.
See "Foreign Currency Translation and Comprehensive Income (Loss)" below for information concerning the exchange rates at
which Renminbi ("RMB") were translated into US Dollars ("USD") at various pertinent dates and for pertinent periods.
OVERVIEW
China
Recycling Energy Corporation (the "Company" or "CREG") was incorporated on May 8, 1980. On March 8, 2007, the
Company changed its name from China Digital Wireless, Inc. to its current name, China Recycling Energy Corporation. The Company, through
its subsidiaries, sells and leases energy saving systems and equipment to its customers in the People's Republic of China ("PRC").
Typically, the Company transfers ownership of the waste energy recycling power generating projects to its customers at the end of each
sales-type lease and provides financing to its customers for the cost of the projects as described below.
The
Company is in the process of transforming and expanding into an energy storage integrated solution provider. We plan to pursue disciplined
and targeted expansion strategies for market areas we currently do not serve. We actively seek and explore opportunities to apply energy
storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale
photovoltaic (PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies.
In
December 2019, a novel strain of coronavirus (COVID-19) was reported and the World Health Organization has declared the outbreak to constitute
a "Public Health Emergency of International Concern." This pandemic, which continues to spread to additional countries, and
is disrupting supply chains and affecting production and sales across a range of industries as a result of quarantines, facility closures,
and travel and logistics restrictions in connection with the outbreak. However, as a result of PRC government's effort on disease
control, the outbreak in China is under the control. As of the date of this prospectus, there are some new Covid-19 cases discovered
in a few provinces of China, however, the number of new cases is not significant due to the PRC government's strict control.
For
the three months ended March 31, 2021 and 2020, the Company had a net loss of $277,224 and $598,551, respectively. The Company has an
accumulated deficit of $43.31 million as of March 31, 2021.
The
historical operating results indicate substantial doubt exists related to the Company's ability to continue as a going concern.
However, the Company had $144.07 million cash on hand at March 31, 2021, as a result of collection of the full payment from all the projects
that were disposed earlier. This is expected to satisfy the Company's estimated liquidity needs 12 months from the issuance of
the financial statements. The Company believes that the actions discussed above are probable of occurring and the occurrence, as well
as the cash flow discussed, mitigate the substantial doubt raised by its historical operating results.
27
Management
also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others. While the
Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable
terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent
upon the Company's ability to further implement its business plan and generate sufficient revenue and its ability to raise additional
funds by way of a public or private offering, or debt financing including bank loans.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Our
management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial
statements ("CFS"), which were prepared in accordance with accounting principles generally accepted in the United States
of America ("US GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates
and assumptions. We base our estimates on historical experience and various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While
our significant accounting policies are more fully described in Note 2 to our CFS, we believe the following accounting policies are the
most critical to assist you in fully understanding and evaluating this management discussion and analysis.
Basis
of Presentation
These
accompanying CFS were prepared in accordance with US GAAP and pursuant to the rules and regulations of the SEC for financial statements.
Basis
of Consolidation
The
CFS include the accounts of CREG and, its subsidiary, Sifang Holdings and Yinghua; Sifang Holdings' wholly-owned subsidiaries,
Huahong and Shanghai TCH; Shanghai TCH's wholly-owned subsidiary Xi'an TCH; and Xi'an TCH's subsidiaries, Erdos
TCH, Zhonghong, and Zhongxun. Substantially all of the Company's revenues are derived from the operations of Shanghai TCH and its
subsidiaries, which represent substantially all of the Company's consolidated assets and liabilities as of March 31, 2021. All
significant inter-company accounts and transactions were eliminated in consolidation.
Use
of Estimates
In
preparing the CFS, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance
sheets as well as revenues and expenses during the year reported. Actual results may differ from these estimates.
Concentration
of Credit Risk
Cash
includes cash on hand and demand deposits in accounts maintained within China. Balances at financial institutions within China are not
covered by insurance. The Company has not experienced any losses in such accounts.
Certain
other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The
Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers'
financial condition and customer payment practices to minimize collection risk on accounts receivable; however, there is no assurance
that the insolvency of one or more customers of the Company would not have a material adverse effect on our business, financial condition
or results of operation.
The
operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition and results of operations
may be influenced by the political, economic and legal environments in the PRC.
28
Accounts
Receivable
As
of March 31, 2021, the Company had gross accounts receivable of $340,553 from Erdos TCH for the electricity sold, and had bad debt
allowance of $34,055 for Erdos TCH due to its failure to make payments as scheduled.
As
of December 31, 2020, the Company had gross accounts receivable of $342,974 of Erdos TCH for the electricity sold. As of December
31, 2020, the Company had bad debt allowance of $34,297 for Erdos TCH due to its failure to make payments as scheduled.
Investment
in sales-type leases, net
The
Company maintains reserves for potential credit losses on receivables. Management reviews the composition of receivables and analyzes
historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns
to evaluate the adequacy of these reserves. Based on an evaluation of the collectability of such receivables, as of December 31, 2020
and March 31, 2021, the Company had bad debt allowance for net investment receivable on sales-type leases of $0.
Revenue
Recognition
Sales-type
Leasing and Related Revenue Recognition
On
January 1, 2019, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial
application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC Topic
842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under
Topic 840. (See Operating lease below as relates to the Company as a lessee). The Company's sales type lease contracts for revenue
recognition fall under ASC 842. During the three months ended March 31, 2021 and 2020, the Company did not sell any new power generating
projects.
The
Company constructs and leases waste energy recycling power generating projects to its customers. The Company typically transfers ownership
of the waste energy recycling power generating projects to its customers at the end of the lease. Prior to January 1, 2019, the investment
in these projects was recorded as investment in sales-type leases in accordance with ASC Topic 840
, "Lease
s
,"
and
its various amendments and interpretations.
The
Company finances construction of waste energy recycling power generating projects. The sales and cost of sales are recognized at the
inception of the lease, which is when the control is transferred to the lessee. The Company accounts for the transfer of control as a
sales type lease in accordance with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of
payments is probable. This is in accordance with the revenue recognition principle in ASC 606 -Revenue from contracts with customers.
The investment in sales-type leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated
executory cost. Minimum lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee).
The discount rate implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments
consist of the gross lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over
the lease term to produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception
of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction
of receivables. Revenue is recognized net of sales tax.
Contingent
Rental Income
The
Company records the income from actual electricity usage in addition to minimum lease payment of each project as contingent rental income
in the period earned. Contingent rent is not part of minimum lease payments.
29
Foreign
Currency Translation and Comprehensive Income (Loss)
The
Company's functional currency is RMB. For financial reporting purposes, RMB figures were translated into USD as the reporting currency.
Assets and liabilities are translated at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated
at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange
rates from period to period are included as a component of stockholders' equity as "Accumulated other comprehensive income."
Gains and losses from foreign currency transactions are included in income. There has been no significant fluctuation in exchange rate
for the conversion of RMB to USD after the balance sheet date.
The
Company uses "Reporting Comprehensive Income" (codified in FASB ASC Topic 220). Comprehensive income is comprised of net
income and all changes to the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders.
RESULTS
OF OPERATIONS
Comparison
of years ended December 31, 2020 and 2019
The
following table sets forth the results of our operations for the periods indicated as a percentage of net sales. Certain columns may
not add due to rounding.
2020
% of Sales
2019
% of Sales
Sales - contingent rental
    income
$
-
-
%
$
697,028
100
%
Cost of sales
-
-
%
-
-
%
Gross profit
-
-
%
697,028
100
%
Interest income
    on sales-type leases
-
-
%
170,403
24
%
Total operating income
-
-
%
867,431
124
%
Total operating
    income (expenses)
5,827,019
-
%
(9,974,519
)
(1,431
)%
Income (loss) from operations
5,827,019
-
%
(9,107,088
)
(1,307
)%
Total non-operating
    expenses, net
(1,776,195
)
-
%
(2,690,476
)
(386
)%
Income (loss) before income tax
4,050,824
-
%
(11,797,564
)
(1,693
)%
Income tax benefit
-
-
%
(3,024,807
)
(434
)%
Net income (loss)
$
4,050,824
-
%
$
(8,772,757
)
(1,259
)%
SALES
. Total
sales for the years ended December 31, 2020 and 2019 were $0 and $697,028, respectively. The sales in 2019 were from the contingent
rental income of Erdos TCH, which is recognized when the actual electricity production is in excess of the minimum lease payments.
COST
OF SALES.
Cost of sales ("COS") for the years ended December 31, 2020 and 2019 were $0.
GROSS
PROFIT
. Gross income for the years ended December 31, 2020 and 2019 were $0 and $697,028, respectively, a gross margin of 0% and
100%.
INTEREST
INCOME ON SALES-TYPE LEASES.
Interest income on sales-type leases for the years ended December 31, 2020 and 2019 was $0 and
$170,403, respectively. The Company disposed all of its systems and currently holds only five power generating systems through Erdos
TCH. Erdos TCH's operations ceased due to renovation and furnace safety upgrade; the Company originally expected to resume production
of these five power generating systems in July 2020, but the resumption of operations was further delayed due to government's request
for Erdos TCH's production line rectification for lowering its energy consumption per unit of GDP. The Company expects to resume
production in July 2021.
OPERATING
(INCOME) EXPENSES
. Operating (income) expenses consisted of general and administrative expenses, and bad debts expense (reversal)
totaling $(5,827,019) for the year ended December 31, 2020, compared to $9,974,519 operating expenses for the year ended December 31,
2019, a decrease of $15,801,538 or 158%. The decrease was mainly due to decreased bad debt expense by $11,417,061, decreased loss on
disposal of systems of $1,242,694, decreased impairment loss on fixed assets and construction in progress of $876,660, decreased operating
expenses of $1,402,969 of Erdos TCH due to cease of operation and social insurance expense adjustment of $508,887 of Xian TCH during
the year ended December 31, 2020.
30
NET
NON-OPERATING EXPENSES.
Net non-operating expenses consisted of loss on note conversion, interest income, interest expenses
and miscellaneous expenses. For the year ended December 31, 2020, net non-operating expenses was $1,776,195 compared to $2,690,476 for
the year ended December 31, 2019. For the year ended December 31, 2020, we had $185,527 interest income but the amount was offset by
$1,463,721 of interest expense on entrusted loan and note payable, and a $502,393 loss on note conversion. For the year ended December
31, 2019, we had $159,183 interest income, but the amounts were offset by a $2.99 million interest expense on entrusted loan and note
payable and a $173,886 loss on note conversion.
INCOME
TAX EXPENSE.
Income tax expense was $0 for the year ended December 31, 2020, compared with $3,024,807 income tax benefit for
the year ended December 31, 2019. The consolidated effective income tax rates for the years ended December 31, 2020 and 2019 were 0%
and (26.9)%, respectively. We had non-taxable income of $6.03 million due to reversal of bad debts in 2020, which resulted in $0 income
tax expense in the year ended December 31, 2020. The income tax benefit for year ended December 31, 2019 was mainly due to tax-deductible
loss.
NET
INCOME (LOSS)
. Net income for year ended December 31, 2020 was $4,050,824 compared to net loss of $8,772,757 for the year ended
December 31, 2019, a decrease of loss of $12,823,581. This decrease in net loss was mainly due to the decrease operating expenses and
decrease interest expense as described above.
Comparison
of three months ended March 31, 2021 and 2020
The
following table sets forth the results of our operations for the periods indicated as a percentage of net sales. Certain columns may
not add due to rounding.
2021
%
                                            of Sales
2020
%
                                            of Sales
Sales - contingent rental income
$
-
-
%
$
-
-
%
Cost of sales
-
-
%
-
-
%
Gross profit
-
-
%
-
-
%
Interest income on sales-type leases
-
-
%
-
-
%
Total operating income
-
-
%
-
-
%
Total operating expenses
273,092
-
%
154,178
-
%
Loss from operations
(273,092
)
-
%
(154,178
)
-
%
Total non-operating income (expenses),
    net
993
-
%
(444,373
)
-
%
Loss before income tax
(272,099
)
-
%
(598,551
)
%
Income tax expense
5,125
-
%
-
-
%
Net loss
$
(277,224
)
-
%
$
(598,551
)
-
%
SALES
. Total
sales for the three months ended March 31, 2021 and 2020 were $0.
COST
OF SALES.
Cost of sales ("COS") for the three months ended March 31, 2021 and 2020 were $0.
GROSS
PROFIT
. Gross income for the three months ended March 31, 2021 and 2020 were $0 with gross margin of 0%.
OPERATING
EXPENSES
. Operating expenses consisted of general and administrative expenses, totaling $273,092 for the three months ended
March 31, 2021, compared to $154,178 for the three months ended March 31, 2020, an increase of $118,914 or 77%. The increase was mainly
due to increased payroll expense by $25,000, increased audit and related fee by $53,000 and other administrative expenses.
NET
NON-OPERATING INCOME (EXPENSES).
Net non-operating income (expenses) consisted of loss on note conversion, interest income,
interest expenses and miscellaneous expenses. For the three months ended March 31, 2021, net non-operating income was $993 compared to
non-operating expense of $444,373 for the three months ended March 31, 2020. For the three months ended March 31, 2021, we had $83,696
interest income, but the amount was offset by $82,086 interest expense on entrusted loan and note payable, and other expense of $617.
For the three months ended March 31, 2020, we had $27,006 interest income, but the amounts were offset by a $355,244 interest expense
on entrusted loan and note payable, $103,167 loss on note conversion and other expense of $12,968.
31
INCOME
TAX EXPENSE.
Income tax expense was $5,125 for the three months ended March 31, 2021, compared with $0 for the three months
ended March 31, 2020. The consolidated effective income tax rates for the three months ended March 31, 2021 and 2020 were 1.9% and 0%,
respectively.
NET
LOSS
. Net loss for three months ended March 31, 2021 was $277,224 compared to net loss of $598,551 for the three months ended
March 31, 2020, a decrease of loss of $321,327. This decrease in net loss was mainly due to decreased interest expense by $273,158, decreased
loss on note conversion by $103,167, and increased interest income by $56,690, despite we had increased operating expense by $118,914.
LIQUIDITY
AND CAPITAL RESOURCES
Comparison
of years ended December 31, 2020 and 2019
As
of December 31, 2020, the Company had cash and equivalents of $107.80 million, other current assets of $399,784, current liabilities
of $39.04 million, working capital of $69.16 million, a current ratio of 2.77:1 and a liability-to-equity ratio of 0.49:1.
The
following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2020
and 2019:
2020
2019
Cash provided by (used in):
Operating Activities
$
82,248,467
$
(14,649,028
)
Investing Activities
(1,885
)
5,074
Financing Activities
3,497,187
(21,816,293
)
Net
cash provided by operating activities was $82.25 million during the year ended December 31, 2020, compared to $14.65 million cash used
in operating activities for the year ended December 31, 2019. The increase in net cash inflow for the year ended December 31, 2020 was
mainly due to increased cash inflow from collection of sales type leases of Pucheng systems by $14.15 million, and increased cash collection
of accounts receivable by $70.55 million for selling / disposing Huayu, Shenqiu, Zhongtai and Tian'an systems and decreased cash
outflow on interest payable on entrusted loan by $10.39 million.
Net
cash provided by (used in) investing activities was $(1,885) and $5,074, respectively, for the years ended December 31, 2020 and 2019.
For the year ended December 31, 2020, $1,885 was the purchase of the fixed assets. For the year ended December 31, 2019, $5,074 was the
proceeds from disposal of the fixed assets.
Net
cash provided by financing activities was $3,497,187 compared to net cash used in financing activities of $21.82 million during the years
ended December 31, 2020 and 2019, respectively. The cash inflow for the year ended December 31, 2020 was from the issuance of common
stock of $497,187 and issuance of notes of $3,000,000. The cash outflow for the year ended December 31, 2019 was from the issuance of
notes of $2.0 million and proceeds from issuance of common stock of $3.31 million, but was offset by repayment of entrusted loan of $27.13
million.
We
do not believe inflation has had or will have a significant negative impact on our results of operations in 2021; however, there is no
assurance that unanticipated economic events could lead to inflation that might materially adversely affect our business.
Comparison
of three months Ended March 31, 2021 and 2020
As
of March 31, 2021, the Company had cash and equivalents of $144.07 million, other current assets of $575,214, current liabilities of
$38.56 million, working capital of $106.08 million, a current ratio of 3.75:1 and a liability-to-equity ratio of 0.35:1.
32
The
following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended March 31,
2021 and 2020:
2021
2020
Cash provided by (used in):
Operating Activities
$
(819,056
)
$
39,650,520
Investing Activities
-
-
Financing Activities
38,253,041
-
Net
cash used in operating activities was $819,056 during the three months ended March 31, 2021, compared to $39.65 million cash provided
by operating activities for the three months ended March 31, 2020. The decrease in net cash inflow for the three months ended March 31,
2021 was mainly due to our cash collection of sales type leases of Pucheng systems by $13.98 million, and cash collection of accounts
receivable by $25.79 million for selling / disposing Huayu, Shenqiu, Zhongtai and Tian'an systems that had been completed in the
three months ended March 31, 2020.
Net
cash provided by (used in) investing activities was $0 and $0, respectively, for the three months ended March 31, 2021 and 2020.
Net
cash provided by financing activities was $38,253,041 compared to net cash used in financing activities of $0 during the three months
ended March 31, 2021 and 2020, respectively. The cash inflow for the three months ended March 31, 2021 was the proceeds from a private
placement of $38,253,041.
On
February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors (the "Purchasers"),
pursuant to which the Company agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company,
at $11.522 per share, which is the five-day average closing price immediately prior to signing the Purchase Agreements. One
of the purchaser is the Company's CEO (also is the Company's Chairman), he purchased 1,000,000 common shares of the Company.
On March 11, 2021, the Company received approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities
purchase agreements, there was no any fees paid in connection with this financing. In April 2021, the Company's CEO amended the
number of shares that he would purchase from 1,000,000 shares to 940,000 shares; accordingly, total number of shares sold in this offering
became 3,260,000 shares. The Company returned $691,320 extra proceeds that were received earlier to the Company's CEO in April
2021.
We
do not believe inflation has had or will have a significant negative impact on our results of operations in 2021; however, there is no
assurance that unanticipated economic events could lead to inflation that might materially adversely affect our business.
Transfers
of Cash to and from Our Subsidiaries
The
PRC has currency and capital transfer regulations that require us to comply with certain requirements for the movement of capital. The
Company is able to transfer cash (US Dollars) to its PRC subsidiaries through: (i) an investment (by increasing the Company's registered
capital in a PRC subsidiary), or (ii) a stockholder loan. The Company's subsidiaries in the PRC have not transferred any earnings
or cash to the Company to date. The Company's business is primarily conducted through its subsidiaries. The Company is a holding
company and its material assets consist solely of the ownership interests held in its PRC subsidiaries. The Company relies on dividends
paid by its subsidiaries for its working capital and cash needs, including the funds necessary: (i) to pay dividends or cash distributions
to its stockholders, (ii) to service any debt obligations and (iii) to pay operating expenses. As a result of PRC laws and regulations
(noted below) that require annual appropriations of 10% of after-tax income to be set aside in a general reserve fund prior to payment
of dividends, the Company's PRC subsidiaries are restricted in that respect, as well as in others respects noted below, in their
ability to transfer a portion of their net assets to the Company as a dividend.
With
respect to transferring cash from the Company to its subsidiaries, increasing the Company's registered capital in a PRC subsidiary
requires the filing of the local commerce department, while a stockholder loan requires a filing with the state administration of foreign
exchange or its local bureau.
33
With
respect to the payment of dividends, we note the following:
1.
PRC
    regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting
    standards and PRC regulations (an in-depth description of the PRC regulations is set forth below);
2.
Our
    PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards,
    each year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;
3.
Such
    reserves may not be distributed as cash dividends;
4.
Our
    PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the
    event of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare
    Fund;
5.
The
    incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary's ability to pay stockholder
    dividends or make other cash distributions; and
6.
The
    Company is subject to covenants and consent requirements.
If,
for the reasons noted above, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company
when needed, the Company's ability to conduct operations, make investments, engage in acquisitions, or undertake other activities
requiring working capital may be materially and adversely affected. However, our operations and business, including investment and/or
acquisitions by our subsidiaries within China, will not be affected as long as the capital is not transferred in or out of the PRC.
PRC
Regulations
In
accordance with PRC regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise
("FIE") established in the PRC is required to provide statutory reserves, which are appropriated from net profit, as reported
in the FIE's PRC statutory accounts. A FIE is required to allocate at least 10% of its annual after-tax profit to the surplus reserve
until such reserve has reached 50% of its respective registered capital (based on the FIE's PRC statutory accounts). The aforementioned
reserves may only be used for specific purposes and may not be distributed as cash dividends. Until such contribution of capital is satisfied,
the FIE is not allowed to repatriate profits to its stockholders, unless approved by the State Administration of Foreign Exchange. After
satisfaction of this requirement, the remaining funds may be appropriated at the discretion of the FIE's board of directors. Our
subsidiary, Shanghai TCH, qualifies as a FIE and is therefore subject to the above-mandated regulations on distributable profits.
Additionally,
in accordance with PRC corporate law, a domestic enterprise is required to maintain a surplus reserve of at least 10% of its annual after-tax
profit until such reserve has reached 50% of its respective registered capital based on the enterprise's PRC statutory accounts.
The aforementioned reserves can only be used for specific purposes and may not be distributed as cash dividends. Xi'an TCH, Huahong,
Zhonghong and Erdos TCH were established as domestic enterprises; therefore, each is subject to the above-mentioned restrictions on distributable
profits.
As
a result of PRC laws and regulations that require annual appropriations of 10% of after-tax income to be set aside, prior to payment
of dividends, in a general reserve fund, the Company's PRC subsidiaries are restricted in their ability to transfer a portion of
their net assets to the Company as a dividend or otherwise.
34
Chart
of the Company's Statutory Reserve
Pursuant
to PRC corporate law, effective January 1, 2006, the Company is required to maintain a statutory reserve by appropriating from its after-tax
profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings. Our restricted and
unrestricted retained earnings under US GAAP are set forth below:
As of
December 31,
2020
December 31,
2019
Unrestricted retained earnings (accumulated
    deficit)
$
(43,026,465
)
$
(46,447,959
)
Restricted retained earnings (surplus
    reserve fund)
15,155,042
14,525,712
Total retained earnings (accumulated
    deficit)
$
(27,871,423
)
$
(31,922,247
)
As of
March 31,
2021
December 31,
2020
Unrestricted retained earnings (accumulated
    deficit)
$
(43,305,227
)
$
(43,026,465
)
Restricted retained earnings (surplus
    reserve fund)
15,156,580
15,155,042
Total retained earnings (accumulated
    deficit)
$
(28,148,647
)
$
(27,871,423
)
OFF-BALANCE
SHEET ARRANGEMENTS
We
have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders' equity or that
are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable
interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing,
hedging or research and development services with us.
CONTRACTUAL
OBLIGATIONS
The
Company's contractual obligations as of December 31, 2020 were as follows:
1 year or
More than
Contractual
    Obligation
less
1 year
Notes payable including
    accrued interest of $18,968
$
3,024,613
$
-
Entrusted loan including interest
    payable of $10,144,228
$
32,040,972
$
306,518
Total
$
35,065,585
$
306,518
The
Company believes it had sufficient cash in bank of $107 million as of December 31, 2020, and a sufficient channel to commercial institutions
to obtain any loans that may be necessary to meet its working capital needs. Historically, we have been able to obtain loans or otherwise
achieve our financing objectives due to the Chinese government's support for energy-saving businesses with stable cash inflows,
good credit ratings and history. However, there is no assurance that we will be able to continue obtaining loans or otherwise achieve
our financial objectives in the future.
The
Company's contractual obligations as of March 31, 2021 were as follows:
1 year or
More than
Contractual
    Obligation
less
1 year
Notes payable including
    accrued interest of $81,968, net of unamortized OID of $125,605
$
3,106,363
$
-
Entrusted loan including interest
    payable of $10,072,599
$
31,814,730
$
304,354
Total
$
34,921,093
$
304,354
The
Company believes it had sufficient cash in bank of $144 million as of March 31, 2021, and a sufficient channel to commercial institutions
to obtain any loans that may be necessary to meet its working capital needs. Historically, we have been able to obtain loans or otherwise
achieve our financing objectives due to the Chinese government's support for energy-saving businesses with stable cash inflows,
good credit ratings and history. However, there is no assurance that we will be able to continue obtaining loans or otherwise achieve
our financial objectives in the future.
35
BUSINESS
Overview
We
are currently engaged in the recycling energy business, providing energy savings and recycling products and services. We are a pioneer
in waste energy recycling and a developer of energy efficiency solutions for various energy intensive industrial enterprises in China.
We use 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 which 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 in nonferrous metal plants. We construct our projects at our customer's facility and the electricity produced
is used on-site by the customer.
We
develop fully customized projects across several verticals to better meet customer's energy recovery needs. 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 by 5% to 20%, lower their
operating costs, extend the life of primary manufacturing equipment, while still complying with government regulations on emissions.
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. Since our power
generation system uses the waste energy produced by customers' original production line, it does not need to utilize new energy
sources from fossil fuel, coal, oil and natural gas. Our power generation system reduces the original waste product emission by recycling
waste energy, which is then turned into usable new energy, while adding no new carbon dioxide emissions, soot, waste residue and other
pollutants after the energy production process completes. Any waste product produced is usually in the form of liquid in such a negligible
amount that it is generally discharged into the sewage treatment system of the customers' plant. Therefore, our projects are designed
to be 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 20 years, and then transfer the projects to the owners.
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 capital to comply with government environmental regulations, reduce
noise and emissions and reduce their energy costs. We provide the initial capital investment for customers in exchange for a long-term
production agreement with attractive returns on investment. We in turn efficiently recapture our costs through the stream of lease payments.
We
are headquartered in China. Our principal executive offices are located at 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd Road,
Yanta District, Xi'an City, Shaanxi Province, China, and our telephone number at this location is +86-29-8765-1098.
Corporate
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, Yinghua and Sifeng, Sifeng's wholly-owned subsidiaries,
Huahong and Shanghai TCH, Shanghai TCH's wholly-owned subsidiaries, Xi'an TCH, Xi'an TCH's wholly-owned subsidiary
Erdos TCH and Xi'an TCH's 90% owned and Shanghai TCH's 10% owned subsidiary Xi'an Zhonghong New Energy Technology
Co., Ltd., and Zhongxun. Shanghai TCH was established as a foreign investment enterprise in Shanghai under the laws of the PRC on May
25, 2004, and currently has registered capital of $29.80 million. Xi'an TCH was incorporated in Xi'an, Shaanxi Province under
the laws of the PRC in November 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 owns 90% and Shanghai TCH owns 10% of Zhonghong.
Zhonghong provides 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.
36
The
Company is in the process of transforming and expanding into an energy storage integrated solution provider. We plan to pursue disciplined
and targeted expansion strategies for market areas we currently do not serve. We actively seek and explore opportunities to apply energy
storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale
photovoltaic (PV) and wind power stations, remote islands without electricity, and cities with multi-energy supplies.
In
July 2019, the four ministries of China, including the National Development and Reform Commission, the National Energy Administration,
Ministry of Industry and Information and Ministry of Science and Technology, jointly issued "the Implementation of 2019-2020 Action
Plan of the 'Promotion of Development of Energy Storage Technology and Industry Guidance'" to not only promote the
development of the energy storage industry in the areas of technical research and development, intelligent manufacture, demonstration
of application, and power battery energy storage applications, but also made clear assignment of responsibilities for local governments
to implement the plan. Local governments and power grid companies have issued relevant policies and implementation rules thereafter.
Driven by national policies and local measures, the market space of energy storage is expanding. We believe the foregoing measures demonstrate
that the application technology of energy storage is an industry supported by Chinese government.
The
Company's organizational chart as of the date of this prospectus is as follows:
37
Our
Projects
We
design, finance, construct, operate and eventually transfer waste energy recycling projects designed 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.
Waste
Heat to Energy Systems
Waste
heat to energy systems utilize waste heat generated in industrial production to generate electricity. The waste heat is trapped to heat
a boiler to create steam and power a steam turbine. Our waste heat to energy systems have used waste heat from cement production and
from metal production.
Shanghai
TCH and its Subsidiaries
Shanghai
TCH was established as a foreign investment enterprise in Shanghai under the laws of the PRC on May 25, 2004 and has a 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. In
February 2009, Huahong was incorporated in Xi'an, Shaanxi province. Erdos TCH was incorporated in April 2009 in Erdos, Inner Mongolia
Autonomous Region. On July 19, 2013, Xi'an TCH formed Xi'an Zhonghong New Energy Technology Co., Ltd ("Zhonghong").
Xi'an TCH owns 90% and Shanghai TCH owns 10% of Zhonghong, which provides energy saving solutions and services, including constructing,
selling and leasing energy saving systems and equipment to customers.
As
of December 31, 2020, Erdos TCH leased power and steam generating systems from waste heat from metal refining to Erdos (a total of five
systems) and charges Erdos a leasing fee based on actual electricity generated.
Erdos
TCH
On
April 14, 2009, the Company formed Erdos TCH as a joint venture (the "JV" or "Erdos TCH") 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 JV has a term of 20 years, with an initial investment of $17.55 million (RMB 120 million), and the total investment
for the project estimated at $79 million (RMB 500 million). Erdos contributed 7% of the total investment for the project, and Xi'an
TCH contributed 93%. According to Xi'an TCH and Erdos' 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 transferred and 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 Erdos TCH. In addition, Xi'an TCH was required to pay Erdos accumulated profits
from inception up to June 30, 2013, in accordance with the 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.
The power generation systems were built in 2009, and are now 12 years old. The equipment is obsolete and the efficiency of the power
generation systems is declining year by year. The current power generation efficiency can only reach 30%, and the equipment needs to
be upgraded. The Company plans to upgrade these five power generation systems in the next six months, commencing third quarter of 2021.
The total project cost is about $40,000,000.
After
considering certain economic challenges facing Erdos and maintaining the long-term cooperative relationship between the parties, which
we believe will continue to produce long-term benefits, on April 28, 2016, Erdos TCH and Erdos entered into a supplemental agreement,
effective May 1, 2016. Under the supplemental agreement, Erdos TCH cancelled monthly minimum lease payments from Erdos, and agreed to
charge Erdos based on actual electricity sold at RMB 0.30 / KWH, with such price to be adjusted annually based on prevailing market conditions.
38
The
Company evaluated the modified terms for payments based on actual electricity sold as minimum lease payments as defined in ASC 840-10-25-4,
since lease payments that depend on a factor directly related to the future use of the leased property are contingent rentals and, accordingly,
are excluded from minimum lease payments in their entirety. The Company wrote off the net investment receivables of these leases at the
lease modification date.
Pucheng
Biomass Power Generation Projects
On
June 29, 2010, Xi'an TCH entered into a Biomass Power Generation ("BMPG") Project Lease Agreement with PuchengXinHeng
Yuan Biomass Power Generation Co., Ltd. ("Pucheng"), a limited liability company incorporated in China. Under this lease
agreement, Xi'an TCH leased a set of 12MW BMPG systems to Pucheng for a minimum of $279,400 (RMB 1,900,000) per month for a term
of 15 years ("Pucheng Phase I").
On
September 11, 2013, Xi'an TCH entered into a BMPG Asset Transfer Agreement (the "Pucheng Transfer Agreement") with
Pucheng Xin Heng Yuan Biomass Power Generation Corporation ("Pucheng"), a limited liability company incorporated in China.
The Pucheng Transfer Agreement provided for the sale by Pucheng to Xi'an TCH of a set of 12 MW BMPG systems with the completion
of system transformation for a purchase price of $16.48 million (RMB 100 million) in the form of 8,766,547 shares of common stock of
the Company at $1.87 per share (the share and per share numbers were not adjusted for the Reverse Stock Split). 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 systems to Pucheng, and combines this lease with the lease for the 12 MW BMPG station
of Pucheng Phase I project, under a single lease to Pucheng for $0.63 million (RMB 3.8 million) per month (the "Pucheng Phase II
Project"). The term for the Pucheng Lease is from September 2013 to June 2025. The lease agreement for the 12 MW station from the
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 Biomass Power Generation 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 paid Shenqiu $10.94 million (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 Biomass Power Generation 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 1.8 million) 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.
On
January 4, 2019, Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong Bai, a resident of China, entered into a Projects Transfer
Agreement (the "Agreement"), pursuant to which Xi'an TCH transferred two Biomass Power Generation Projects in Shenqiu
("Shenqiu Phase I and II Projects") to Mr. Bai for $18.55 million (RMB 127,066,000). Mr. Bai agreed to transfer all the equity
shares of his wholly owned company, Xi'an Hanneng Enterprises Management Consulting Co. Ltd. ("Xi'an Hanneng"),
to Beijing Hongyuan Recycling Energy Investment Center, LLP (the "HYREF"), as repayment for the loan made by Xi'an
Zhonghong to HYREE as consideration for the transfer of the Shenqiu Phase I and II Projects (See Note 10). The transfer was completed
on February 15, 2019.
39
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 WGPG station, which was converted from a 15 MW coal gangue power generation station
from Yida. As consideration for the Transfer Asset, Xi'an TCH paid Yida $18.69 million (RMB 115 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. The exchange rate between US Dollar and Chinese RMB in connection with the stock issuance was the rate equal to the
middle rate published by the People's Bank of China on the closing date of the assets transfer.
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 $0.49 million (RMB 3 million) per month,
and the term of the lease is from June 28, 2014 to June 27, 2029. Yida will also provide an $0.49 million (RMB 3 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 $16.89 million (RMB
112,000,000) (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 of $0.90 million (RMB 6,000,000) to Xi'an TCH within
5 business days from the execution of the Repurchase Agreement; (ii) a payment of $7.54 million RMB 50,000,000) 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 $9.35
million RMB 62,000,000) 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 was transferred from Xi'an TCH to Yida within 3 business days after
Xi'an TCH received 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 and the HYREF Fund
On
June 25, 2013, Xi'an TCH and Hongyuan Huifu Venture Capital Co. Ltd ("Hongyuan Huifu") jointly established Hongyuan
Recycling Energy Investment Management Beijing Co., Ltd (the "Fund Management Company") with registered capital of $1.45
million (RMB 10 million). With respect to the Fund Management Company, voting rights and dividend rights are allocated 80% and 20% between
Hongyuan Huifu 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 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 amount of $77 million (RMB 460 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 $46.67 million (RMB 280 million) to the HYREF Fund and is a preferred limited partner; (2) Hongyuan Huifu, which made
an initial capital contribution of $16.67 million (RMB 100 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, and was extended again for another six years, expiring July 18, 2025. 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 size of the HYREF
Fund is $76.66 million (RMB 460 million). The HYREF Fund was formed for the purpose of investing in Xi'an Zhonghong New Energy
Technology Co., Ltd., a then 90% owned subsidiary of Xi'an TCH, for the construction of two coke dry quenching ("CDQ")
waste heat power generation ("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").
40
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 $4.85 million (RMB 30 million). Xi'an TCH paid $4.37 million (RMB 27 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. On December 29, 2018, Shanghai TCH entered into a Share Transfer Agreement with HYREF, pursuant to which
HYREF transferred its 10% ownership in Xi'an Zhonghong to Shanghai TCH for $0.44 million (RMB 3 million). The transfer was completed
on January 22, 2019. The Company owns 100% of Xi'an Zhonghong after the transaction.
On
July 24, 2013, Zhonghong entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching 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").
On
December 29, 2018, Xi'an Zhonghong, Xi'an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed
Assets Transfer Agreement, pursuant to which Xi'an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan
of $27.54 million (RMB 188,639,400) to HYREF. Xi'an Zhonghong, Xi'an TCH, Guohua Ku and Chonggong Bai also agreed to buy
back the CDQ WHPG Station when conditions under the Buy Back Agreement are met (see Note 9). The transfer of the Station was completed
January 22, 2019, the Company recorded $624,133 loss from this transfer. Since the original terms of Buy Back Agreement are still valid,
and the Buy Back possibility could occur; therefore, the loan principal and interest and the corresponding asset of Chengli CDQ WHPG
station cannot be derecognized due to the existence of Buy Back clauses (see Note 5 for detail).
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 Projects 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 $0.087 (RMB 0.534) per kilowatt hour (excluding
tax). 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 2020. The Xuzhou Huayu Project has been on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd. and
local residents on certain pollution-related issues.
On
January 4, 2019, Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement (the "Agreement"),
pursuant to which Xi'an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking
Co., Ltd. ("Xuzhou Huayu Project") to Mr. Bai for $17.52 million (RMB 120,000,000). Mr. Bai agreed that as consideration
for the transfer of the Xuzhou Huayu Project to him (Note 9), he would transfer all the equity shares of his wholly owned company, Xi'an
Hanneng, to HYREF as repayment for the loan made by Xi'an Zhonghong to HYREF. The transfer of the project was completed on February
15, 2019. The Company recorded $397,033 loss from this transfer during the year ended December 31, 2019. On January 10, 2019, Mr.
Chonggong Bai transferred all the equity shares of his wholly owned company, Xi'an Hanneng, to HYREF as repayment for the loan.
Xi'an Hanneng was expected to own 47,150,000 shares of Xi'an Huaxin New Energy Co., Ltd for the repayment of Huayu system
and Shenqiu system. As of September 30, 2019, Xi'an Hanneng already owned 29,948,000 shares of Huaxin, but was not able to obtain
the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 20,
2019, Mr. Bai and all the related parties agreed to have Mr. Bai instead pay in cash for the transfer price of Huayu (see Note 9 for
detail).
On
January 10, 2020, Zhonghong, Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights
and interests of Xuzhou Tian'an Project to Tianyu for $24.37 million including VAT (RMB 170 million) in three installment payments.
The 1st installment payment of $7.17 million (RMB 50 million) to be paid within 20 working days after the contract is signed. The 2nd
installment payment of $7.34 million (RMB 50 million) is to be paid within 20 working days after completion of the project construction
but no later than July 31, 2020. The final installment payment of $10.28 million (RMB 70 million) was to be paid before December 31,
2020. In December, 2020, the Company received the payment in full for Tian'an Project.
41
Zhongtai
Waste Heat Power Generation Energy Management Cooperative Agreement
On
December 6, 2013, Xi'an TCH 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 was to 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 is also to build a furnace to generate steam from the smoke pipeline's waste
heat and sell the steam to Zhongtai.
The
construction period of the Project was expected to be 18 months from the date when conditions are ready for construction to begin. Zhongtai
is to 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 $0.089 (RMB 0.534) 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 $0.067
(RMB 0.402) 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 $16.67 (RMB 100) 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
for $0.16 (RMB 1). 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 with 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 obligations under the EPC Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi'an
TCH $25.77 million (RMB 167,360,000) including (i) $23.46 million (RMB 152,360,000) for the construction of the Project; and (ii) $2.31
million (RMB 15,000,000) 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) $7.70 million (RMB 50,000,000) was to be paid within
20 business days after the Transfer Agreement was signed; (b) $4.32 million (RMB 30,000,000) was to be paid within 20 business days after
the Project was completed, but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) was to 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 $7.70 million (RMB 50,000,000)
by Zhongtai to Xi'an TCH and the full ownership of the Project was to be transferred to Zhongtai after it completes all payments
pursuant to the Transfer Agreement. The Company recorded a $2.82 million loss from this transaction in 2016. In 2016, Xi'an TCH
had received the first payment of $7.70 million and the second payment of $4.32 million. However, the Company received a repayment commitment
letter from Zhongtai on February 23, 2018, in which Zhongtai committed to pay the remaining payment of $13.45 million (RMB 87,360,000)
no later than the end of July 2018. In July 2018, Zhongtai and the Company reached a further oral agreement to extend the repayment term
of $13.45 million (RMB 87,360,000) by another two to three months. Nevertheless, in January 2020, Zhongtai paid RMB 10 million ($1.41
million); in March 2020, Zhongtai paid $2.82 million (RMB 20 million); in June 2020, Zhongtai paid $1.41 million (RMB 10 million); and
in December 2020, Zhongtai paid $4.28 million (RMB 30 million), which was payment in full. Accordingly, the Company reversed bad debt
expense of $5.80 million which was recorded earlier.
42
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), to be paid no later than October 1, 2028. Zhongxun is 100% owned by Xi'an
TCH and is 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 is 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 December 31, 2020 Status at December 31, 2020
As
of December 31, 2020, Xi'an TCH had the following sales-type leases: BMPG systems to Pucheng Phase I and II (15 and 11-year terms,
respectively). On February 15, 2019, Xi'an TCH transferred the Shenqiu Phase I and II Projects to Mr. Chonggong Bai.
Asset
Repurchase Agreement
During
the years ended December 31, 2020 and 2019, the Company entered into or completed the following Asset Repurchase Agreements:
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 agreed to 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 agreed to pay to Xi'an TCH an aggregate purchase price of $25.45 million
(RMB 165,200,000), whereby (a) $10.05 million (RMB 65,200,000) will be paid by Rongfeng to Xi'an TCH within 20 business days after
the Transfer Agreement is signed, (b) $7.70 million (RMB 50,000,000) will be 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) $7.70 million (RMB 50,000,000) will 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 $10.05 million
(RMB 65,200,000) by Rongfeng to Xi'an TCH and the full ownership of the Project has been 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. The Company received full payment of $25.45 million in 2016.
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.
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 $25.77 million (RMB 167,360,000) including payments of: (i) $23.46 million (RMB 152,360,000) for the
construction of the Project; and (ii) $2.31 million (RMB 15,000,000) 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) $7.70 million
(RMB 50,000,000) was paid within 20 business days after the Transfer Agreement was signed; (b) $4.32 million (RMB 30,000,000) will be
paid within 20 business days after the Project is completed, but no later than July 30, 2016; and (c) $13.45 million (RMB 87,360,000)
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 $7.70 million (RMB 50,000,000) 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. Xi'an TCH received the first payment of $7.70 million
and the second payment of $4.32 million in 2016. The Company recorded a $2.82 million loss from this transaction. In January 2020, Zhongtai
paid $1.41 million (RMB 10 million); in March 2020, Zhongtai paid $2.82 million (RMB 20 million); in June 2020, Zhongtai paid $1.41 million
(RMB 10 million); in December 2020, Zhongtai paid $4.62 million (RMB 30 million). The company received full payment of $25.77 million
in 2020.
43
On
December 22, 2020, Shanghai TCH entered into an Equity Acquisition Agreement with Xi'an Taiying Energy Saving Technology Co., Ltd.,
a PRC company ("Xi'an Taiying"), and its three shareholders to purchase all of the issued and outstanding shares of
stock of Xi'an Taiying. The purchase price for said shares shall consist of (i) 619,525 shares of common stock at an issuance price
of $4.37 per share, (ii) 60,000,000 shares of Series A convertible stock and (iii) a cash payment of RMB 1,617,867,026 (approximately
$247 million at a conversion rate of 1:6.55). The shares shall be issued within 15 business days after approval by the Board of Directors
and/or shareholders of the Company and Nasdaq approval and the cash shall be paid in three tranches – RMB 390 million (approximately
$59.5 million) within 10 days after the agreement is executed, RMB 300 million (approximately $45.8 million) by March 31, 2021 and RMB
927,867,026 (approximately $141.7 million) within 10 days after the shares of Xi'an Taiying are registered to Buyer. As of the
date of this prospectus, the Company has not obtained, and there is no assurance that the Company will be able to obtain, necessary approval
from Nasdaq to proceed with the transaction. In addition, the Company is currently renegotiating the payment terms with the sellers.
Industry
and Market Overview
Overview
of Waste-to-Energy Industry
The
waste energy recycling industry concentrates mostly on power-intensive manufacturing and production processes, such as iron, steel and
nonferrous metal production, cement production, and coal and petrochemical plants. Our waste energy recycling projects allow customers
to recapture previously wasted pressure, heat, and gas from their manufacturing and production processes and use this waste to generate
electricity. Waste energy recycling projects are installed at a customer's facility and the electricity produced can be used on-site
to lower energy costs and create a more efficient production process. The industry verticals at the vanguard of this trend are metallurgical
production (including iron & steel), cement, coal mining, coke production and petrochemicals.
The
industry also includes the conversion of biomass to electricity. For thousands of years, biomass, biological material derived from living
organisms like plants and their byproducts, was burned to produce heat so as to convert it to energy. A number of non- combustion methods
are now available to convert raw biomass into a variety of gaseous, liquid, or solid fuels that can be used directly in a power plant
to generate electricity.
Waste-to-Energy
Industry Growth
China
has experienced rapid economic growth and industrialization in recent years, increasing the demand for electricity. In the PRC, growth
in energy consumption has exceeded growth in gross domestic product, causing a shortage of electricity with blackouts and brownouts over
much of the country. Much of the energy demand has been due to the expansion of energy intensive industrial sectors such as steel, cement,
and chemicals. China's increasing modernization and industrialization has made it the world's largest consumer of energy.
One
result of this massive increase in electric generation capacity has been the rise of harmful emissions. China has surpassed the United
States to become the world's largest emitter of greenhouse gases, and the country faces enormous challenges from the pollution
brought about by its consumption of conventional energy. On September 12, 2013, the State Council released the Action Plan for Air Pollution
Prevention and Control. The action plan has proposed that in five years, China will witness the overall improvement of air quality and
dramatic drop of seriously polluted days. It is anticipated that China will strive to gradually improve air quality in China by focusing
on reducing emissions and maximizing energy creation.
Description
of WGPG (Waste Gas Power Generation)
During
the process of industrial production, some by-products, such as blast furnace gas, coke furnace gas, oil gas, and others are created
with certain high intensive thermal energy. The waste gas can be collected and used as a fuel by gas turbine systems to generate power
energy.
Gas
turbines are a set of hi-tech equipment and devices that are crucial to the energy development strategy of China. Gas turbines, which
use flammable gas as fuel and combines with recycling power generating technology, have many merits. These include high efficiency power
generation, low investment, short construction periods, small land usage, water savings, environment protection and more. We believe
the market prospect of the gas turbine industry is promising.
44
Through
years of research, development and experimental applications, this gas-to-energy system has started to be applied into some high energy
intensive industrial plants, such as in the course of iron-smelting in metallurgy plants.
Under
the vigorous promotion of national policies, the installed capacity of waste heat power generation in China is growing continuously.
According to the report by envirunion.com, by the end of 2020, the cumulative installed capacity of waste heat power generation in China
is estimated to be 45 million kilowatts. However, the utilization of waste heat resources is still not enough, and there is still
a large space for utilization. In 2020, the average total recycled waste heat resources in China will be about 1.3 billion tons
of standard coal. During the 14th Five-Year Plan period, continuous research and development and breakthroughs in efficient and energy-saving
technologies will promote the upgrading of traditional production processes. It is estimated that in 2026, the installed capacity of
waste heat power generation in China will be close to 200 million kilowatts. (
Source
: http://www.envirunion.com/newsinfo-27773.html.)
The
report also indicates that at present, the installed capacity of waste heat power generation accounts for about 2% of the country's
installed capacity of power generation. During the 14th Five-Year Plan period, the continuous research and development and breakthrough
of efficient and energy-saving technology will promote the upgrading of traditional production process, and the market share of industrial
energy saving such as the utilization of waste heat and pressure will further expand, and the proportion of waste heat power generation
in the country's installed capacity will also continue to expand. It is estimated that in 2026, the installed capacity of
waste heat power generation in China will be close to 200 million kilowatts.
2021-2026
Forecast of China's Waste Heat Power Generation Installation
(Unit:
One hundred thousand GW)
45
Stringent
Environmental Standards and Increasing Government Support
Since
energy is a major strategic issue affecting the development of the Chinese economy, the Chinese government has promoted the development
of recycling and encouraged enterprises to use waste energy recycling projects of the type we sell and service. Similar to previous five-year
periods, the China National Environment Protection Plan, for the 14th five year period (2021-2025), is focused on high energy consumption
industries, including specific programs to support the building of waste energy recycling projects for application in iron, steel and
nonferrous metal plants and in cement production lines. Given the worsening environment and insufficient energy supply in China, the
Chinese government has implemented policies to curb pollution and reduce wasteful energy usage. The Renewable Energy Law, strict administrative
measures to restrict investment and force consolidation in energy wasting industries, and the requirement to install energy-saving and
environment protecting equipment whenever possible are just some ways the government is emphasizing the need to reduce emissions and
to maximize energy creation. Local government officials are now required to tie emission, energy usage and pollution to GDP growth. If
local emissions of pollutants grow faster than the local GDP, these local officials face the risk of losing their jobs. Such determination
and strict enforcement by the central and local governments provide a good backdrop and are expected to enhance growth opportunities
for the Company.
The
following tables show the funds invested, or expected to be invested, in the environmental protection industry by the Chinese government.
46
Source:
China National Environmental Protection Plan in the 13th Five Year Plan (2016-2020).
In
recent years, China attached great importance to the problem of environmental pollution, and has invested a lot of manpower and capital
cost in air pollution control. It is estimated that in 2021, the total output value of China's environmental protection industry
will reach nearly RMB 11 trillion.
47
The
14th Five-Year Plan (2021-2025) covers a crucial period in China's economic and social development. Environmental protection and
low-carbon development will be one of the top priority considerations during this period. The government, private enterprises and the
public sector are expected to jointly implement the strictest environmental protection system to realize environmental improvement, control
carbon emissions, honor climate commitments and deeply participate into global climate governance. China aims to hit the CO2 emissions
peak by around 2030 and reduce CO2 emissions per unit of the GDP by 60 percent to 65 percent from the 2005 level on or before 2030.
Waste-to-Energy
is a Cost-Effective Means to Meet Rising Energy Needs
It
is anticipated that China will need to increase its electricity generating capacity to meet its future needs. This demand may mean price
increases for electricity in China. With the need for more energy, in particular energy that does not cause additional emissions, and
the relative low price of the waste-to-energy production we provide, we believe that our markets will continue to expand.
Since
China has been experiencing a dramatic surge in its energy consumption as well as widespread energy shortages, recycling energy is not
only an attractive alternative to other sources of energy as part of a national diversification strategy to avoid dependence on any one
energy source or politically sensitive energy supplies, but also a proven solution to make the use of energy more efficient. Under current
economic conditions and current tax and regulatory regimes, waste energy recycling projects generally can create price- competitive electricity
compared to electricity generated from fossil fuels or other renewable sources. Our customers can reduce energy costs significantly by
installing our waste energy recycling projects. Because the waste heat/pressure/power we collect to recycle and generate electricity
is provided at no cost and the raw materials we use for power are free, the generating cost from recycling energy is lower compared to
electricity cost from the national grid. This means our customers can leverage the waste-to-energy projects to generate low-cost electricity,
reducing energy costs for the manufacturing process.
Customers
of our energy recycling projects may also qualify for credits from the Clean Development Mechanism ("CDM"). The CDM is an
international arrangement under the Kyoto Protocol, allowing industrialized countries with a greenhouse gas reduction commitment to invest
in ventures that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.
In 2005, China's government promulgated "Measures for Operation and Management of Clean Development Mechanism Projects in
China" ("China CDM Measures") to facilitate the application and operation of CDM project activities in China. Our energy
recycling solutions are of a kind which fall into the beneficial categories accredited by the China CDM Measures. If our customers can
get approval from the Chinese government and successfully register their projects in the United Nations' CDM Executive Board, they
can receive additional revenue income through exchanging their Certified Emission Reductions ("CER") credits with investors
in industrialized countries.
Trends
in Industries we Principally Service
Iron,
Steel and Nonferrous Metal Industry
As
the biggest iron and steel producer in the world and one of the highest carbon dioxide emission sectors, China's iron and steel
industry is undergoing a low-carbon transition accompanied by remarkable technological progress and investment adjustment, in response
to the macroeconomic climate and policy intervention.
The
nonferrous metals industry is an important raw material industry in China because it plays an important role in supporting the domestic
economy. In recent years, China 's nonferrous metals industry has maintained strong momentum of development and made noteworthy
achievements. Faced with mounting pressure on resources and the environment, the industry of China 's nonferrous metals has reached
an important transition without delay.
China's non-ferrous metal sector
started well in 2021. The output of 10 types of non-ferrous metals stood at 16.05 million tons, a 11.7% increase from 2020 and resulting
in an average first-quarter year-on-year growth of 8.2% over the past two years, according to the National Bureau of Statistics.
48
Our
Strategies
Expand
to New Business of Energy Storage with Future High Growth Potentials
We
are in the process of transforming into an energy storage integrated solution provider. We plan to pursue disciplined and targeted expansion
strategies for market areas that we currently do not serve. We are actively seeking and exploring opportunities to apply energy storage
technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic
(PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies. By supporting and
motivating all kinds of the electric power market to participant in resource development and utilization of demand response, we plan
to provide services including peak shaving with compensation and frequency modulation.
In
recent years, electrochemical energy storage technology has maintained a rapid growth trend, the cumulative installed capacity continues
to expand. In 2020, the accumulative installed capacity of electrochemical energy storage in China was 3269.2MW. During the
14th Five-Year Plan period, it is an important period for energy storage to explore and realize the "rigid demand" application
of the market, to productize the system and to obtain stable commercial interests. It is expected that the electrochemical energy storage
market will continue to develop rapidly in 2021, with the accumulative installed capacity reaching 5790.8MW.
In
April 2021, the National Development and Reform Commission and the National Energy Administration issued Guiding Opinions on Accelerating
the Development of New Type Energy Storage. This is the second national comprehensive policy document on the energy storage industry
since the National Energy Administration, together with five ministries and commissions, issued the Guiding Opinions on Promoting the
Development of China's Energy Storage Technology and Industry in 2017 (the "New Energy Storage Guidance"). The New
Energy Storage Guidance establishes a "double carbon" goal, providing a development goal and direction for the industry.
The
New Energy Storage Guidance, for the first time, explicitly quantified the development "double carbon" goals of the energy
storage industry at the national level, and it is estimated that more than 30 million kilowatts (30GW+) of new energy storage projects
will be installed by 2025. From 3.28GW at the end of 2020 to 30GW in 2025, the scale of the new energy storage market is expected to
expand 10 times the current level in the next five years, with an annual compound annual growth rate of more than 55%, as a consequence
of the New Energy Storage Guidance.
Continually
Enhance Research and Development Efforts
We
plan to devote resources to research and development in order to enhance our waste-to-energy design and engineering capabilities. We
anticipate that our in-house design and engineering team will provide additional competitive advantages, including flexibility to quickly
design and evaluate new technologies or applications in response to changing market trends.
Our
Business Models
We
have sold our products to our customers under two models: the BOT model and the operating lease model, although we emphasize the BOT
model which we believe is more economically beneficial to us and to our customers.
BOT
Model
We
primarily engage in the BOT model to provide waste-to-energy solutions to our customers:
"Build"
We
work directly with customers for each of our waste-to-energy projects. Our working process starts with a team of engineers that assesses
and analyzes the specific needs of the customer to establish the design layout, equipment procurement list and capital expenditure budget
for the project. Our sales team works closely with our engineering staff to present and negotiate the model with the customer.
49
After
the signing of a contract, we finance the entire capital expenditure budget ourselves and commence the construction and installation
of the project. We do not manufacture the equipment and materials that are used in the construction of the waste-to-energy power generation
facility. Rather, we incorporate standard power generating equipment into a fully integrated on-site waste energy recycling project for
our customer. The construction and installation period ranges from three to 12 months subject to the project type, size and complexity.
We
usually engage an energy, procurement and construction, or EPC, general contractor, who is experienced in power plant and waste energy
recycling project construction, to take charge of equipment procurement, project construction and installation. Our team of five engineers
participates in and monitors the equipment purchase process; this team also oversees the construction and installation activities to
ensure that they are completed on time and meet our rigorous standards and specifications.
"Operate"
After
the project has been installed at the customer site and passed a series of stringent tests, we outsource the operation to a third-party
vendor. The operation period ranges from five to 20 years, subject to the terms of each contract. Currently, we have one active project
under such contract as we transition into an energy storage integrated solution provider.
During
the operation period, the customer is able to purchase all the electricity at a below-market price. We collect energy-saving-based lease
payments from the customer; the lease term is equivalent to the operation period, ranging from five to 20 years, and the payments are
based on the sale by us, as lessor, to our customers, as lessee, of energy generated by the waste energy recycling project at below-market
rates. The customer's payments are based on a minimum operation schedule agreed upon with our customer, and are collateralized
by assets of the customer and/or third party guarantees. To reduce risk, we offer leasing services across a wide variety of industries
and only target larger manufacturers or state-owned enterprises. Operation in excess of the minimum schedule enables us to receive additional
revenues from the excess energy generated and sold to the customer.
"Transfer"
Based
on the specific terms for each project, we eventually transfer the waste energy recycling project to the customer at no cost or a nominal
cost upon the completion of the operation/lease period. For example, Tongchuan Shengwei Cement Power Generation project signed a 9-year
lease starting from the first quarter of 2009 to the end of 2013. After the lease term was up, we transferred the station to the owner
at no cost pursuant to the contract terms, which vary based on industries and the type of power generation stations.
Why
BOT
Waste-to-energy
projects are capital intensive, which requires the manufacturers to invest a considerable amount of cash to purchase equipment during
the construction period. As a BOT service provider, we fund all contracted projects on our own or jointly with our customers; such financing
arrangements can help our customers by removing or reducing the heavy capital expenditure burden required by specific projects, thereby
allowing them to concentrate on their core business. While technologically mature in advanced countries, waste-to-energy projects are
still new to most of China's industrial companies and require intensive technology or know-how with respect to energy recycling
and power generation. It is time-consuming or not feasible for industrial manufacturers to equip themselves with adequate expertise and
technicians. We believe that our specific sector knowledge and project experience allow us to construct, operate and maintain the power
plants efficiently and to respond to operational issues in a timely and cost-efficient manner.
In
exchange for upfront capital investment, we require secured power generating capacity during the operation period and guaranteed attractive
internal rates of return from each project. Our operation period ranges from five to 20 years, during which we are entitled to sell the
recycled electricity to those customers at a predetermined rate. Such electricity sales are secured by long-term electricity production
agreements with guarantees, which result in minimum annual payments. We employ a process of systematic internal scrutiny on new customer
development, so as to minimize operational and default risk. For some smaller or non-state-owned enterprises, we require property collateral,
management or third-party guarantees, and/or prepayment of three months. As such, our cash inflow schedule from each in-operation project
is fixed and predictable, providing clear financial visibility. Our payback period is generally two to three years, depending on the
project size.
In
our experience, this BOT model is well received by our existing and potential customers in China. The insufficient supply of BOT vendors
to the market is wholly due to the funding limitations of most of the recycling energy solution providers. Not all of our competitors
have the ability to access sufficient capital on a timely basis.
50
Contractor
and Equipment Suppliers
We
generally conduct our project construction through an EPC general contractor. We select the EPC general contractor for each project through
a bidding process; then we sign a contract with the selected contractor for that project. The general contractor may outsource parts
of our project construction to subcontractors according to the complexity and economics of the project. The general contractor is responsible
for purchasing equipment to satisfy the requirements of the project we design for our customer. We generally do not purchase equipment
directly from the equipment suppliers, but our general contractors obtain our consent before selecting the equipment suppliers. Our engineering
department is involved in the equipment supplier selection process together with our general contractors and makes sure our standards
and requirements have been appropriately applied in selection of the equipment. We currently have engaged Shaanxi Huaxin Energy Engineering
Co., Ltd. for our projects under construction, and we also maintain relationships with several other quality general contractors in China,
including Wuxi Guolian, CITIC Heavy Industries Co., Ltd., A-Power Energy Generation Systems, Ltd.
As
mentioned above, 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 system. The key equipment used in our projects
are the boilers and turbine generators, which represent the majority of equipment cost for each project. Though we do not place the direct
procurement orders, we believe we maintain good relationships with those power generation equipment suppliers, and these relationships
help provide cost-effective equipment purchasing by the general contractor for our intended projects and ensure the timely completion
of these projects. We have well-established business relationships with most of the suppliers from whom our general contractors procure
equipment, including Hangzhou Boiler Plant, Beijing Zhongdian Electric Machinery, Chengdu Engine Group, Shanghai Electric Group, China
Aviation Gas Turbine Co. Ltd and Xuji Electric. Therefore, we believe that we have a strong position and support in equipment supply
and installation, which benefits us, the general contractors and our customers.
Main
Customers
Our
customers are mainly mid- to large-size enterprises in China involving high energy-consuming businesses. Following our selection process
described in the next paragraph, we conduct stringent evaluation procedures to identify and qualify potential customers and projects.
To lower our investment and operational risk, we target companies with geographic or industry competitive advantages, with strong reputations
and in good financial condition. Generally, our targets include steel and nonferrous metal mills with over 3 million tons of production
capacity per year, cement plants with over 2 million tons of production capacity per year that utilize new- suspension-line process,
and coking plants with over 600 tons production capacity per year. Our existing customers operate in Shanxi province, Shaan'xi
province, Shandong province, Jiangsu province and the Inner Mongolia Autonomic Region in China.
Marketing
and Sales
We
market and sell our projects nationwide through our direct sales force of two employees based in Xi'an, China. Our marketing programs
include industrial conferences, trade fairs, sales training, and trade publication advertising. Our sales and marketing group works closely
with our research and development and engineering departments to coordinate our project development activities, project launches and
ongoing demand and supply planning. We market our projects directly to the industrial manufacturers who can utilize our energy recovery
projects in their manufacturing processes, including steel, cement, nonferrous metal, coal and petrochemical industries.
Our
management team has long-standing relationships with our existing customers and those companies that we consider to be potential customers.
We also maintain relationships with municipal governments, which often sponsor or subsidize potential customers that can utilize our
projects.
Geographic
Distribution of Sales
Sales
in China accounted for 100% of revenue in 2020 and 2019.
Seasonality
For
the most part, the Company's business and sales are not subject to any seasonality factors.
51
Intellectual
Property Rights
The
Company does not currently possess any intellectual property rights.
Research
and Development
We
believe that research and development ("R&D") is of the outmost importance in the waste heat, gas and pressure to energy
industry, particularly with regards to practical usage and application.
To
develop new and practical solutions for our customers, our R&D team, consisting of five employees, also has the support of our on-site
and project engineers who provide feedback and numerous ideas to the R&D team from their daily experiences with installation and
operation of various waste gas, heat or pressure to energy projects. Our relationship with the Shanghai Electric Distributed Energy Sources
Technology Co., Ltd., which was memorialized under a cooperation agreement dated December 19, 2017, gives us access to the latest developments
in energy and waste-to-energy technologies as well as technical support of the R&D teams of the R & D team of Distributed
Energy Sources of Central Research Institute of Shanghai Electric Group.
Government
and Environmental Management System
Since
we do not hold the licenses that the various levels of Chinese government require for our operations, we mainly rely on third-party servicers
and contractors, who do possess all levels of licenses, to carry out our operations.
Competition
In
the past, waste energy recycling projects have been installed mainly by the industrial plants themselves. These plants hire general contractors
to purchase waste energy recycling equipment manufactured by third parties and with design support from government design institutes,
which usually charge a one-time design fee, construct the projects on-site. Pressure has increased on Chinese producers to become more
energy-efficient, but many mid-sized companies do not have the special technical expertise or the capital to install and operate such
waste energy recycling projects. Many companies have begun to outsource these functions to third- party providers, creating an opportunity
in a growing market.
We
use a BOT model to provide energy saving and recovery systems for various energy intensive industries, such as cement, steel and metallurgy
industries. We face competition from an array of market participants.
Our
main competitors as third-party providers are state owned research institutes or their wholly owned construction companies; however,
smaller private companies occasionally employ a BOT model to provide waste-to-energy systems. The state-owned enterprises include Equipment
and System Engineer Co., Ltd. of Hangzhou Steam Turbine & Power Group (Hangzhou Turbine) and Energy Saving Development Co.,
Ltd of China National Material Group, Sinoma Development Co., Ltd. The private companies include China Senyuan Electronic Co., Ltd.,
Dalian East New Energy Development Co. Ltd.
,
Top Resource Conservation Engineering Co., Ltd. and Nanjing Kaisheng Kaineng
Environmental Energy.
We
believe that there is a larger market in the waste-to-energy industry in China for systems constructed on the "Engineering Procurement
Construction" or "EPC" model in which customers purchase the services of a contractor to construct a system for the
customer at the customer's expense. Service providers include Dalian East New Energy Development, Nanjing Kaisheng Cement Technology
and Engineering Co., Ltd., Jiangxi Sifang Energy Co., Ltd., Beijing Century Benefits Co., Ltd., Beijing Shineng Zhongjin Energy Technology
Co., Ltd., Kunming Sunwise Co., Ltd. and China Everbright International Ltd. We compete with EPC providers for waste-to-energy projects
when potential customers are able to obtain external financing or have the necessary capital.
We
believe that we offer advantages over our competitors in several ways:
●
Our
    management team has over 20 years of industry experience and expertise;
●
We
    have the capabilities to provide TRT, CHPG and WGPG systems, while our competitors usually concentrate on one type or another;
52
●
We
    have the capabilities and experience in undertaking large scale projects; and
●
We
    provide BOT or capital lease services to the customers, while our competitors usually use an EPC (engineering, procurement and construction)
    or turnkey contract model.
Employees
As
of May 31, 2021 we had 16 employees:
Management:
4 Employees
Administration:
4 Employees
Marketing: 2
Employees
Accounting &
Finance:
4 Employees
Project
Officer:
2 Employees
All
of our personnel are employed full-time and none of them are represented under collective bargaining agreements. We consider our relations
with our employees to be good.
We
maintain certain insurance policies to safeguard us against risks and unexpected events as required in China and with applicable PRC
laws, such as social security insurance, including pension insurance, unemployment insurance, work-related injury insurance and medical
insurance for our employees. However, we do not maintain business interruption insurance or product liability insurance, which are not
mandatory under PRC laws. In addition, we do not maintain key man insurance, insurance policies covering damages to our network infrastructures
or information technology systems nor any insurance policies for our properties. During the fiscal years 2020 and 2019, we did not make
any material insurance claims in relation to our business.
Costs
and Effects of Compliance with Environmental Laws
There
were many new laws, regulations, rules and notices regarding the environment and energy production adopted, promulgated and put into
force during past years. The Chinese government is putting more stringent requirements and urgency on reducing pollution and emissions
and improving energy efficiency nationwide. Our products are designed and constructed to comply with the environmental laws and regulations
of China. As our systems allow our customers to use waste heat and gases to create energy, we help reduce the overall environmental impact
of our customers. Since our business focuses on recycling energy, the effect of the strengthening of environmental laws in China may
be to increase demand for the products and services we offer and others like them.
Legal
Proceedings
From
time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party to any
material legal proceedings, and to our knowledge none is threatened. There can be no assurance that future legal proceedings arising
in the ordinary course of business or otherwise will not have a material adverse effect on our financial position, results of operations
or cash flows.
53
REGULATIONS
We
have been advised by our PRC counsel, that, based on their review of our operations material provided by us and their review of PRC laws
and regulations, our operations in the PRC, as presently conducted, based on our approved qualifications, comply in all material respects
with applicable PRC laws and regulations.
PRC
Regulations
In
accordance with PRC regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise
("FIE") established in the PRC is required to provide statutory reserves, which are appropriated from net profit, as reported
in the FIE's PRC statutory accounts. A FIE is required to allocate at least 10% of its annual after-tax profit to the surplus reserve
until such reserve has reached 50% of its respective registered capital (based on the FIE's PRC statutory accounts). The aforementioned
reserves may only be used for specific purposes and may not be distributed as cash dividends. Until such contribution of capital is satisfied,
the FIE is not allowed to repatriate profits to its stockholders, unless approved by the State Administration of Foreign Exchange. After
satisfaction of this requirement, the remaining funds may be appropriated at the discretion of the FIE's board of directors. Our
subsidiary, Shanghai TCH, qualifies as a FIE and is therefore subject to the above-mandated regulations on distributable profits.
Additionally,
in accordance with PRC corporate law, a domestic enterprise is required to maintain a surplus reserve of at least 10% of its annual after-tax
profit until such reserve has reached 50% of its respective registered capital based on the enterprise's PRC statutory accounts.
The aforementioned reserves can only be used for specific purposes and may not be distributed as cash dividends. Xi'an TCH, Huahong,
Zhonghong and Erdos TCH were established as domestic enterprises; therefore, each is subject to the above-mentioned restrictions on distributable
profits.
As
a result of PRC laws and regulations that require annual appropriations of 10% of after-tax income to be set aside, prior to payment
of dividends, in a general reserve fund, the Company's PRC subsidiaries are restricted in their ability to transfer a portion of
their net assets to the Company as a dividend or otherwise.
Renewable
Energy Law and Other Government Directive
The
Renewable Energy Law of PRC, which originally became effective on January 1, 2006 and was amended on December 26, 2009, sets forth policies
to encourage the development and on-grid application of renewable energy. Renewable energy under this law refers to non-fossil fuel energy,
including wind energy, solar energy, water energy, biomass energy, geothermal energy, ocean energy and other forms of renewable energy.
The Renewable Energy Law of PRC also sets forth a national policy to encourage the installation and use of solar energy water heating
systems, solar energy heating and cooling systems, photovoltaic systems and other systems that use solar energy. It also provides economic
incentives, such as the establishment of national funding, preferential loans provided by financial institutions with financial interest
subsidies to certain renewable energy development and utilization projects, and tax preferential treatment for the development of certain
renewable energy projects.
The
PRC Energy Conservation Law, which was amended on October 28, 2007 and July 2, 2016, encourages utilization of energy-saving building
materials like new wall materials and energy-saving equipment, and encourage the installation and application of renewable energy use
systems such as solar energy. The PRC Energy Conservation Law also encourages and supports the vigorous development of methane in rural
areas, promotes the utilization of renewable energy resources such as biomass energy, solar energy and wind power, develops small-scale
hydropower generation based on the principles of scientific planning and orderly development, promotes energy-saving-type rural houses
and furnaces, encourages the utilization of non-cultivated lands for energy plants, and energetically develops energy forests such as
firewood forests.
On
September 4, 2006, the Ministry of Finance, or MOF, and Ministry of Construction jointly promulgated the Interim Measures for Administration
of Special Funds for Application of Renewable Energy in Building Construction, pursuant to which the MOF will arrange special funds to
support the application of Building Integrated Photovoltaics systems, or BIPV applications, to enhance building energy efficiency, protect
the environment and reduce consumption of fossil fuel energy. Under these measures, applications to provide hot water supply, refrigeration,
heating and lighting are eligible for such special funds.
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On
September 26, 2009, the State Council of the PRC approved and circulated the Opinions of National Development and Reform Commission,
known as the NDRC, and other Nine Governmental Authorities on Restraining the Production Capacity Surplus and Duplicate Construction
in Certain Industries and Guiding the Industries for Healthy Development. These opinions concluded that polysilicon production capacity
in China has exceeded demand and the State Council set forth a policy to impose more stringent requirements on the construction of new
facilities for manufacturing polysilicon in China. The Opinions of the NRDC also stated that the government should encourage polysilicon
manufacturers to enhance cooperation and affiliation with downstream solar power product manufacturers to expand their product lines.
However, these opinions do not provide any detailed measures for the implementation of this policy. As we are not a polysilicon manufacturer
and do not expect to manufacture polysilicon in the future, we believe the Opinions of the NRDC will not have any material impact on
our business.
On
October 10, 2010, the State Council of the PRC promulgated a decision to accelerate the development of seven strategic new industries.
Pursuant to this decision, the PRC government aspired to promote the popularization and application of solar thermal technologies by
increasing tax and financial policy support, encouraging investment and providing other forms of beneficial support.
On
March 16, 2011, the National People's Congress approved the Outline of the Twelfth Five-Year Plan for National Economic and Social
Development of the PRC, which includes a national commitment to promoting the development of renewable energy and enhancing the competitiveness
of the renewable energy industry. Accordingly, in January 2012, the Ministry of Industry and Information Technology and the Ministry
of Science and Technology, respectively, promulgated the Twelfth Five-Year Special Plans Regarding the New Materials Industry and the
High-tech Industrialization to support the development of the PRC solar power industry.
On
March 8, 2011, the MOF and the Ministry of Housing and Urban-Rural Development jointly promulgated the Circular on Further Application
of Renewable Energy in Building Construction to increase the utilization of renewable energy in buildings.
On
March 27, 2011, the NDRC promulgated revised Guideline Catalogue for Industrial Restructuring, which categorized the solar power industry
as an encouraged item. On February 16, 2013, the NDRC promulgated the 2013 revised Guideline Catalogue for Industrial Restructuring to
be effective on May 1, 2013, the solar power industry is still categorized as an encouraged item.
On
March 16, 2016, the National People's Congress approved the Outline of the Thirteenth Five-Year Plan for National Economic and
Social Development of the PRC, which mentions a national commitment to continuing to support the development of PV generation industry.
Regulations
Relating to Electric Power Industry
The
regulatory framework of the PRC power industry consists primarily of the Electric Power Law, which became effective on April 1, 1996,
and was most recently amended on December 29, 2018, and the Electric Power Regulatory Ordinance, which became effective on May 1, 2005.
One of the stated purposes of the Electric Power Law is to protect the legitimate interests of investors, operators and users and to
ensure the safety of power operations. According to the Electric Power Law, the PRC government encourages PRC and foreign investment
in the power industry. The Electric Power Regulatory Ordinance sets forth regulatory requirements for many aspects of the power industry,
including, among others, the issuance of electric power business permits, the regulatory inspections of power generators and grid companies
and the legal liabilities for violations of the regulatory requirements.
Electric
Power Business Permit
On
January 5, 2006, the NDRC promulgated the Administrative Provisions on Renewable Energy Power Generation which set forth specific measures
for setting the price of electricity generated from renewable energy sources, including solar, and for allocating the costs associated
with renewable power generation. The Administrative Provisions on Renewable Energy Power Generation also delegate administrative and
supervisory authority among government agencies at the national and provincial levels and assign partial responsibility to electricity
grid companies and power generation companies for implementing the Renewable Energy Law.
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Pursuant
to the Provisions on the Administration of the Electric Power Business Permit, which were issued by the State Electricity Regulatory
Commission, known as SERC, and became effective on December 1, 2005, unless otherwise provided by the SERC, no company or individual
in the PRC may engage in any aspect of electric power business (including power generation, transmission, dispatch and sales) without
first obtaining an electric power business permit from the SERC. These provisions also require that if an applicant seeks an electric
power business permit to engage in power generation, it must also obtain in advance all relevant government approvals for the project
including construction, generation capacity and environmental compliance.
However,
there are exceptions pursuant to which certain of our photovoltaic power generation projects may not need to obtain an electric power
business permit from the SERC. On July 18, 2013, the NDRC issued the Interim Measures for the Administration of Distributed PV Power
Generation, which waived the previous requirement to obtain an Electric Power Business Permit for distributed generation projects. On
April 9, 2014, the National Energy Association, or NEA, issued the Circular on Clarifying Issues concerning the Administration of Electric
Power Business Permit, which waived requirement to obtain an Electric Power Business Permit for those solar power generation projects
with installed capacity less than 6MW and any distributed generation projects approved by or filed with the NDRC or its local branches,
and required the local NEA to simplify the Electric Power Business Permit application procedure for the solar power generation companies.
Grid
Connection and Dispatchment
All
electric power generated in China is distributed through power grids, except for electric power generated by facilities not connected
to a grid. The distribution of power to each grid is administered by dispatch centers, which administer and dispatch planned output by
power plants connected to the grid. The Regulations on the Administration of Electric Power Dispatch to Networks and Grids, promulgated
by the State Council and the former Ministry of Electric Power Industry, effective on November 1, 1993, as amended on January 8, 2011,
and its implementation measures, regulate the operation of dispatch centers.
Feed-in
Tariff (FIT) Payments
The
Renewable Energy Law of the PRC, as amended on December 26, 2009 and effective on April 1, 2010, sets forth policies to encourage the
development and utilization of solar power and other renewable energy. The Renewable Energy Law authorizes the relevant pricing authorities
to set favorable prices for electricity generated from solar and other renewable energy sources.
The
NDRC further issued the Circular on Promoting the Healthy Development of PV Industry by Price Leverage on August 26, 2013, or the 2013
Circular. Under the 2013 Circular, the feed-in tariff ("FIT") (including VAT) for solar power projects approved or filed
after September 1, 2013 or beginning operation after January 1, 2014 would be RMB0.90 per kilowatt hour ("kWh"), RMB0.95
per kWh or RMB1.00 per kWh, depending on the locations of the projects (excluding on-grid solar power projects located in Tibet).
In
addition, the 2013 Circular sets forth special rules that entitle distributed generation projects (excluding the projects that have received
an investment subsidy from the central budget) to a national subsidy of RMB0.42 per kWh. According to the Circular on Further Implementing
Polices Relating to Distributed Generation issued by the NEA on September 2, 2014 and the Circular on Implementation Plans of PV Generation
Construction for 2015 issued by the NEA on March 16, 2015, rooftop distributed generation projects that sell electricity directly to
consumers or to both consumers and grid enterprises receive a national subsidy of RMB0.42 per kWh plus the local desulphurized coal benchmark
electricity price for the electricity sold to the State Grid or a negotiated electricity purchase price for electricity sold directly
to consumers. Ground-mounted projects and rooftop distributed generation projects which sell all electricity to grid enterprises are
entitled to the FIT of RMB0.90 per kWh, RMB0.95 per kWh or RMB1.00 per kWh, depending on where the project is located (excluding on-grid
solar power projects located in Tibet).
On
December 22, 2015, the NDRC issued the Circular on Improving the Policies on the On-grid Tariffs of Onshore Wind Power Generation and
PV Generation, effective on January 1, 2016, which provides that ground mounted projects, as well as rooftop distributed generation projects
that sell all electricity generated to the local grid companies, are entitled to FIT of RMB0.80 per kWh, RMB0.88 per kWh or RMB0.98 per
kWh, depending on where the project is located (excluding on grid solar power projects located in Tibet), provided that these projects
are filed after January 1, 2016 and fall within the regional scale index of the year, or these projects are filed prior to January 1,
2016 and fall within regional scale index of the year, but do not commence operations prior to June 30, 2016.
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The
difference between the FIT for solar power projects and the desulphurized coal benchmark electricity price, or the subsidies paid to
distributed generation projects, are funded by the renewable energy development funds. The above FIT and subsidy policies are valid for
20 years for each power generation project since its formal operation, in principle.
On
December 30, 2016, the Ministry Industry of Information Technology, NDRC, the Ministry of Science and Technology and MOF jointly promulgated
the Development Guide Regarding the New Materials Industry to support and provide details for the development of the PRC solar power
industry.
On
February 10, 2017, the NEA promulgated the Circular on Printing and Distributing the Guidance on Energy Work in 2017, which promotes
the construction of PV and thermal power projects. According to this circular, the PRC government planned to add the new construction
scale of 20 million kilowatts and the new installed capacity of 18 million kilowatts in 2017. Although it is the PRC government's
policy to encourage such construction, it is not clear what specific targets have been fulfilled.
On
May 31, 2018, the NEA, Ministry of Finance and NDRC of the PRC jointly promulgated a Notice regarding the Matters of Photovoltaic Power
Generation in 2018 ("2018 PV Power Generation Notice"). The 2018 PV Power Generation Notice set forth new policies on general
and distributed PV power stations. For example, based on the industry practice, no scale for the construction of general photovoltaic
power station will be arranged in 2018. Before the issuance of any new rules in respect of the construction of general photovoltaic power
stations, no national government subsidies were provided to general photovoltaic power station. There will be a scale of 10 gigawatts
for the construction of distributed photovoltaic power station. In general, the feed-in tariff for general photovoltaic power stations
will be reduced by RMB 0.05 per kWh.
On
April 28, 2019, the NDRC issued a Notice Regarding Issues of Improvement on Mechanism for Grid Price of Photovoltaic Power Generation,
effective on July 1, 2019. The benchmark solar PV tariff has been changed into guiding solar PV tariff. For utility-scale solar PV projects
that fully feed electricity into grids after July 1, 2019, the FIT will be RMB 0.4 per kWh, RMB 0.45 per kWh, or RMB 0.55 per kWh depending
on where the project is located. Commercial and industrial distributed PV that deliver 100% of output to the grid will apply utility-scale
PV FITs, others can receive a subsidy of RMB 0.1/kWh.
On
January 7, 2019, NDRC and the NEA jointly promulgated the Circular on Actively Promoting Subsidy-free Grid Price Parity for Wind Power
and PV Power, which set forth several measures regarding project organization, construction, operation and supervision to promote PV
power generation power projects with grid price equivalent to or below the benchmark grid price of coal-fired power units.
Subsidy
Catalog
On
November 29, 2011, the MOF, NDRC and NEA jointly issued the Interim Measures for the Administration of Levy and Use of Renewable Energy
Development Fund, which provides that development funds for renewable energy include designated funds arranged by the public budget of
national finance, and the renewable energy tariff surcharge established thereunder be collected from electricity consumers. Solar power
projects can only receive central government subsidies after completing certain administrative and perfunctory procedures with the relevant
authorities of finance, price and energy to be listed in the Subsidy Catalog issued by the MOF, NDRC and NEA. These subsidies represent
the difference between the FIT for solar power projects and the desulphurized coal benchmark electricity price. In January 2016, the
NEA announced that there would be a nation-wide inspection on all solar power projects in operation and under construction, and that
fall within the regional scale index of the year would be included in and managed via the Platform for Renewable Energy Power Generation
Projects for the purpose of government subsidies application and payment.
In
order to be listed in the Subsidy Catalog, ground-mounted projects submit applications to the relevant provincial authorities; and in
accordance with the Circular on Issues Concerning Implementing Electric Quantity-based Subsidy Policy for Distributed Generation Projects
issued by the MOF on July 24, 2013, rooftop distributed generation projects submit applications to the grid enterprises in the area where
the projects are located. After preliminary review of the applications, the provincial authorities will jointly report to the MOF, NDRC
and NEA, and the MOF, NDRC and NEA have final review of such applications to decide whether to list in the Subsidy Catalog.
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Development
Funds of Renewable Energy
The
Renewable Energy Law provides financial incentives, including national funding for the development of renewable energy projects.
Pursuant
to the Interim Measures for the Administration of Designated Funds for the Development of Renewable Energy issued by the MOF and effective
on April 2, 2015, the MOF sets up designated funds to support the development and utilization of renewable energy in accordance with
the national fiscal budget.
According
to the Implementing Measures for the Administration of Price of Renewable Energy and Cost Sharing Program and the Interim Measures for
Adjustment to Additional On-grid Tariff for Renewable Energy issued by the NDRC, the gap between the FIT for solar power projects and
the desulphurized coal benchmark electricity price is subsidized by collecting a tariff surcharge from the electricity consumers within
the service coverage area of grid enterprises at or above provincial level.
Mandatory
Purchase of Renewable Energy
The
Renewable Energy Law imposes mandatory obligations on grid enterprises to purchase the full amount of on-grid electricity generated by
approved renewable energy plants whose power generation projects meet the grid connection technical standards in the areas covered by
the grid enterprises' power grids. Grid enterprises must improve the power grid construction in order to better absorb electricity
generated from renewable energy.
Pursuant
to the Measures for the Supervision and the Administration of Purchase of Full Amount of Renewable Energy by Grid Companies issued by
the SERC in July 2007, the SERC and its local branches supervise the purchase of the full amount of renewable energy by the grid enterprises.
If the grid enterprises do not purchase the full volume of the electricity generated from the renewable energy due to the circumstances,
such as force majeure or any other circumstance endangering the safety and stability of the power grids, the grid enterprises must promptly
notify the renewable energy power generation companies of the details in writing and also submit detailed facts to the competent local
branches of the SERC.
The
Several Opinions on Promoting the Healthy Development of PV Industry also requires the grid enterprises to ensure PV power generation
projects' timely connection to the power grid and purchase the full amount of electricity generated by the PV power generation
projects.
On
March 20, 2015, the NDRC and NEA issued a directive opinion that emphasized that the competent provincial authorities must strengthen
the implementation of the provisions with regard to the purchase of the full amount of electricity generated by renewable energy and
avoid any curtailment of solar power projects. In addition, the directive opinion stated that electricity generated by clean energy is
encouraged to be sold directly to the consumers in the regions where there is an ample supply of clean energy, and the relevant parities
must coordinate the trans-provincial supply of electricity and power transmission capability, in order to maximize the utilization of
clean energy. Local governments, such as the Inner Mongolian Autonomous Government, also announced their intentions to efficiently implement
the system regarding the purchase of the full amount of renewable energy.
On
March 24, 2016, the NDRC issued the Measures for the Administration of Guaranteed Purchase of Full Amount of Renewable Energy, to strengthen
the administration of, and provide details for, the implementation of the purchase of the full amount of renewable energy by the grid
enterprises.
On
May 10, 2019, NDRC and NEA jointly released Notice on Establishing a Mandatory Renewable Electricity Consumption Mechanism, pursuant
to which, the government sets renewable electricity consumption quotas in electricity power consumption. The renewable consumption quotas
will be determined at the provincial level and the provincial energy administrations will lead the implementation process.
Environmental
Protection
The
construction processes of the solar power projects may generate noise, waste water, gaseous emissions and other industrial wastes. Therefore,
we are subject to a variety of government regulations related to the storage, use and disposal of hazardous materials and to the protection
of the environment of the community. The major environmental regulations applicable to our business activities in the PRC include the
Environmental Protection Law of the PRC, the Law on the Prevention and Control of Noise Pollution, the Law on the Prevention and Control
of Air Pollution, the Law on the Prevention and Control of Water Pollution, the Law on the Prevention and Control of Solid Waste Pollution,
the Environmental Impact Evaluation of Law, and the Regulations on the Administration of Environmental Protection in Construction Projects.
58
Corporate
Laws and Industry Catalogue Relating to Foreign Investment
The
establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC, or the Company Law,
effective in 1994, as amended in 1999, 2004, and 2005, respectively. The Company Law is applicable to our PRC subsidiaries and affiliated
PRC entity unless the PRC laws on foreign investment have stipulated otherwise.
The
establishment, approval, registered capital requirement and day-to-day operational matters of wholly foreign-owned enterprises ("WFOE"),
are regulated by the WFOE Law of the PRC effective in 1986, as amended in 2000, and the Implementation Rules of the WFOE Law of the PRC
effective in 1990, as amended in 2001.
Investment
activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment, or
the Catalogue, which was promulgated and is amended from time to time by the Ministry of Commerce and the National Development and Reform
Commission. The Catalogue divides industries into three categories: encouraged, restricted and prohibited. Industries not listed in the
Catalogue are generally open to foreign investment unless specifically restricted by other PRC regulations.
Establishment
of WFOEs is generally permitted in encouraged industries. Some restricted industries are limited to equity or contractual joint ventures,
while in some cases Chinese partners are required to hold the majority interests in such joint ventures.
For
example, sales and distribution of audio and video products are among the restricted categories, and only contractual joint ventures
in which Chinese partners holding majority interests can engage in the distribution of audio and video products in China.
In
addition, restricted category projects are also subject to higher-level government approvals. Foreign investors are not allowed to invest
in industries in the prohibited category.
Regulations
Relating to Taxation
In
January 2008, the PRC Enterprise Income Tax Law (The "EIT" Law) took effect. The EIT applies a uniform 25% enterprise income
tax rate to both foreign-invested enterprises and domestic enterprises, unless where tax incentives are granted to special industries
and projects. Under the EIT Law and its implementation regulations, dividends generated from the business of a PRC subsidiary after January
1, 2008 and payable to its foreign investor may be subject to a withholding tax rate of 10% if the PRC tax authorities determine that
the foreign investor is a non-resident enterprise, unless there is a tax treaty with China that provides for a preferential withholding
tax rate. Distributions of earnings generated before January 1, 2008 are exempt from PRC withholding tax.
Under
the EIT Law, an enterprise established outside China with "de facto management bodies" within China is considered a "resident
enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its
worldwide income. A circular issued by the State Administration of Taxation in April 2009 regarding the standards used to classify certain
Chinese-invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as "resident
enterprises" clarified that dividends and other income paid by such PRC "resident enterprises" will be considered PRC-source
income and subject to PRC withholding tax, currently at a rate of 10%, when paid to non-PRC enterprise shareholders. This circular also
subjects such PRC "resident enterprises" to various reporting requirements with the PRC tax authorities.
Under
the implementation regulations to the EIT Law, a "de facto management body" is defined as a body that has material and overall
management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise.
In addition, the tax circular mentioned above specifies that certain PRC-invested overseas enterprises controlled by a Chinese enterprise
or a Chinese enterprise group in the PRC will be classified as PRC resident enterprises if the following are located or residence in
the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and
personnel decision making bodies; key properties, accounting books, the company seal and minutes of board meetings and shareholders'
meetings; and half or more of the senior management or directors having voting rights.
59
Regulations
Relating to Foreign Exchange
Pursuant
to the Regulations on the Administration of Foreign Exchange issued by the State Council and effective in 1996, as amended in January
1997 and August 2008, current account transactions, such as sale or purchase of goods, are not subject to PRC governmental control or
restrictions. Certain organizations in the PRC, including foreign-invested enterprises, may purchase, sell, and/or remit foreign currencies
at certain banks authorized to conduct foreign exchange business upon providing valid commercial documents. Approval of the PRC State
Administration of Foreign Exchange ("SAFE"), however, is required for capital account transactions.
In
August 2008, SAFE issued a circular on the conversion of foreign currency into Renminbi by a foreign-invested company that regulates
how the converted Renminbi may be used. The circular requires that the registered capital of a foreign-invested enterprise converted
into Renminbi from foreign currencies may only be utilized for purposes within its business scope. For example, such converted amounts
may not be used for investments in or acquisitions of other PRC companies, unless specifically provided otherwise, which can inhibit
the ability of companies to consummate such transactions. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi
registered capital of foreign-invested enterprises converted from foreign currencies. The use of such Renminbi capital may not be changed
without SAFE's approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been utilized.
Violations may result in severe penalties, such as heavy fines.
Regulations
Relating to Labor
Pursuant
to the PRC Labor Law effective in 1995 and the PRC Labor Contract Law effective in 2008, a written labor contract is required when an
employment relationship is established between an employer and an employee. Other labor-related regulations and rules of the PRC stipulate
the maximum number of working hours per day and per week as well as the minimum wages. An employer is required to set up occupational
safety and sanitation systems, implement the national occupational safety and sanitation rules and standards, educate employees on occupational
safety and sanitation, prevent accidents at work and reduce occupational hazards.
In
the PRC, workers dispatched by an employment agency are normally engaged in temporary, auxiliary or substitute work. Pursuant to the
PRC Labor Contract Law, an employment agency is the employer for workers dispatched by it, and it must perform an employer's obligations
toward them. The employment contract between the employment agency and the dispatched workers, and the placement agreement between the
employment agency and the company that receives the dispatched workers must be in writing. Also, the company that accepts the dispatched
workers must bear joint and several liabilities for any violation of the Labor Contract Law by the employment agencies arising from their
contracts with dispatched workers. An employer is obligated to sign an indefinite term labor contract with an employee if the employer
continues to employ the employee after two consecutive fixed-term labor contracts. The employer also has to pay compensation to the employee
if the employer terminates an indefinite term labor contract. Except where the employer proposes to renew a labor contract by maintaining
or raising the conditions of the labor contract and the employee is not agreeable to the renewal, an employer is required to compensate
the employee when a definite term labor contract expires. Furthermore, under the Regulations on Paid Annual Leave for Employees issued
by the State Council in December 2007 and effective as of January 2008, employees who have served an employer for more than one (1) year
and less than ten years are entitled to a 5-day paid vacation, those whose service period ranges from 10 to 20 years are entitled to
a 10-day paid vacation, and those who have served for more than 20 years are entitled to a 15-day paid vacation. An employee who does
not use such vacation time at the request of the employer shall be compensated at three times their normal salaries for each waived vacation
day.
Pursuant
to the Regulations on Occupational Injury Insurance effective in 2004 and the Interim Measures concerning the Maternity Insurance for
Enterprise Employees effective in 1995, PRC companies must pay occupational injury insurance premiums and maternity insurance premiums
for their employees. Pursuant to the Interim Regulations on the Collection and Payment of Social Insurance Premiums effective in 1999
and the Interim Measures concerning the Administration of the Registration of Social Insurance effective in 1999, basic pension insurance,
medical insurance, and unemployment insurance are collectively referred to as social insurance. Both PRC companies and their employees
are required to contribute to the social insurance plans. Pursuant to the Regulations on the Administration of Housing Fund effective
in 1999, as amended in 2002, PRC companies must register with applicable housing fund management centers and establish a special housing
fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.
60
Regulations
on PRC Company Law
Pursuant
to the PRC Company Law, promulgated by the Standing Committee of the National People's Congress (the "SCNPC") on December,
29 1993, effective as of July 1, 1994, and as revised on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and
October 26, 2018, the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law. The
PRC Company Law defines two types of companies: limited liability companies and companies limited by shares.
Each
of our PRC subsidiaries is a limited liability company. Unless otherwise stipulated in the related laws on foreign investment, foreign
invested companies are also required to comply with the provisions of the PRC Company Law.
Regulations
on PRC Tort Liability Law
Pursuant
to the Tort Liability Law of China, which was promulgated by the National People's Congress Standing Committee on December 30,
2009 and became effective on July 1, 2010, producers are liable for damages caused by defects in their products and sellers are liable
for damages attributable to their fault. If the defects are caused by the fault of third parties, such as the transporter or storekeeper,
producers and sellers have the right to seek compensation from these third parties after paying the damages. The producers and sellers
are obligated to take remedial measures, such as issuing warnings or recalling the products in a timely manner if defects are found in
products that are in circulation. If a party knowingly manufactured and sold defective products that cause death or severe personal injuries,
the injured person has the right to claim punitive damages.
Regulations
on Dividend Distribution
Wholly
foreign-owned companies in the PRC may pay dividends only out of their accumulated profits after tax as determined in accordance with
PRC accounting standards. Remittance of dividends by a wholly foreign-owned enterprise out of China is subject to examination by the
banks designated by SAFE. Wholly foreign-owned companies may not pay dividends unless they set aside at least 10% of their respective
accumulated profits after tax each year, if any, to fund certain reserve funds, until such time as the accumulative amount of such fund
reaches 50% of the wholly foreign-owned company's registered capital. In addition, these companies also may allocate a portion
of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds at their discretion. These reserve funds
and staff welfare and bonus funds are not distributable as cash dividends.
Safe
Regulations on Offshore Special Purpose Companies Held by PRC Residents or Citizens
Pursuant
to the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment
via Overseas Special Purpose Vehicles, or Circular No. 75, issued in October 2005 by SAFE and its supplemental notices, PRC citizens
or residents are required to register with SAFE or its local branch in connection with their establishment or control of an offshore
entity established for the purpose of overseas equity financing involving a roundtrip investment whereby the offshore entity acquires
or controls onshore assets or equity interests held by the PRC citizens or residents. In addition, such PRC citizens or residents must
update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to increases or decreases
in investment amount, transfers or exchanges of shares, mergers or divisions, long-term equity or debt investments, external guarantees
or other material events that do not involve roundtrip investments. Subsequent regulations further clarified that PRC subsidiaries of
an offshore company governed by the SAFE regulations are required to coordinate and supervise the filing of SAFE registrations in a timely
manner by the offshore holding company's shareholders who are PRC citizens or residents. If these shareholders fail to comply,
the PRC subsidiaries are required to report to the local SAFE branches. If the shareholders of the offshore holding company who are PRC
citizens or residents do not complete their registration with the local SAFE branches, the PRC subsidiaries may be prohibited from distributing
their profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore company, and the offshore company
may be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover, failure to comply with the SAFE
registration and amendment requirements described above could result in liability under PRC law for evasion of applicable foreign exchange
restrictions.
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M&A
Rules
On
August 8, 2006, six PRC regulatory agencies, including China Securities Regulatory Commission ("CSRC"), promulgated a rule
entitled Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors ("the M&A Rules")
to regulate foreign investment in PRC domestic enterprises. The M&A rules, among other things, requires an overseas special purpose
vehicle ("SPV"), formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies
or individuals, to obtain the approval of CSRC prior to publicly listing their securities on an overseas stock exchange. There remains
some uncertainty as to how this regulation will be interpreted or implemented in the context of an overseas offering. If the CSRC or
another PRC regulatory agency subsequently determines that approval is required for this offering, we may face sanctions by the CSRC
or another PRC regulatory agency.
The
M&A Rules also establish procedures and requirements that could make some acquisitions of Chinese companies by foreign investors
more time-consuming and complex, including requirements in some instances that the Ministry of Commerce be notified in advance of any
change-of-control transaction in which a foreign investor takes control of a Chinese domestic enterprise.
SAFE
Regulations on Employee Share Options
On
March 28, 2007, SAFE promulgated the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating
in Employee Share Holding Plan or Share Option Plan of Overseas Listed Company, or the Share Option Rule. Pursuant to the Share Option
Rule, Chinese citizens who are granted share options by an overseas publicly listed company are required to register with SAFE through
a Chinese agent or Chinese subsidiary of the overseas publicly listed company and complete certain other procedures. Our PRC employees
who have been granted share options will be subject to these regulations. Failure of our PRC share option holders to complete their SAFE
registrations may subject these PRC employees to fines and legal sanctions and may also limit our ability to contribute additional capital
into our PRC subsidiaries and limit our PRC subsidiaries' ability to distribute dividends to us.
62
MANAGEMENT
The
following table sets forth certain information regarding our executive officers and director nominees as of the date of this prospectus:
Name
Age
Position
Guohua
    Ku
59
Chief
    Executive Officer, Director and Chairman of the Board
Yongjiang
    (Jackie) Shi
46
Chief
    Financial Officer and Vice President
Binfeng
    (Adeline) Gu
43
Secretary
Yan
    Zhan
47
Director
Xiaoping
    Guo
(1)
68
Independent
    Director
Zhongli
    Liu
(1)
61
Independent
    Director
LuLu
    Sun
(1)
42
Independent
    Director
(1)
Member
                                            of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
Mr.
Guohua Ku
was appointed as a director and our Chief Executive Officer as of December 10, 2008. He was elected Chairman of
the Board as of April 1, 2009. Prior to joining the Company, Mr. Ku served as a Senior Engineer for Yingfeng Technology from 2003 to
2007. From 1979 to 2003, Mr. Ku served in multiple capacities for Shaanxi Blast Air Blower (Group) Co., Ltd., with his last position
serving as a Senior Engineer. Mr. Ku's experience as our Chief Executive Officer, as well as Chairman of the Board, and extensive
scientific and operational knowledge and expertise qualifies him to serve as Chairman of the Board and led the Board to conclude that
he should be nominated to serve another term as a director. Mr. Ku obtained MBA from Northwest University of China in 1999.
Mr.
Yongjiang (Jackie) Shi
was appointed as our Chief Financial Officer ("CFO") and a Vice President, effective on December
20, 2019. Mr. Shi has served as the financial consultant to the Board since September 28, 2016 and was the CFO of the Company from May
16, 2015 to September 27, 2016. Mr. Shi was the Assistant CFO & Vice President in charge of finance for the Company from January
2015 to May 2015. Mr. Shi joined Xi'an TCH Energy Technology Company, Ltd., a wholly owned subsidiary of the Company in 2014 as
a VP of Finance and he previously worked as the Director of Investor Relations for Xilan Natural Gas Group from 2005 to 2014. Mr. Shi
studied professional accounting at the University of New South Wales, Australia from 2001 to 2003, and was awarded his master's
degree of finance in 2003. He studied public administration at Northwest University of China from 1994 to 1998, and obtained his bachelor's
degree in law in 1998.
Ms.
Adeline Gu
was appointed as the Company's Chief Financial Officer and Secretary on September 28, 2016. Ms. Gu resigned
as our Chief Financial Officer as of December 13, 2019. Ms. Gu has been serving as secretary for the office of Board of Directors of
the Company from August, 2012 to September 27, 2016. She was the Investor Relations Director from December 2007 to August 13, 2012 and
Investor Relations Director Assistant from March 2006 to December 2007 of China Natural Gas, Inc. From October 2005 to March 2006, Ms.
Gu was the Interpreter of Xi'an Equity Exchange & Shaanxi Watson Biology Gene Technology Co., Ltd. Ms. Gu studied at Northwest
University of China from September, 1995 to June, 1999 and received her bachelor degree, majoring in English. Ms. Gu has held a Chinese
Accounting Certificate since 2000.
Mr.
Yan Zhan
was appointed as a director of the company on March 16, 2021. He has worked for Xi'an TCH Energy Technology Co.,
Ltd., our wholly-owned subsidiary in the PRC, since May 2013 and he has served as the Chief Sales Officer since June 2016. Mr. Zhan
obtained his junior college diploma majored in Manufacturing Processes and Equipment from Northwestern Polytechnical
University in September 1995. After his graduation, he served as the head of production department of Xi'An Kanghuamen Factory
from 1995 to 1996. Mr. Zhan studied and taught at Shanxi Educational College from 1996 to 1998. From 1998 to 2004, he served as the sales
manager of Xi'An Equipment Import and Export Company, after which he served as the general manager of Shanxi Wanding Yandong Technology
Co., Limited from 2004 to 2013. In nominating Mr. Zhan for election as a director, our Board focused on his past marketing
and sales experience and technical knowledge in the energy recycling industry and his knowledge of the operations of the Company
as a member of management.
Mr.
Xiaoping Guo
was appointed as a director on June 1, 2017. Mr. Guo was also appointed as the Chairman of the Compensation
Committee and a member of the Audit, Nominating and Corporate Governance Committees. Mr. Guo has served as the assistant to the president
of Datang New Energy Co., Ltd., since 2010. Mr. Guo received his bachelor degree from the Xi'an Jiaotong University in 1977, and
his master's degree in systems engineering from the same school in 2000. Mr. Guo's extensive project engineering and development
experience, as well as his management experience, qualifies him to serve on our Board and led the Board to conclude that he should be
nominated as a director.
63
Mr
Zhongli Liu
was appointed as a director on March 6, 2020. Mr. Liu was also appointed as the Chairman of the Audit Committee
and a member of the Compensation, Nominating and Corporate Governance Committees. Mr. Liu served as the inspector to be in charge of
securities inspection at Shaanxi Supervision Bureau of China Securities Regulatory Commission from 1999 to September 2019. He worked
as the head of department of economics and management, professor, chief of scientific research at Xi'an Finance and Economics University
from 1984 to 1998. Since July 2017, he served as the independent director of the Board at China Haiseng Fresh Fruit Juice Co., Ltd. (00359.HK).
Mr. Liu studied industrial economy management at Xi'an Jiaotong University from September 1978 to July 1982 and was awarded his
bachelor's degree of finance in 1982. He studied planning economics at Renmin University of China from 1982 to 1984 and was awarded
his master's degree of finance in 1984. Mr. Liu's significant financial expertise qualifies him to serve on our Board and
led the Board to conclude that he should be nominated as a director.
Ms.
LuLu Sun
was appointed as a director on August 5, 2015. Mr. Sun was also appointed as the Chairman of the Corporate Governance
Committee and a member of the Compensation and Nominating Committees. Ms. Sun serves as Marketing Director for Net Engine Power Tech.
Ltd. Co. in China from June 2013 to present and she was the New Media Business Development Director for Rayli Magazine in China from
June 2009 to May 2013. From July 2002 to May 2009, Ms. Sun was the Business Development Project Manager for Sina Mobile in China. Ms.
Sun's extensive experience in marketing and business development in China qualifies her to serve on our Board and led the Board
to conclude that she should be nominated as a director.
CORPORATE
GOVERNANCE
Leadership
Structure and Role in Risk Oversight
The
Company's current board leadership structure separates the board chair and principal executive officer roles into two positions.
Mr. Ku has served as both Chairman of the Board and CEO of the Company since April 1, 2009. Our Board continues to believe there are
important advantages to Mr. Ku serving in both roles at this time. Mr. Ku is the director most familiar with our business and industry
and is best situated to propose Board agendas and lead Board discussions on important matters. Mr. Ku provides a strong link between
management and the Board, which promotes clear communication and enhances strategic planning and implementation of corporate strategies.
Another advantage is the clarity of leadership provided by one person representing us to employees, stockholders and other stakeholders.
The Board has not named a lead independent director.
Our
Board is responsible for oversight of the Company's risk management practices while management is responsible for the day-to-day
risk management processes. In the Board's opinion, this division of responsibilities is the most effective approach for addressing
the risks facing the Company. The Board receives periodic reports from management regarding the most significant risks facing the Company.
In addition, the Audit Committee assists the Board in its oversight of our risk assessment and risk management policies. Our Audit Committee
is empowered to appoint and oversee our independent registered public accounting firm, monitor the integrity of our financial reporting
processes and systems of internal controls and provide an avenue of communication among our independent auditors, management, our internal
auditing department and our Board.
Diversity
The
Board does not have a formal policy with respect to Board nominee diversity. In recommending proposed nominees to the full Board, the
Corporate Governance and Nominating Committee is charged with building and maintaining a board that has an ideal mix of talent and experience
to achieve our business objectives in the current environment. In particular, the Corporate Governance and Nominating Committee is focused
on relevant subject matter expertise, depth of knowledge in key areas that are important to us, and diversity of thought, background,
perspective and experience so as to facilitate robust debate and broad thinking on strategies and tactics pursued by us.
Director
Independence
Xiaoping
Guo, LuLu Sun and Zhongli Liu are our only non-employee directors, and our Board has determined that each of them is independent pursuant
to the listing rules of Nasdaq and the rules of the SEC. All of the members of each of the Audit Committee, Compensation Committee and
Corporate Governance and Nominating Committee are independent as defined in Nasdaq Rule 5605(a)(2). As required under applicable Nasdaq
listing standards, in the 2019 fiscal year, our independent directors met twice in regularly scheduled executive sessions at which only
our independent directors were present.
64
Board
Meetings and Committee Meeting; Annual Meeting Attendance
During
the year ended December 31, 2020, the Board held one (1) meeting and acted through unanimous consent on 17 different occasions. In addition,
the Audit Committee held four (4) meetings; the Corporate Governance and Nominating Committee held one (1) meeting; and the Compensation
Committee held one (1) meeting. During the year ended December 31, 2020, each of the directors attended, in person or by telephone, more
than 75% of the meetings of the Board and the committees on which he or she served. We encourage our Board members to attend our Annual
Meetings, but we do not have a formal policy requiring attendance. Some of our then-sitting Board members attended the 2020 Annual Meeting.
Corporate
Governance and Nominating Committee
The
Corporate Governance and Nominating Committee currently consists of Xiaoping Guo, Zhongli Liu and LuLu Sun. Ms. LuLu Sun is the chairman
of our Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee oversees all aspects of the Company's
corporate governance functions on behalf of the Board, including identifying individuals qualified to become directors, recommending
to the Board the selection of director nominees for each meeting of the stockholders at which directors are elected and overseeing the
monitoring and evaluation of the Company's corporate governance practices. The Corporate Governance and Nominating Committee reviewed
the performance of all of the current members of the Board and determined and recommended to the Board that all of the current directors
should be nominated at the annual shareholder meeting each year for re-election. No other candidates were recommended or evaluated. The
Corporate Governance and Nominating Committee operates under a written charter, which is available on our website at www.creg-cn.com
under the links "Investor Relations – Corporate Governance."
Selection
of Board Nominees
Our
Corporate Governance and Nominating Committee is responsible for identifying, selecting and evaluating Board candidates. From a general
perspective, candidates are reviewed in the context of the existing Board members, our operating requirements and the long-term interests
of our stockholders. In selecting candidates for appointment or re-election to the Board, the Corporate Governance and Nominating Committee
of the Board considers the following criteria: (i) personal and professional ethics and integrity, including a reputation for integrity
and honesty in the business community; (ii) experience as an executive officer of companies or as a senior leader of complex organizations,
including scientific, government, financial or technological organizations; (iii) financial knowledge, including an understanding of
finance, accounting, the financial reporting process, and company measures for operating and strategic performance; (iv) ability to critically
and independently evaluate business issues, contributing diverse perspectives or viewpoints, and making practical and mature judgments;
(v) a genuine interest in the Company, and the ability to spend the time required to make substantial contributions as a director; and
(vi) no conflict of interest or legal impediment that would interfere with the duty of loyalty to the Company and its stockholders. In
addition, the Corporate Governance and Nominating Committee reviews the qualifications of the directors to be appointed to serve as members
of the Audit Committee to ensure that they meet the financial literacy and sophistication requirements under the Nasdaq rules and that
at least one of them qualifies as an "audit committee financial expert" under the rules of the SEC.
Audit
Committee
The
Audit Committee currently consists of Xiaoping Guo, Zhongli Liu and LuLu Sun, each of whom is independent under Nasdaq listing standards.
Zhongli Liu serves as chairman of our Audit Committee.
The
Board determined that Mr. Liu qualifies as an "audit committee financial expert," as defined by Nasdaq Rule 5605(a)(2) and
Item 407 of Regulation S-K. In reaching this determination, the Board made a qualitative assessment of Mr. Liu's level of knowledge
and experience based on a number of objective and subjective factors, including formal education, financial and accounting acumen, and
business experience. The Audit Committee is responsible for assisting the Board in fulfilling its oversight responsibilities with respect
to: (i) the financial reports and other financial information provided by us to the public or any governmental body; (ii) our compliance
with legal and regulatory requirements; (iii) our systems of internal controls regarding finance, accounting and legal compliance that
have been established by management and the Board; (iv) the qualifications and independence of our independent registered public accounting
firm; (v) the performance of our internal audit function and the independent registered public accounting firm; and (vi) our auditing,
accounting and financial reporting processes generally. The Audit Committee has been established in accordance with Section 3(a)(58)(A)
of the Exchange Act. In connection with its responsibilities, the Board has delegated to the Audit Committee the authority to select
and hire our independent registered public accounting firm and determine their fees and retention terms. The Audit Committee's
policy is to pre-approve all audit and non-audit services by category, including audit-related services, tax services, and other permitted
non-audit services. In accordance with the policy, the Audit Committee regularly reviews and receives updates on specific services provided
by our independent registered public accounting firm. All services rendered by Prager Metis CPAs LLC to the Company are permissible under
applicable laws and regulations. During fiscal year 2020, all services requiring pre-approval and performed by the Company's accounting
firm, Prager Metis CPAs LLC, were approved in advance by the Audit Committee in accordance with the pre-approval policy. The Audit Committee
operates under a written charter, which is available on our website at www.creg-cn.com under the links "Investor Relations
– Corporate Governance."
65
Compensation
Committee
The
Compensation Committee currently consists of Xiaoping Guo, Zhongli Liu and LuLu Sun. Mr. Guo is the chairman of our Compensation Committee.
The Compensation Committee's purpose is (i) to oversee the Company's efforts to attract, retain and motivate members of the
Company's senior management team, (ii) to carry out the Board's overall responsibility relating to the determination of compensation
for all executive officers, (iii) to oversee all other aspects of the Company's compensation policies, and to oversee the Company's
management resources, succession planning and management development activities. The Compensation Committee has the authority to engage
independent advisors to assist it in carrying out its duties. During fiscal year 2020, the Compensation Committee did not engage the
services of any independent advisors, experts or other third parties. We believe that the functioning of our Compensation Committee complies
with any applicable requirements of Nasdaq and SEC rules and regulations. The Compensation Committee operates under a written charter,
which is available on our website at www.creg-cn.com under the links "Investor Relations – Corporate Governance."
Compensation
Committee Interlocks and Insider Participation in Compensation Decisions
All
members of the Compensation Committee are independent directors. No current member of our Compensation Committee is a current or former
officer or employee of the Company or any of its subsidiaries, and no director or executive officer of the Company is a director or executive
officer of any other corporation that has a director or executive officer who is also a director of the Company.
Stockholder
Communication with the Board of Directors
Stockholders
may communicate with the Board by writing to the attention of Ms. Adeline Gu, our Secretary, at 4/F, Tower C, Rong Cheng Yun Gu Building,
Keji 3rd Road, Yanta District, Xi'an City, Shaanxi Province, 710075 China.
Code
of Ethics
We
have adopted a "code of ethics" as defined by regulations promulgated under the Securities Act of 1933, as amended, and the
Exchange Act that applies to all of our directors and employees worldwide, including our principal executive officer, principal financial
officer and principal accounting officer. A current copy of our Code of Business Conduct and Ethics is available on our website at www.creg-cn.com
under the links "Investor Relations – Corporate Governance." We intend to disclose any amendments to the Code of Business
Conduct and Ethics, as well as any waivers for executive officers or directors, on our website.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our executive officers, directors and holders of more than 10% of our common stock to file with the
SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Based solely on
our review of the copies of these reports, we believe that all filing requirements of Section 16(a) of the Exchange Act were timely complied
with during the fiscal year ended December 31, 2020.
66
EXECUTIVE
COMPENSATION
The
following summary compensation table sets forth the compensation earned by our named executive officers for the years ended December
31, 2020 and 2019.
Summary
Compensation Table
The
following table summarizes the compensation earned during the years ended December 31, 2020 and 2019, by those individuals who served
as our Chief Executive Officer, or Chief Financial Officer during any part of fiscal year 2020 and our other most highly compensated
executive officer. The individuals listed in the table below are referred to as the "named executive officers."
Name and
    Principal Position Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)(4)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All
    Other
Compensation
($)
Total
($)
Guohua
    Ku
(1)
2020
33,078
--
--
--
--
--
--
33,078
Chief
    Executive Officer and Chairman of the Board
2019
33,078
--
--
--
--
--
33,078
Yongjiang
    (Jackie) Shi
(2)
2020
26,585
--
--
--
--
--
--
26,585
Chief
    Financial Officer
2019
2,462
--
--
--
--
--
--
2,462
Binfeng (Adeline) Gu
2020
22,648
22648
Secretary
2019
22,648
22648
1.
Guohua
    Ku was appointed as Chief Executive Officer of the Company on December 10, 2008.
2.
Yongjiang
    (Jackie) Shi was appointed as Chief Financial Officer and Vice President of the Company on December 16, 2019.
Narrative
to Summary Compensation Table
During
the 2020 fiscal year, we used base salary as the exclusive executive compensation to our executive officers. We use base salary to fairly
and competitively compensate our executives, including the named executive officers, for the jobs we ask them to perform. We view base
salary as the most stable component of our executive compensation program, as this amount is not at risk. We believe that the base salaries
of our executives should be targeted at or above the median of base salaries for executives in similar positions with similar responsibilities
at comparable companies, consistent with our compensation philosophy. Because of our emphasis on performance-based compensation for executives,
base salary adjustments are generally made only when we believe there is a significant deviation from the market or an increase in responsibility.
Our Compensation Committee reviews the base salary levels of our executives each year to determine whether an adjustment is warranted
or necessary.
67
Employment
Contracts
Mr. Guohua Ku entered into
an employment agreement with the Company to serve as its CEO on December 10, 2008. The agreement had a two-year term, starting December
10, 2008, that included a one-month probationary period. In accordance with the terms and conditions of Mr. Ku's employment agreement,
on December 10, 2010, 2012, 2014, 2016, 2018, and, most recently, on December 10, 2020, the Company and Mr. Ku agreed to renew Mr. Ku's
employment agreement for an additional two-year term. Mr. Ku receives a salary of RMB 216,000 ($33,078) annually for his service as CEO.
The Company may terminate the employment agreement at any time without any prior notice to the employee if Mr. Ku engages in certain conduct,
including, but not limited to (i) violating rules and procedures of the Company or breaching the terms of the employment agreement; (ii)
neglecting his duties or engaging in malpractice for personal gain that damages the Company; (iii) entering into an employment relationship
with any other employer during his employment with the Company; or (iv) the commission of a crime. The Company also may terminate the
employment agreement upon 30 days written notice to Mr. Ku under certain other conditions, including but not limited to (i) inability
to continue position due to non-work-related sickness or injury; (ii) incompetence; and (iii) the need for mass layoffs or other restructuring.
Mr. Ku has the right to resign at any time upon a 30-day written notice to the Company.
Mr. Yongjiang Shi entered
into an employment agreement with the Company to serve as its CFO on May 8, 2020. Pursuant to the terms of Mr. Shi's employment
agreement, he receives a cash compensation in the amount of RMB 16,000 (approximately $2,300) per month for his service as the CFO and
Vice President and is also entitled to receive an annual equity award of at least 5,000 shares of common stock of the Company. The term
of the employment agreement is for 24 months and may be renewed for an additional term by the Company upon 30-day notice prior to its
termination. This employment agreement may be terminated by the Company or Mr. Shi at any time without any prior notice.
In
connection with her appointment as Chief Financial Officer and Secretary, the Company entered into an employment agreement with Ms. Gu
on September 28, 2016. Pursuant to the terms of the employment agreement, Ms. Gu will receive compensation in the amount of RMB 10,000
(approximately $1,538) per month for her role as Chief Financial Officer, plus stock options for no less than 5,000 shares of common
stock of the Company each year to be issued under the China Recycling Energy Corporation Omnibus Equity Plan (the "Plan")
with the specific terms of the options to be determined by the Compensation Committee of the Board in the future. The term of the employment
agreement is for two years, starting on September 28, 2016. The Compensation Committee approved the grant of an option to Ms. Gu to purchase
5,000 shares of the Company's common stock on April 27, 2017. On September 28, 2018, the Company and Ms. Gu agreed to renew Ms.
Gu's employment agreement for an additional two-year term. Ms. Gu receives a salary of RMB 144,000 ($22,052) annually for her service
as CFO. Ms. Gu resigned from her position as the Chief Financial Officer of the Company on December 13, 2019.
Potential
Payments Upon Termination or Change of Control
Employment
Agreements
Certain
of our executive officers, including our CEO, have employment agreements with the Company's operating subsidiaries in China. Under
Chinese law, we may only terminate employment agreements without cause and without penalty by providing notice of non-renewal one month
prior to the date on which the employment agreement is scheduled to expire. If we fail to provide this notice or if we wish to terminate
an employment agreement in the absence of cause, as defined in the agreement, then we are obligated to pay the employee one month's
salary for each year we have employed the employee. We are, however, permitted to terminate an employee for cause without penalty pursuant
to each employment agreement.
2015
Plan
In
June of 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the "2015 Equity
Plan") at its annual meeting. The total aggregate shares of common stock authorized for issuance during the term of the 2015 Equity
Plan is 124,6,26 shares of the Company's authorized shares of common stock, as adjusted for the Reverse Stock Split, effected on
April 13, 2020. The 2015 Equity Plan will terminate on the earliest to occur of (i) the 10th anniversary of the Equity Plan's effective
date, or (ii) the date on which all shares available for issuance under the Equity Plan shall have been issued as fully vested shares.
We have not granted any options to purchase shares of our common stock under the 2015 Equity Plan during the 2020 fiscal year.
68
NON-EMPLOYEE
DIRECTOR COMPENSATION
Non-Employee
Director Compensation
The
following table sets forth certain information regarding the compensation earned by or awarded during the 2020 fiscal year to each of
our non-executive directors:
Fees
Earned or
Paid in
Cash
Stock
Awards
Option
Awards
Non-Equity
Incentive Plan
Compensation
Nonqualified
Deferred
Compensation
All Other
Compensation
Total
Name
($)(1)
($)(1)
($)(1)
($)
Earnings
($)
($)
LuLu
    Sun
(2)
$
7692
$
7692
Xiaoping
    Guo
(3)
$
7692
$
7692
Xiaogang
    Zhu
(3)
$
1000
$
1000
Zhongli
    Liu
(4)
$
7692
$
7692
Yan
    Zhan
(5)
$
14,906
$
14,906
1.
In
    setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties to the
    Company, as well as the skill level required to serve as a director and manage the affairs of the Company. Each non-employee director
    receives an annual Board fee of RMB 50,000. Non–employee directors do not receive additional fees for attendance at Board or
    Board committee meetings or for serving on Board Committees. There were no stock options granted and exercised by non-employee directors
    during the 2020 fiscal year. There were no option awards outstanding as of December 31, 2020, for any of the non-employee directors.
2.
Ms.
    LuLu Sun was appointed to the Board on August 5, 2015.
3.
Messrs.
    Guo and Zhu were appointed as directors effective June 1, 2017. Mr. Zhu resigned from the Board effective March 5, 2020.
4.
Mr.
                                            Liu was appointed to the Board on March 6, 2020 to fill the vacancy resulted from the resignation
                                            of Xiaogang Zhu.
5.
Mr.
    Zhan was appointed to the Board on March 12, 2021 to fill the vacancy resulted from the resignation of Geyun Wang.
Option
Grants
We
had no outstanding equity awards as of the end of fiscal years ended December 31, 2020 and 2019.
Option
Exercises and Fiscal Year-End Option Value Table
There
were no stock options exercised during fiscal years ended December 31, 2020 and 2019 by the executive officers.
Outstanding
Equity Awards at Fiscal Year-End Table
We
had no outstanding equity awards as of the end of fiscal years ended December 31, 2020 and 2019.
Long-Term
Incentive Plans and Awards
There
were no awards made to a named executive officer in fiscal 2020 and 2019 under any long-term incentive plan.
69
PRINCIPAL
STOCKHOLDERS
The
following table sets forth certain information provided to us by each of the following as of the date of this prospectus (unless otherwise
indicated) regarding their beneficial ownership of our common stock:
●
each person, entity or
    group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known by us to be the beneficial owner of
    more than 5% of our outstanding shares of common stock;
●
each of our directors and
    named executive officers; and
●
all of our directors and
    named executive officers as a group.
Information
relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by
each person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be
a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or
direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security.
The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within
60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. The address for each director
and executive officer is 4/F, Tower C, Rong Cheng Yun Gu Building, Keji 3rd Road, Yanta District, Xi'an City, Shaanxi Province,
China 710075.
Common Stock Beneficially Owned
Number of
Shares
Percent of
Class
Directors and Named Executive Officers
Guohua Ku
1,278,291
19.42
%
Yongjiang (Jackie) Shi
0
(1)
*
Adeline Gu
500
(2)
*
Yan Zhan
0
*
Xiaoping Guo
0
*
Zhongli Liu
0
*
LuLu Sun
0
*
All executive officers and directors as a group (7 persons)
1,278,791
19.42
%
Other 5% Stockholders
Eastern Good Investments, Ltd.
440,000
6.68
%
Forever Inherit Group (HK) Ltd.
1,000,000
15.19
%
Keen Merit Investments, Ltd.
440,000
6.68
%
Lead Crest Investments, Ltd.
440,000
6.68
%
*
Less than one percent (1%)
    of outstanding shares.
1.
Excludes at least 5,000
    shares issuable to Mr. Shi annually pursuant to the term of his employment agreement with the Company.
2.
Represents 500 shares of
    common stock subject to currently exercisable stock options.
EQUITY
COMPENSATION PLAN INFORMATION
During
the fiscal year ended December 31, 2020, we have not issued any shares of common stock under the 2015 Plan.
70
RELATED
PARTY TRANSACTIONS
The
Company has not implemented a written policy concerning the review of related party transactions; however, the Company's policy
is that the Audit Committee must review related party transactions and Board must approve all related party transactions. Further, all
material related party transactions will be made or entered into on terms that are no less favorable to us than can be obtained from
unaffiliated third parties.
A
"related party transaction" is a transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness)
or any series of similar transactions, arrangements or relationships in which the Company (including any of our subsidiaries) was, is
or will be a participant, the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect
interest.
On
December 29, 2018, our Chairman of the Board and CEO, Guohua Ku, entered into a Buy-Back Agreement with the following parties: Xi'an
TCH, Xi'an Zhonghong, HYREF, Chonggong Bai and Xi'an Hanneng Enterprises Management Consulting Co. Ltd. ("Xi'an
Hanneng"). Pursuant to the terms of the Buy Back Agreement, Mr. Ku, together with Xi'an TCH, Xi'an Zhonghong, and Chonggong
Bai, as Buyers, jointly and severally agreed to buy back all outstanding capital equity of Xi'an Hanneng which was transferred
to HYREF by Chonggong Bai, and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi'an Zhonghong. (See Notes
5 and 10). Pursuant to the terms of the Buy-Back agreement, HYREF may request that the Buyers buy back the equity shares of Xi'an
Hanneng and/or the CDQ WHPG station if one of the following conditions is met: (i) HYREF holds the equity shares of Xi'an Hanneng
until December 31, 2021; (ii) Xi'an Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations
Co., Ltd., a Chinese over-the-counter trading system (the "NEEQ"); (iii) Xi'an Huaxin New Energy, or any of the Buyers
or its affiliates has a credit problem, including not being able to issue an auditor report or standard auditor report or any control
person or executive of the Buyers is involved in crimes and is under prosecution or has other material credit problems, to HYREF's
reasonable belief; (iv) if Xi'an Zhonghong fails to timely make repayment on principal or interest of the loan agreement, its supplemental
agreement or extension agreement; (v) the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment
Agreement or its related transaction documents, including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer
Agreement, the Entrusted Loan Agreement and their guarantee agreements and supplemental agreements.
As
of December 31, 2020 and 2019, the Company had $28,440 and $41,174, respectively, in advances from the Company's management, which
bear no interest, are unsecured, and are payable upon demand.
As
of March 31, 2021 and December 31, 2020, the Company had $28,466 and $28,440, respectively, in advances from the Company's management,
which bear no interest, are unsecured, and are payable upon demand.
On
February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors, pursuant to which
the Company agreed to sell to the purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at $11.522
per share. One of the purchasers is the Company's CEO and Chairman of the Board, who purchased 1,000,000 shares of common
stock of the Company.
In
April 2021, the Company's CEO amended the number of shares that he would purchase from 1,000,000 shares to 940,000 shares. The
Company returned $691,320 in excess purchase price that were received earlier to the Company's CEO in April 2021.
71
DESCRIPTION
OF SECURITIES
Issuances
of Shares of Common Stock
As of July 27, 2021, there
were 6,583,327 shares of our common stock outstanding, and warrants to purchase 30,411 shares of our common stock.
On July 27, 2021, the Company
filed a certificate of change to its Articles of Incorporate with the Secretary of State of the State of Nevada to increase its authorized
shares to 100,000,000 shares of common stock.
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 ("BOD")
out of legally available funds; however, the current policy of our BOD 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 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 BOD 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 BOD 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.
Transfer
Agent and Registrar
The
Transfer Agent for our common stock and Warrants is Securities Transfer Corporation, located at 2901 Dallas Pkwy Suite 380, Plano, TX
75093.
72
MARKET
PRICE AND DIVIDENDS ON OUR COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
Our common stock is currently
traded on the Nasdaq Capital Market under the symbol "CREG." On July 27, 2021, the last reported sales price for our common
stock was $7.07 per share.
Shares
Issued for Stock Compensation
On
October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm, engaging that firm as
the exclusive lead underwriter for a registered securities offering. Pursuant to the terms of this engagement agreement, the Company
issued 10,000 shares of its unregistered and restricted common stock to an investment banker firm within 10 days from the date of the
execution of the engagement agreement, and the remaining 5,000 shares to be paid upon completion of the offering. The agreement has expired
and the Company has no obligation to pay the remaining 5,000 shares.
On
October 11, 2019, the Company entered a consulting agreement with a consulting company to advise the Company on an acquisition project.
Pursuant to the terms of this consulting agreement, the Company issued 31,250 shares of the Company's unregistered and restricted
common stock to this consulting company. The agreement has expired and the acquisition project was abandoned.
The
issuances of the shares of common stock for stock compensation described above were exempt from registration under Section 4(a)(2) of
the Securities Act as transactions by an issuer not involving any public offering.
Equity
Compensation Plan Information
2015
Plan
In
June of 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the "2015 Equity
Plan") at its annual meeting. The total aggregate shares of common stock authorized for issuance during the term of the 2015 Equity
Plan is 124,6,26 shares of the Company's authorized shares of common stock, as adjusted for the Reverse Stock Split, effected on
April 13, 2020. The 2015 Equity Plan will terminate on the earliest to occur of (i) the 10th anniversary of the Equity Plan's effective
date, or (ii) the date on which all shares available for issuance under the Equity Plan shall have been issued as fully-vested shares.
Holders
of Capital Stock
As of July 27, 2021, there
were 6,583,327 shares of our common stock outstanding, held by approximately 2,728 shareholders of record, and warrants to purchase 30,411
shares of our common stock, held by 5 warrant holders.
Stock
Option Grants
We
granted stock options to purchase 500 shares of common stock subject to currently exercisable stock options under the 2015 Equity Plan.
Dividends
To
date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the
foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our
business, our Board of Directors has the discretion to declare and pay dividends in the future.
Payment
of dividends in the future will depend upon our earnings, capital requirements, and any other factors that our Board of Directors deems
relevant.
73
SHARES
ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering,
there was little to no trading activity in our common stock. Future sales of substantial amounts of common stock in the public market,
or the perception that such sales may occur, could adversely affect the market price of our common stock. Immediately prior to the offering,
there are 6,583,327 shares of common stock outstanding. Upon the completion of the offering, we will have an aggregate of shares of common
stock outstanding immediately assuming no exercise of the over-allotment option by the Underwriter.
All
shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for
any shares purchased by our "affiliates," as that term is defined in Rule 144 under the Securities Act, whose sales would
be subject to the Rule 144 resale restrictions described below, other than the holding period requirement. The remaining shares of common
stock, representing approximately % or % of our outstanding shares, following the firm commitment offering, respectively, will be held
by our existing shareholders. Many of these shares are "restricted securities" as that phrase is defined in Rule 144 under
the Securities Act. Subject to certain contractual restrictions, including the lock-up agreements described below, holders
of restricted shares will be entitled to sell those shares in the public market pursuant to an effective registration statement under
the Securities Act or if they qualify for an exemption from registration under Rule 144. Sales of these shares in the public market after
the restrictions under the lock-up agreements lapse, or the perception that those sales may occur, could cause the prevailing market
price to decrease or to be lower than it might be in the absence of those sales or perceptions. As a result of lock-up agreements
described below, and the provisions of Rules 144 under the Securities Act, the restricted securities will be available for sale in the
public market.
We,
all of our directors and officers and certain shareholders have agreed with the Underwriter, subject to certain exceptions, not to sell,
transfer or dispose of, directly or indirectly, any of our shares of common stock or any securities convertible into or exercisable or
exchangeable for shares of our common stock for a period of 180-days after the date of this prospectus without the prior written consent
of the Underwriter. This consent may be given at any time without public notice. Upon expiration of the lock-up period, these
shares will be available for sale in the public market, subject in some cases to applicable volume limitations under Rule 144.
We
also agreed to register shares underlying the Underwriter's Warrants. Once exercised, of which there can be no guarantee, subject
to the relative lock up period described elsewhere in this prospectus, those shares shall be freely tradable without restriction or further
registration under the Securities Act.
Rule
144
Some
of our stockholders will be forced to hold their shares of our common stock for at least a six-month period before they are
eligible to sell those shares, and even after that six-month period, sales may not be made under Rule 144 promulgated under
the Securities Act unless we and such stockholders are in compliance with other requirements of Rule 144.
In
general, Rule 144 provides that (i) any of our non-affiliates that has held restricted common stock for at least six months
is thereafter entitled to sell its restricted stock freely and without restriction, provided that we remain compliant and current with
our SEC reporting obligations, and (ii) any of our affiliates, which includes our directors, executive officers and other person
in control of us, that has held restricted common stock for at least six months is thereafter entitled to sell its restricted stock subject
to the following restrictions: (a) we are compliant and current with our SEC reporting obligations, (b) certain manner of sale
provisions are satisfied, (c) a Form 144 is filed with the SEC, and (d) certain volume limitations are satisfied, which limit
the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of
outstanding shares. A person who has ceased to be an affiliate at least three months immediately preceding the sale and who has owned
such shares of common stock for at least one year is entitled to sell the shares under Rule 144 without regard to any of the limitations
described above.
74
Summary
of Shares Available for Future Sale
The
following table summarizes the total shares potentially available for future sale. To the extent we sell a number of shares of common
stock under the firm commitment offering, the below tables will be adjusted proportionately as to numbers of shares available for sale
and dates on which such shares may be sold (as to currently outstanding shares).
Outstanding
    Shares
Date
    Available for Sale
Currently
    outstanding shares of common stock not subject to lock-up agreement:
Available
    for sale and subject to Rule 144 requirement
Currently Outstanding Shares
    of Common Stock Subject to Lock-up Agreement:
After
    180-day from the date of this prospectus.
Shares
    Offered in this Offering
(1)
:
After
    the completion of this offering, these shares will be freely tradable.
(1)
Including the shares of
    common stock upon exercise of the Warrants. The shares of common stock upon exercise of the Underwriter Warrants will become available
    for sale after 180-day from commencement of sale of this offering.
75
UNDERWRITING
Under
the terms and subject to the conditions of an underwriting agreement dated the date of this prospectus, the underwriters named below,
for whom Univest Securities. LLC is acting as the representative and sole book-running manager, have severally agreed to purchase, and
we have agreed to sell to them, the number of securities at the initial public offering price, less the underwriting discounts, as set
forth on the cover page of this prospectus and as indicated below:
Underwriters
Number
of Shares of
Common Stock
and Warrants
Univest Securities, LLC
Total
The
underwriters are offering the securities subject to their acceptance of the securities rom us and subject to prior sale. The underwriting
agreement provides that the obligations of the underwriters to pay for and accept delivery of the securities offered by this prospectus
are subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take
and pay for all of the securities offered by this prospectus if any such securities are taken. However, the underwriters are not
required to take or pay for the securities covered by the underwriters' option to purchase additional securities described below.
We
have granted a 45-day option to the representative of the underwriters to purchase up to        additional
shares of common stock and/or up to        Warrants at the initial public offering price listed
on the cover page of this prospectus, less underwriting discounts. The underwriters may exercise this option solely for the purpose of
covering over-allotments, if any, made in connection with the offering contemplated by this prospectus. To the extent the option is exercised,
each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares
of common stock and warrants as the number listed next to the underwriter's name in the preceding table bears to the total number
of shares of common stock and warrants listed next to the names of all underwriters in the preceding table.
The
underwriters will offer the shares to the public at the initial public offering price set forth on the cover of this prospectus and to
selected dealers at the initial public offering price less a selling concession not in excess of $0.16 per share. After this offering,
the initial public offering price, concession and reallowance to dealers may be reduced by the representative. No change in those terms
will change the amount of proceeds to be received by us as set forth on the cover of this prospectus. The securities are offered by the
underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in
part.
Discounts
and Expenses
The
underwriting discounts are equal to 8% of the initial public offering price set forth on the cover of this prospectus.
The
following table shows the per share and accompanying warrant and total initial public offering price, underwriting discounts, and proceeds
before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase
up to an additional shares of common stock and/or up to Warrants.
Per Share and
accompanying
Warrant
Total Without
Exercise of
Over-allotment
Option
Total With
Full Exercise
of Over-
allotment
Option
Initial public offering price
$
$
10,000,000
$
11,500,000
Underwriting discounts to be paid by us
$
$
800,000
$
920,000
Proceeds, before expenses, to us
$
$
9,200,000
$
10,580,000
We have agreed to pay to the underwriters
upon the consummation of the offering, a non-accountable expense allowance equal to one percent (1%) of the gross proceeds of the offering.
We have also agreed to pay the representative reasonable out-of-pocket expenses including but not limited to, (i) reasonable travel and
out-of-pocket expenses, including clearing charges; (ii) reasonable fees of legal counsel incurred by the Underwriter in connection with
the offering. The total accountable expenses shall not exceed $150,000. Notwithstanding any contained herein to the contrary, the representative
shall return to the Company any expenses previously paid, or advanced, but that which were not actually incurred, in accordance with FINRA
Rule 5110(g)(4)(A).
76
Underwriter
Warrants
We have also agreed to grant to
the representative a warrant covering a number of shares equal to 5% of the aggregate number of shares of common stock sold in the offering
(the "Underwriter Warrants"). The Underwriter Warrants will be exercisable, in whole or in part, during a period commencing
after 6 months of the closing of the offering and will expire on the five-year anniversary of the date of commencement of sales of the
offering. The Underwriter Warrants will be exercisable at a price equal to 100% of the offering price and shall not be redeemable. We
have registered the shares underlying the Underwriter Warrants in the registration statement. The Underwriter Warrants may not be sold,
transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that
would result in the effective economic disposition of the securities by any person for a period of 180 days following the date of commencement
of sales of the offering (in accordance with FINRA Rule 5110(e)(1) except as may be provided in FINRA Rule 5110(e)(2). The Underwriter
Warrants may be exercised as to all or a lesser number of shares, and will provide for cashless exercise. The Underwriter Warrants shall
further provide for adjustment in the number and price of such warrants (and the share of the common stock underlying such warrants) in
the event of recapitalization, a merger or other structural transactions to prevent dilution.
Right
of First Refusal
Pursuant
to the underwriting agreement, we will provide the representative of the underwriters the right of first refusal for one year from the
date of commencement of sales of this public offering to act as financial advisor or to act as joint financial advisor on at least equal
economic terms on any public or private financing (debt or equity), merger, business combination, recapitalization or sale of some or
all of the equity or assets of our company, whether undertaken in conjunction with another broker-dealer or on the Company's own
volition.
Price
Stabilization
The underwriters will be required
to comply with the Securities Act and the Exchange Act, including without limitation, Rule 10b-5 and Regulation M under the Exchange Act.
These rules and regulations may limit the timing of purchases and sales of shares of capital stock by the Underwriter acting as principal.
Under these rules and regulations, the Underwriter:
●
may not engage in any stabilization
    activity in connection with our securities; and
●
may not bid for or purchase
    any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange
    Act, until it has completed its participation in the distribution.
Determination
of Offering Price
The public offering price of the
shares we are offering was determined by us in consultation with the underwriters based on discussions with potential investors in light
of the history and prospects of our company, the stage of development of our business, our business plans for the future and the extent
to which they have been implemented, an assessment of our management, the public stock price for similar companies, general conditions
of the securities markets at the time of the Offering and such other factors as were deemed relevant.
Indemnification
We have agreed to indemnify the
underwriters against liabilities relating to the Offering arising under the Securities Act and the Exchange Act and to contribute to payments
that the underwriters may be required to make for these liabilities.
Foreign
Regulatory Restrictions on Purchase of our Shares
We
have not taken any action to permit a public offering of our shares outside the United States or to permit the possession or distribution
of this prospectus outside the United States. People outside the United States who come into possession of this prospectus must inform
themselves about and observe any restrictions relating to this offering of our shares and the distribution of this prospectus outside
the United States.
77
Potential
Conflicts of Interest
The
underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course
of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business
activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities
(or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their
customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and
their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities
or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.
Other
Relationships
The
underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment,
hedging, financing and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment
banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future
receive customary fees, commissions and expenses.
In
addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of
investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank
loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities
and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish
or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that
they acquire, long and/or short positions in such securities and instruments.
Electronic
Offer, Sale and Distribution of Securities
A
prospectus in electronic format may be made available on the websites maintained by the Underwriter. In addition, the common stock may
be sold by the Underwriter to securities dealers who resell the common stock to online brokerage account holders. Other than the prospectus
in electronic format, the information on the Underwriter's website and any information contained in any other website maintained
by the Underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved
and/or endorsed by us or the Underwriter in its capacity as Underwriter and should not be relied upon by investors.
Lock-up
Agreements
We,
each of our directors and officers and holders of our common stock on a fully diluted basis immediately prior to the consummation of
this offering have agreed or are otherwise contractually restricted for a period of 180 days after the date of this prospectus, without
the prior written consent of the Underwriter not to directly or indirectly:
●
issue (in the case of the
    Company), offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
    grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any shares of our common stock or other
    capital stock or any securities convertible into or exercisable or exchangeable for our common stock or other capital stock;
●
in the case of the Company,
    file or cause the filing of any registration statement under the Securities Act with respect to any shares of our common stock or
    other capital stock or any securities convertible into or exercisable or exchangeable for our common stock or other capital stock,
    other than registration statements on Form S-8 filed with the SEC after the closing date of this offering; or
●
enter into any swap or
    other agreement, arrangement, hedge or transaction that transfers to another, in whole or in part, directly or indirectly, any of
    the economic consequences of ownership of our common stock or other capital stock or any securities convertible into or exercisable
    or exchangeable for our common stock or other capital stock,
whether
any transaction described in any of the foregoing bullet points is to be settled by delivery of our common stock or other capital stock,
other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing.
78
There
are no existing agreements between the Underwriter and any person who will execute a lock-up agreement in connection with this offering
providing consent to the sale of shares prior to the expiration of the lock-up period. The lock up does not apply to the issuance of
shares upon the exercise of rights to acquire shares of common stock pursuant to any existing stock option or the conversion of any of
our preferred convertible stock.
Offer
Restrictions outside the United States
Other
than in the United States, no action has been taken by us or the Underwriter that would permit a public offering of the securities offered
by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with
the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result
in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are
advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in
any jurisdiction in which such an offer or a solicitation is unlawful.
Australia.
This prospectus is not a product disclosure statement, prospectus or other type of disclosure document for the purposes of Corporations
Act 2001 (Commonwealth of Australia) (the "Act") and does not purport to include the information required of a product disclosure
statement, prospectus or other disclosure document under Chapter 6D.2 of the Act. No product disclosure statement, prospectus, disclosure
document, offering material or advertisement in relation to the offer of the securities has been or will be lodged with the Australian
Securities and Investments Commission or the Australian Securities Exchange.
Accordingly,
(1) the offer of the securities under this prospectus may only be made to persons: (i) to whom it is lawful to offer the shares without
disclosure to investors under Chapter 6D.2 of the Act under one or more exemptions set out in Section 708 of the Act, and (ii) who are
"wholesale clients" as that term is defined in section 761G of the Act, (2) this prospectus may only be made available in
Australia to persons as set forth in clause (1) above, and (3) by accepting this offer, the offeree represents that the offeree is such
a person as set forth in clause (1) above, and the offeree agrees not to sell or offer for sale any of the securities sold to the offeree
within 12 months after their issue except as otherwise permitted under the Act.
Canada.
The securities may not be offered, sold or distributed, directly or indirectly, in any province or territory of Canada other than
the provinces of Ontario and Quebec or to or for the benefit of any resident of any province or territory of Canada other than the provinces
of Ontario and Quebec, and only on a basis that is pursuant to an exemption from the requirement to file a prospectus in such province,
and only through a dealer duly registered under the applicable securities laws of such province or in accordance with an exemption from
the applicable registered dealer requirements.
European
Economic Area.
In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive, or a
Relevant Member State, from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or
the Relevant Implementation Date, an offer of the securities to the public may not be made in that Relevant Member State prior to the
publication of a prospectus in relation to the securities that has been approved by the competent authority in that Relevant Member State
or, where appropriate, approved in another Relevant Member State and the competent authority in that Relevant Member State has been notified,
all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date,
make an offer of the securities to the public in that Relevant Member State at any time,
●
to legal entities that
    are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is
    solely to invest in securities;
●
to any legal entity that
    has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than
    €43,000,000, and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;
●
to fewer than 100 natural
    or legal persons (other than qualified investors as defined in the Prospectus Directive; or
79
●
in any other circumstances
    that do not require the publication by the company of a prospectus pursuant to Article 3 of the Prospectus Directive;
provided
that no such offer of securities shall result in a requirement for the publication by the company of a prospectus pursuant to Article
3 of the Prospectus Directive.
For
purposes of the above provision, the expression "an offer of securities to the public" in relation to any securities in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the
securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the same may be varied in
that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression "Prospectus Directive"
means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Hong
Kong.
The securities may not be offered or sold by means of this document or any other document other than (i) in circumstances
that do not constitute an offer or invitation to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong)
or the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong), or (ii) to "professional investors" within the meaning
of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances that
do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong),
and no advertisement, invitation or document relating to the securities may be issued or may be in the possession of any person for the
purpose of issue (in each case whether in Hong Kong or elsewhere), that is directed at, or the contents of which are likely to be accessed
or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to securities
which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within
the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Malaysia
The securities have not been and
may not be approved by the Securities Commission Malaysia, or SC, and this document has not been and will not be registered as a prospectus
with the SC under the Malaysian capital markets and services act of 2007, or CMSA. Accordingly, no securities or offer for subscription
or purchase of securities or invitation to subscribe for or purchase securities are being made to any person in or from within Malaysia
under this document except to persons falling within any of paragraphs 2(g)(i) to (xi) of schedule 5 of the CMSA and distributed only
by a holder of a capital markets services license who carries on the business of dealing in securities and subject to the issuer having
lodged this prospectus with the SC within seven days from the date of the distribution of this prospectus in Malaysia. The distribution
in Malaysia of this document is subject to Malaysian laws. Save as aforementioned, no action has been taken in Malaysia under its securities
laws in respect of this document. This document does not constitute and may not be used for the purpose of a public offering or an issue,
offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the approval of the SC or the registration
of a prospectus with the SC under the CMSA.
People's
Republic of China.
This prospectus may not be circulated or distributed in the PRC and the securities may not be offered or sold,
and will not offer or sell to any person for re-offering or resale directly or indirectly to any resident of the PRC except pursuant
to applicable laws and regulations of the PRC. For the purpose of this paragraph, PRC does not include Taiwan and the special administrative
regions of Hong Kong and Macau.
Singapore
The
securities represented may not be offered or sold, nor may any document or other material in connect with such securities be distributed,
either directly or indirectly, (i) to persons in Singapore other than under circumstances in which such offer or sale does not constitute
an offer or sale of such securities to the public in Singapore or (ii) to the public or any member of the public in Singapore other than
pursuant to, and in accordance with the conditions of, an exemption invoked under division 5a or part iv of the companies act, chapter
50 of Singapore and to persons to whom the securities may be offered or sold under such exemption.
United
Kingdom.
An offer of the securities may not be made to the public in the United Kingdom within the meaning of Section 102B of
the Financial Services and Markets Act 2000, as amended, or the FSMA, except to legal entities that are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise
in circumstances that do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial
Services Authority, or the FSA.
An
invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) may only be communicated to persons
who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 or in circumstances in which Section 21 of FSMA does not apply to the company.
All
applicable provisions of the FSMA with respect to anything done by the underwriter in relation to the securities must be complied with
in, from or otherwise involving the United Kingdom.
80
LEGAL
MATTERS
The
validity of the common stock and Warrants offered hereby will be passed upon for us by Ortoli Rosenstadt LLP. Hunter Taubman Fischer
& Li LLC is acting as United States securities counsel to the Underwriter.
EXPERT
The
consolidated financial statements for each of the years ended December 31, 2020 and 2019, as set forth in this prospectus and elsewhere
in the registration statement have been so included in reliance on the report of Prager Metis CPAs LLP ("Prager Metis"),
an independent registered public accounting firm, given on their authority as experts in accounting and auditing. The current address
of Prager Metis is 2381 Rosecrans Avenue, Suite 350, El Segundo, CA 90245.
WHERE
YOU CAN FIND MORE INFORMATION
We
filed with the SEC a registration statement under the Securities Act for the common stock in this offering. This prospectus does not
contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement.
For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits that were
filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document
that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract
or other document filed as an exhibit to the registration statement.
We
file annual, quarterly and current reports and other information with the SEC. Our filings with the SEC are available to the public on
the SEC's website at
www.sec.gov
. Those filings are also available to the public on our corporate website at
www.ccmus.com
.
The information we file with the SEC or contained on, or linked to through, our corporate website or any other website that we may maintain
is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read and copy, at the SEC's
prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of which this prospectus
is a part, at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330
to obtain information on the operation of the Public Reference Room.
81
INDEX
TO FINANCIAL STATEMENTS
PAGE
Report
    of Independent Registered Public Accounting Firm
F-2
Consolidated
    Balance Sheets
F-4
Consolidated
    Statements of Operations and Comprehensive Loss
F-5
Consolidated Statements of Cash Flows
F-6
Consolidated
    Statements of Stockholders' Equity
F-7
Notes
    to Consolidated Financial Statements
F-8 - F-33
F-
1
REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
    the Shareholders', Audit Committee, Board of Directors and Management
China
    Recycling Energy Corp.
Opinion
    on the Consolidated Financial Statements
We
    audited the accompanying consolidated balance sheets of China Recycling Energy Corp. ("the Company") as of December 31,
    2020 and 2019 and the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash
    flows for years then ended and the related notes (collectively referred to as "financial statements"). In our opinion,
    the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company
    as of December 31, 2020 and 2019, and the results of its operations and cash flows for the years then ended, in conformity with accounting
    principles generally accepted in the United States of America.
Basis
    of Opinion
These
    financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
    Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting
    Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance
    with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
    PCAOB.
We
    conducted our audits in accordance with the standards of the PCAOB. Those standards require we plan and perform the audits to obtain
    reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The
    Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
    of our audits we are required to obtain understanding of internal control over financial reporting but not for the purpose of expressing
    an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such
    opinion.
Our
    audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
    or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
    the amounts and disclosures in the financial statements. Our auditss also included evaluating the accounting principles used and
    significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
    that our audits provide a reasonable basis for our opinion.
Critical
    Audit Matter
Critical
    Audit Matters are matters arising from the current period audit of the financial statements that were communicated or required to
    be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements
    and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
    alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters
    below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
An affiliate
    of Prager Metis International
NORTH AMERICA
EUROPE
ASIA
F-
2
China Recycling Energy Corp
April 15, 2021
Page 2 of 2
Asset
subject to buyback and entrusted loan payable
As
described in Notes 5, 9 and 19, on December 29, 2018, the Company worked out with the lender an alternative repayment proposal as a settlement
of the entrusted loan, whereby the Company transferred an asset as the partial repayment for the loan and accrued interest of approximately
$28 million. Per the agreement, the lender has an option to request the Company buyback the asset when certain conditions under the buy
back agreement are met, at the higher of the fair value of the asset or the loan and related accrued interest at the date of exercise
of the buyback option. The transferred asset and related portion of the entrusted loan was not derecognized on the accompanying consolidated
financial statements as of December 31, 2020 as the Company has not yet been fully relieved of its obligation due to the buyback option.
As of December 31, 2020, the lender has not exercised it buyback option. However, because of the buyback option, the Company was contingently
liable for the excess of fair value of the transferred asset over the balance of the loan and related interest. It is also noted that
as of April 9, 2021, the lender entered into a termination agreement of the buyback agreement, under which terms they will not execute
the buy-back option and will not ask for any additional payment from the Company other than the lender keeping the transferred asset.
We
identified the determination of fair value of the transferred asset as a critical audit matter. The evaluation of the fair value requires
management judgement, and is based on their engagement of an expert appraiser. This therefore involves auditing management's judgement,
as well as the formal appraisal of the estimated fair value of the transferred asset, which involved a high degree of subjectivity.
The
primary procedures we performed to address this critical audit matter included:
●
We
                                            read the terms of the original buyback agreement,
●
We
                                            utilized our internal valuation expert to assist in testing the appraisal of the fair value
                                            on the transferred asset as of December 31, 2020, that the Company had received,
●
We
                                            obtained confirmation from the lender that it had not exercised its buyback right at the
                                            balance sheet date.
●
For
                                            the subsequent event, we obtained and evaluated the April 9 termination agreement
We
have served as the Company's auditor since 2019.
El
Segundo, California
April 15, 2021
F-
3
CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020
DECEMBER 31, 2019
ASSETS
CURRENT ASSETS
Cash
$
107,804,013
$
16,221,297
Accounts receivable, net
308,677
42,068,760
Interest receivable on sales type leases
-
5,245,244
Prepaid expenses
55,420
52,760
Other receivables
35,687
1,031,143
Total current assets
108,203,797
64,619,204
NON-CURRENT ASSETS
Investment in sales-type leases, net
-
8,287,560
Long term deposit
16,799
15,712
Operating lease right-of-use assets, net
-
54,078
Asset subject to buyback
28,916,924
27,044,385
Construction in
    progress
-
23,824,202
Total non-current assets
28,933,723
59,225,937
TOTAL ASSETS
$
137,137,520
$
123,845,141
LIABILITIES AND STOCKHOLDERS'
    EQUITY
CURRENT LIABILITIES
Accounts payable
$
76,074
$
2,200,220
Taxes payable
3,145,612
4,087,642
Accrued interest on notes
18,968
-
Notes payable, net of unamortized OID of
    $144,355
3,005,645
-
Accrued liabilities and other payables
726,696
1,184,751
Operating lease liability
-
56,755
Due to related parties
28,440
41,174
Interest payable on entrusted loans
10,144,228
8,200,044
Entrusted loan payable
21,896,744
20,480,214
Total current liabilities
39,042,407
36,250,800
NONCURRENT LIABILITIES
Accrued interest on notes
-
368,362
Income tax payable
5,174,625
5,782,625
Notes payable, net of unamortized OID
-
1,552,376
Long term payable
459,777
430,034
Entrusted loan payable
306,518
286,689
Refundable deposit
    from customers for systems leasing
-
544,709
Total noncurrent
    liabilities
5,940,920
8,964,795
Total liabilities
44,983,327
45,215,595
CONTINGENCIES AND COMMITMENTS (NOTE 17
    & 18)
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 10,000,000 shares authorized,
    3,177,050 shares and 2,032,721 shares issued and outstanding as of December 31, 2020 and 2019, respectively
3,177
2,033
Additional paid in capital
119,748,999
116,682,374
Statutory reserve
15,155,042
14,525,712
Accumulated other comprehensive income
    (loss)
273,440
(6,132,614
)
Accumulated deficit
(43,026,465
)
(46,447,959
)
Total Company stockholders' equity
92,154,193
78,629,546
TOTAL LIABILITIES
    AND EQUITY
$
137,137,520
$
123,845,141
The accompanying notes are an integral part of
these consolidated financial statements.
F-
4
CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
YEARS ENDED DECEMBER 31,
2020
2019
Revenue
Contingent rental income
$
-
$
697,028
Interest income
    on sales-type leases
-
170,403
Total operating income
-
867,431
Operating expenses
Bad debt allowance (reversal)
(6,031,058
)
5,386,003
Impairment loss on fixed assets and construction
    in progress
-
876,660
Loss on disposal of systems
-
1,242,694
General and administrative
204,039
2,469,162
Total operating
    (income) expenses
(5,827,019
)
9,974,519
Income (loss) from operations
5,827,019
(9,107,088
)
Non-operating income (expenses)
Loss on note conversion
(502,393
)
(173,886
)
Interest expense - inducement on note conversion
-
(893,958
)
Interest income
185,527
159,183
Interest expense
(1,463,721
)
(2,101,440
)
Other income, net
4,392
319,625
Total non-operating
    expenses, net
(1,776,195
)
(2,690,476
)
Income (loss) before income tax
4,050,824
(11,797,564
)
Income tax benefit
-
(3,024,807
)
Net income (loss)
4,050,824
(8,772,757
)
Other comprehensive items
Foreign currency
    translation gain (loss)
6,406,054
(1,511,684
)
Comprehensive income
    (loss)
$
10,456,878
$
(10,284,441
)
Basic and diluted weighted average
    shares outstanding
2,564,373
1,564,940
Basic and diluted
    income (loss) per share
$
1.58
$
(5.61
)
The accompanying notes are an integral part of
these consolidated financial statements.
F-
5
CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
4,050,824
$
(8,772,757
)
Adjustments to reconcile net loss to net
    cash provided by (used in) operating activities:
Amortization of OID and debt issuing costs
    of notes
61,895
97,161
Stock compensation expense
10,999
148,625
Operating lease expenses
55,519
66,262
Asset impairment loss
876,660
Bad debt allowance (reversal)
(6,031,058
)
5,386,003
Loss on disposal of 40% ownership of Fund
    Management Co
-
46,461
Loss on transfer of Chengli Boxing system
-
624,133
Loss on transfer of Xuzhou Huayu system
-
397,033
Loss on transfer of Shenqiu Phase I &
    II systems
-
208,359
Loss on disposal of fixed assets
-
289
Loss on note conversion
502,393
173,886
Interest expense-inducement on note conversion
-
893,958
Changes in deferred tax
-
(3,024,807
)
Changes in assets and liabilities:
Interest receivable on sales type leases
-
(170,403
)
Collection of principal and interest on
    sales type leases for Pucheng systems
14,149,790
-
Accounts receivable
72,933,179
2,383,251
Prepaid expenses
(3,596
)
(21,126
)
Other receivables
(3,549
)
(135,938
)
Accounts payable
(2,153,320
)
(2,837,609
)
Taxes payable
(2,164,906
)
(1,317,882
)
Payment of lease liability
(58,226
)
(63,555
)
Interest payable on entrusted loan
1,302,610
(9,091,732
)
Accrued liabilities and other payables
(404,087
)
(36,932
)
Refundable deposit for systems leasing
-
(478,368
)
Net cash provided by (used in) operating
    activities
82,248,467
(14,649,028
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property & equipment
(1,885
)
-
Proceeds from disposal of property &
    equipment
-
5,074
Net cash provided by (used in) investing
    activities
(1,885
)
5,074
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of entrusted loan
-
(27,125,768
)
Issuance of notes payable
3,000,000
2,000,000
Issuance of common stock
497,187
3,309,475
Net cash provided by financing activities
3,497,187
(21,816,293
)
EFFECT OF EXCHANGE RATE CHANGE ON CASH
5,838,947
(541,598
)
NET INCREASE (DECREASE) IN CASH
91,582,716
(37,001,845
)
CASH, BEGINNING OF PERIOD
16,221,297
53,223,142
CASH, END OF PERIOD
$
107,804,013
$
16,221,297
Supplemental cash flow data:
Income tax paid
$
-
$
221,934
Interest paid
$
-
$
-
Supplemental disclosure of non-cash operating activities
Transfer of Tian'an project from
    construction in progress to accounts receivable
$
24,095,685
$
-
Transfer of Xuzhou Huayu Project and Shenqiu
    Phase I & II projects to Mr. Bai
$
-
$
35,415,556
Adoption of ASC 842-right-of-use asset
$
-
$
(118,234
)
Adoption of ASC 842-operating lease liability
$
-
$
118,234
Supplemental disclosure of non-cash financing activities
Conversion of notes into common shares
$
2,057,191
$
1,612,392
The accompanying notes are an integral part of
these consolidated financial statements.
F-
6
CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
YEARS ENDED DECEMBER 31, 2020 AND 2019
Common Stock
Paid in
Statutory
Other Comprehensive
Accumulated
Non controlling
Shares
Amount
Capital
Reserves
(Loss)/Income
Deficit
Total
Interest
Balance at January 1, 2019
1,029,528
$
1,030
$
114,493,283
$
14,525,712
$
(4,620,930
)
$
(37,675,202
)
$
86,723,893
$
(3,544,624
)
Net loss for the year
-
-
-
-
-
(8,772,757
)
(8,772,757
)
-
Purchase of noncontrolling interest
-
-
(3,948,242
)
-
-
-
(3,948,242
)
3,544,624
Issuance of common stock for equity financing
395,927
396
3,309,079
-
-
-
3,309,475
-
Issuance of common stock for stock compensation
41,250
41
148,584
-
-
-
148,625
-
Conversion of convertible notes including accrued interest into
    common shares
185,195
185
2,014,791
-
-
-
2,014,976
-
Conversion of long-term notes into common shares
175,400
176
665,084
-
-
-
665,260
-
Warrants exchanged into shares
205,421
205
(205
)
-
-
-
-
-
Foreign currency translation loss
-
-
-
-
(1,511,684
)
-
(1,511,684
)
-
Balance at December 31, 2019
2,032,721
2,033
116,682,374
14,525,712
(6,132,614
)
(46,447,959
)
78,629,546
-
Net income for the year
-
-
-
-
-
4,050,824
4,050,824
-
Issuance of common stock for stock compensation
3,333
3
10,996
-
-
-
10,999
-
Conversion of long-term notes into common shares
866,646
867
2,558,716
-
-
-
2,559,583
-
Shares issued for equity financing
265,250
265
496,922
-
-
-
497,187
-
Round-up of fractional shares due to  reverse split
9,100
9
(9
)
-
-
-
-
-
Transfer to statutory reserves
-
-
-
629,330
-
(629,330
)
-
-
Foreign currency translation
    gain
-
-
-
-
6,406,054
-
6,406,054
-
Balance at December 31, 2020
3,177,050
$
3,177
119,748,999
$
15,155,042
$
273,440
$
(43,026,465
)
$
92,154,193
$
-
The accompanying notes are an integral part of
these consolidated financial statements.
F-
7
CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
China Recycling Energy
Corporation (the "Company" or "CREG") is incorporated in Nevada state. The Company, through its subsidiaries,
provides energy saving solutions and services, including selling and leasing energy saving systems and equipment to customers, and project
investment in the Peoples Republic of China ("PRC").
The Company's organizational
chart as of December 31, 2020 is as follows:
F-
8
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. Erdos contributed 7% of the total investment
of the project, and Xi'an TCH Energy Technology Co., Ltd. ("Xi'an TCH") contributed 93%. 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. 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 started to charge Erdos based on actual electricity sold at RMB 0.30 / KWH. The selling price of each KWH is determined
annually based on prevailing market conditions. Since May 2019, Erdos TCH has ceased its operations due to renovations and furnace safety
upgrades of Erdos, and the Company initially expected the resumption of operations in July 2020, but the resumption of operations was
further delayed due to government's request for Erdos' production line rectification for lowering its energy consumption
per unit of GDP, the Company expects to resume the production in July 2021. During this period, Erdos will compensate Erdos TCH RMB 1
million ($145,460) per month, until operations resume.
In addition, Erdos TCH
has 30% ownership in DaTangShiDai (BinZhou) Energy Savings Technology Co., Ltd. ("BinZhou Energy Savings"), 30% ownership
in DaTangShiDai DaTong Recycling Energy Technology Co., Ltd. ("DaTong Recycling Energy"), and 40% ownership in DaTang ShiDai
TianYu XuZhou Recycling Energy Technology Co, Ltd. ("TianYu XuZhou Recycling Energy"). These companies were incorporated
in 2012 but there have not been any operations since then nor has any registered capital contribution been made.
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 ("Pucheng Phase I").
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 87,666 shares (post-reverse stock split) of common stock, par value $0.001 per share
(the "Common Stock") of the Company at $187.0 per share (post-reverse stock price). 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 systems 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 the Pucheng Phase
I project terminated upon the effective date of the Pucheng Lease. The ownership of the two 12 MW BMPG systems will transfer to Pucheng
at no additional charge when the Pucheng Lease expires.
F-
9
On September 29, 2019,
Xi'an TCH entered into a Termination Agreement of the Lease Agreement of the Biomass Power Generation Project (the "Termination
Agreement") with Pucheng. Pursuant to the Termination Agreement, the parties agreed that: (i) Pucheng shall pay outstanding
lease fees of RMB 97.6 million ($14 million) owed as of December 31, 2018 to Xi'an TCH before January 15, 2020; (ii) Xi'an
TCH will waive the lease fees owed after January 1, 2019; (iii) Xi'an TCH will not return RMB 3.8 million ($542,857) in cash deposits
paid by Pucheng; (iv) Xi'an TCH will transfer the Project to Pucheng at no additional cost after receiving RMB 97.6 million ($14
million) from Pucheng, and the original lease agreement between the parties will be formally terminated; and (v) if Pucheng fails to
pay off RMB 97.6 million ($14 million) to Xi'an TCH before January 15, 2020, Xi'an TCH will still hold ownership of the Project
and the original lease agreement shall still be valid. The Company recorded $2.67 million bad debt expense for Pucheng during the year
ended December 31, 2019. Xi'an TCH received RMB 97.6 million ($14 million) in full on January 14, 2020 and the ownership of the
system was transferred.
Shenqiu Yuneng Biomass Power Generation Projects
On September 28, 2011,
Xi'an TCH and Shenqiu 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 of $286,000 (RMB 1,800,000) for 11
years.
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.
As repayment for a loan
made by Xi'an Zhonghong to Beijing Hongyuan Recycling Energy Investment Center, LLP (the "HYREF") on January 10, 2019
(see further discussion in Note 9); on January 4, 2019, Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong Bai (or "Mr.
Bai"), a resident of China, entered into a Projects Transfer Agreement (the "Agreement"), pursuant to which Xi'an
TCH transferred two BMGP in Shenqiu ("Shenqiu Phase I and II Projects") to Mr. Bai for RMB 127,066,000 ($18.55 million).
As consideration for the transfer of the Shenqiu Phase I and II Projects to Mr. Bai (Note 9), Mr. Bai transferred all the equity shares
of his wholly owned company, Xi'an Hanneng Enterprises Management Consulting Co. Ltd. ("Xi'an Hanneng") to Beijing
Hongyuan Recycling Energy Investment Center, LLP (the "HYREF") as repayment for a loan made by Xi'an Zhonghong to HYREF
on January 10, 2019. The transfer of the projects was completed on February 15, 2019. The Company recorded $208,359 loss from the transfer
during the year ended December 31, 2019. Xi'an Hanneng was expected to own 47,150,000 shares of Xi'an Huaxin New Energy Co.,
Ltd for the repayment of Shenqiu system and Huayu system. However, Xi'an Hanneng was not able to obtain all the Huaxin shares due
to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 20, 2019, Mr. Bai and all the related parties
therefore agreed to have Mr. Bai instead make a payment in cash for the transfer price of Shenqiu (see Note 9 for detail).
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"), of which it
owns 90% of Zhonghong, with HYREF owning the other 10%. Zhonghong is engaged to provide energy saving solution and services, including
constructing, selling and leasing energy saving systems and equipment to customers. On December 29, 2018, Shanghai TCH entered into a
Share Transfer Agreement with HYREF, pursuant to which HYREF transferred its 10% ownership in Zhonghong to Shanghai TCH for RMB 3 million
($0.44 million). The transfer was completed on January 22, 2019. The Company owns 100% of Xi'an Zhonghong after the transaction.
On July 24, 2013, Zhonghong
entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching 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").
F-
10
On December 29, 2018, Xi'an
Zhonghong, Xi'an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed Assets Transfer Agreement,
pursuant to which Xi'an Zhonghong transferred Chengli CDQ WHPG station ("the Station") as the repayment for the loan
of RMB 188,639,400 ($27.54 million) to HYREF. Xi'an Zhonghong, Xi'an TCH, Guohua Ku and Chonggong Bai also agreed to a Buy
Back Agreement for the Station when certain conditions are met (see Note 9). The transfer of the Station was completed January 22, 2019,
at which time the Company recorded a $624,133 loss from this transfer. Since the original terms of the Buy Back Agreement are still valid,
and the Buy Back possibility could occur; therefore, the loan principal and interest and the corresponding asset of the Station cannot
be derecognized due to the existence of Buy Back clauses (see Note 9 for detail).
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 Projects 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 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 2020.
The Xuzhou Huayu Project has been on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd. and local residents on certain pollution-related
issues.
On January 4, 2019, Xi'an
Zhonghong, Xi'an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement (the "Agreement"), pursuant
to which Xi'an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co.,
Ltd. ("Xuzhou Huayu Project") to Mr. Bai for RMB 120,000,000 ($17.52 million). Mr. Bai agreed that as consideration for the
transfer of the Xuzhou Huayu Project to him, as well as Shenqiu discussed above, he would transfer all the equity shares of his wholly
owned company, Xi'an Hanneng, to HYREF as repayment for the loan made by Xi'an Zhonghong to HYREF. (Note 9). The transfer
of the project was completed on February 15, 2019. The Company recorded $397,033 loss from this transfer during the year ended December
31, 2019. On January 10, 2019, Mr. Chonggong Bai transferred all the equity shares of his wholly owned company, Xi'an Hanneng,
to HYREF as repayment for the loan. Xi'an Hanneng was expected to own 47,150,000 shares of Xi'an Huaxin New Energy Co., Ltd
for the repayment of Huayu system and Shenqiu system. As of September 30, 2019, Xi'an Hanneng already owned 29,948,000 shares of
Huaxin, but was not able to obtain the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018
annual report. On December 20, 2019, Mr. Bai and all the related parties agreed to have Mr. Bai instead making a payment in cash for
the transfer price of Huayu (see Note 9 for detail).
On January 10, 2020, Zhonghong,
Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights and interests of Xuzhou Tian'an
Project to Tianyu for RMB 170 million including VAT ($24.37 million) in three installment payments. The 1st installment payment of RMB
50 million ($7.17 million) to be paid within 20 working days after the contract is signed. The 2nd installment payment of RMB 50 million
($7.34 million) is to be paid within 20 working days after completion of the project construction but no later than July 31, 2020. The
final installment payment of RMB 70 million ($10.28 million) is to be paid before December 31, 2020. The Company received the payment
in full for Tian'an Project as of December 31, 2020.
Zhongtai Waste Heat Power Generation Energy Management Cooperative
Agreement
On December 6, 2013, Xi'an
TCH 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 was to 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 is also to build a furnace to generate steam from the smoke pipeline's waste heat and sell the
steam to Zhongtai.
F-
11
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 obligations under the EPC
Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi'an TCH RMB 167,360,000 ($25.77
million) including (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 to be paid within 20 business days after
the Transfer Agreement was signed; (b) RMB 30,000,000 ($4.32 million) was to be paid within 20 business days after the Project was completed,
but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) was to 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. The Company recorded a $2.82 million loss from this transaction in 2016. In 2016, Xi'an TCH had received the
first payment of $7.70 million and the second payment of $4.32 million. However, the Company received a repayment commitment letter from
Zhongtai on February 23, 2018, in which Zhongtai committed to pay the remaining payment of RMB 87,360,000 ($13.45 million) no later than
the end of July 2018; in July 2018, Zhongtai and the Company reached a further oral agreement to extend the repayment term of RMB 87,360,000
($13.45 million) by another two to three months. In January 2020, Zhongtai paid RMB 10 million ($1.41 million); in March 2020, Zhongtai
paid RMB 20 million ($2.82 million); in June 2020, Zhongtai paid RMB 10 million ($1.41 million); and in December 2020, Zhongtai paid
RMB 30 million ($4.28 million), which was payment in full. Accordingly, the Company reversed the bad debt expense of $5.80 million which
had been recorded earlier.
Formation of Zhongxun
On March 24, 2014, Xi'an
TCH incorporated a 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 nor has any capital contribution been made as of the date of this report.
Formation of Yinghua
On February 11, 2015, the
Company incorporated a 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 nor has any capital contribution
been made as of the date of this report.
Reverse Stock Split
On April 13, 2020, the
Company filed a certificate of change ("Certificate of Change") with the Secretary of State of the State of Nevada, pursuant
to which, on April 13, 2020, the Company effected a reverse stock split of its Common Stock, at a rate of 1-for-10, accompanied by a
corresponding decrease in the Company's issued and outstanding shares of Common Stock (the "Reverse Stock Split").
The accompanying consolidated financial statements and related disclosure in for periods prior to the Reverse Stock Split have been retroactively
restated to reflect this reverse stock split.
F-
12
Other Events
In December 2019, a novel
strain of coronavirus (COVID-19) was reported in and the World Health Organization has declared the outbreak to constitute a "Public
Health Emergency of International Concern." This pandemic, which continues to spread to additional countries, and is disrupting
supply chains and affecting production and sales across a range of industries as a result of quarantines, facility closures, and travel
and logistics restrictions in connection with the outbreak. However, as a result of PRC government's effort on disease control,
most cities in China were reopened, the outbreak in China is under the control. The Company disposed all of its systems and currently
holds only five power generating systems through Erdos TCH, the Company initially expected to resume production of these five power generating
systems in July 2020 from the renovation and furnace safety upgrade, but the resumption of operations was further delayed due to government's
request for Erdos' production line rectification for lowering its energy consumption per unit of GDP; the Company expects the resumption
date to be July 2021. As of this report date, there are some new Covid-19 cases discovered in a few provinces of China, however, the
number of new cases is not significant due to PRC government's strict control.
On December 22, 2020, Shanghai
TCH entered into an Equity Acquisition Agreement with Xi'an Taiying Energy Saving Technology Co., Ltd., a PRC company ("Xi'an
Taiying") and its three shareholders to purchase all of the issued and outstanding shares of stock of Xi'an Taiying. The
purchase price for said shares shall consist of (i) 619,525 shares of common stock at an issuance price of $4.37 per share, (ii) 60,000,000
shares of Series A convertible stock and (iii) a cash payment of RMB 1,617,867,026 (approximately $247 million at a conversion rate
of 1:6.55). The shares shall be issued within 15 business days after approval by the Board of Directors and/or shareholders of the Company
and Nasdaq approval and the cash shall be paid in three tranches – RMB 390 million (approximately $59.5 million) within 10 days
after the agreement is executed, RMB 300 million (approximately $45.8 million) by March 31, 2021 and RMB 927,867,026 (approximately $141.7
million) within 10 days after the shares of Xi'an Taiying are registered to Buyer. As of the date of this report, the Company has
not obtained and there is no assurance that the Company will be able to obtain necessary approval to proceed with the transaction. In
addition, the Company is currently renegotiating the payment terms with the sellers for paying less shares but does not know when the
renegotiation will be completed.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial
statements ("CFS") were prepared in accordance with accounting principles generally accepted in the United States of America
("US GAAP").
Basis of Consolidation
The CFS include the accounts
of CREG and its subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. ("Yinghua") and Sifang Holdings; Sifang Holdings'
wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. ("Huahong") and Shanghai TCH Energy Tech Co., Ltd. ("Shanghai
TCH"); Shanghai TCH's wholly-owned subsidiary, Xi'an TCH Energy Tech Co., Ltd. ("Xi'an TCH"); and
Xi'an TCH's subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd ("Erdos TCH"), 100% owned by Xi'an
TCH (See note 1), 2) Zhonghong, 90% owned by Xi'an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun, 100% owned by Xi'an
TCH. Substantially all the Company's revenues are derived from the operations of Shanghai TCH and its subsidiaries, which represent
substantially all the Company's consolidated assets and liabilities as of December 31, 2020. However, there was no revenue for
the Company for the year ended December 31, 2020. All significant inter-company accounts and transactions were eliminated in consolidation.
Uses and Sources of Liquidity
For the year ended December
31, 2020, the Company had a net income of $4.05 million based on receipts of accounts receivable which had previously been reserved as
bad debt allowance and was reversed in 2020. For the year ended December 31, 2019, the Company had net loss of $8.77 million. The Company
had an accumulated deficit of $43.03 million as of December 31, 2020. The Company disposed all of its systems and currently holds only
five power generating systems through Erdos TCH, which is expected to resume production in July 2021. The Company is in the process of
transforming and expanding into an energy storage integrated solution provider. The Company plans to pursue disciplined and targeted
expansion strategies for market areas the Company currently does not serve. The Company actively seeks and explores opportunities to
apply energy storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes,
large scale photovoltaic (PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy
supplies. The Company had cash of $107.80 million as of December 31, 2020, and has raised additional $38.25 million in a private
offering in March 2021. The Company's cash flow forecast indicate it will have sufficient cash to funds its operations for the
next 12 months from the date of issuance of these financial statements.
F-
13
The historical operating
results indicate the Company has recurring losses from operations which rise the question related to the Company's ability to continue
as a going concern. However, the Company had $107.80 million cash on hand at December 31, 2020 as a result of collection the full payment
from all the projects that had been disposed earlier.
The ability of the Company
to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate sufficient
revenue and its ability to raise additional funds by way of a public or private offering, or debt financing including bank loans. The
consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Use of Estimates
In preparing these CFS
in accordance with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the balance sheets as well as revenues and expenses during the period reported. Actual results may differ from these estimates. On
an on-going basis, management evaluates their estimates, including those related to allowances for bad debt and inventory obsolescence,
impairment loss on fixed assets and construction in progress, income taxes, and contingencies and litigation. Management bases their
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
resources.
Revenue Recognition
A)
Sales-type
Leasing and Related Revenue Recognition
On January 1, 2019, the
Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic
842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application.
Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC Topic 842, while prior
period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. (See
Operating lease below as relates to the Company as a lessee). The Company's sales type lease contracts for revenue recognition
fall under ASC 842. During the years ended December 31, 2020 and 2019, the Company did not sell any new power generating projects.
The Company constructs
and leases waste energy recycling power generating projects to its customers. The Company typically transfers legal ownership of the
waste energy recycling power generating projects to its customers at the end of the lease. Prior to January 1, 2019, the investment in
these projects was recorded as investment in sales-type leases in accordance with ASC Topic 840
, "Lease
s
,"
and
its various amendments and interpretations.
The Company finances construction
of waste energy recycling power generating projects. The sales and cost of sales are recognized at the inception of the lease, which
is when the control is transferred to the lessee. The Company accounts for the transfer of control as a sales type lease in accordance
with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of payments is probable. This is
in accordance with the revenue recognition principle in ASC 606 - Revenue from contracts with customers. The investment in sales-type
leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated executory cost. Minimum
lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee). The discount rate
implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments consist of the gross
lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over the lease term to
produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception of the lease,
the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction of receivables.
Revenue is recognized net of value-added tax.
B)
Contingent
Rental Income
The Company records income
from actual electricity generated of each project in the period the income is earned, which is when the electricity is generated. Contingent
rent is not part of minimum lease payments.
F-
14
Operating Leases
On January 1, 2019, the
Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at
the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented
under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with its historical accounting
under Topic 840. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and
a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or
operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition
approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative
period presented in the financial statements, with certain practical expedients available.
The Company elected the
package of practical expedients permitted under the transition guidance, which allowed it to carry forward its historical lease classification,
its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January
1, 2019. The Company also elected to combine its lease and non-lease components and to keep leases with an initial term of 12 months
or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line
basis over the lease term.
The Company leased an office
in Xi'an, China as the Company's headquarter; upon adoption, the Company recognized total Right of Use Asset ("ROU")
of $116,917, with corresponding liabilities of $116,917 on the consolidated balance sheets. The ROU assets include adjustments for prepayments
and accrued lease payments. The adoption did not impact its beginning retained earnings, or its prior year consolidated statements of
income and statements of cash flows. At December 31, 2020, the ROU was $0 as the lease was expired in November 2020.
Under Topic 842, the Company
determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present
value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable
at the time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the
information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing
rate is a hypothetical rate based on its understanding of what its credit rating would be. The ROU asset also includes any lease payments
made prior to commencement and is recorded net of any lease incentives received. The Company's lease terms may include options
to extend or terminate the lease when it is reasonably certain that it will exercise such options.
Operating leases are included
in operating lease right-of-use assets and operating lease liabilities (current and non-current), on the consolidated balance sheets.
Cash
Cash include cash on hand,
demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three
months or less as of the purchase date.
Accounts Receivable
The Company's policy
is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable
and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer
payment patterns to evaluate the adequacy of these reserves.
F-
15
As of December 31, 2020,
the Company had gross accounts receivable of $342,974 of Erdos TCH for electricity sold. As of December 31, 2019, the Company had gross
accounts receivable of $48.06 million; of which, $35.42 million was for transferring the ownership of Huayu and Shenqiu Phase I and II
systems to Mr. Bai; $10.03 million was from the sales of CDQ and a CDQ WHPG system to Zhongtai, and $2.61 million accounts receivable
of Erdos TCH for electricity sold. As of December 31, 2020, the Company had bad debt allowance of $34,297 for Erdos TCH due to the customer
not making the payments as scheduled. As of December 31, 2019, the Company had bad debt allowance of $5,733,781 for Zhongtai and $261,430
for Erdos TCH due to the customer not making the payments as scheduled. During the year ended December 31, 2020, the Company recognized
a reversal of the bad debt allowance of $6,031,058, of which $5,799,094 was for Zhongtai and $231,964 was for Erdos TCH as a result of
payment collection from Zhongtai and Erdos TCH. As of December 31, 2020, the Company received the payment in full from all the projects
which had been disposed earlier.
2020
2019
Xuzhou Zhongtai project
$
-
$
10,034,116
Bai Chonggong (for Shenqiu and Huayu projects)
-
35,415,556
Xuzhou Tian'an project
-
-
Receivable of electricity sales of Erdos
342,974
2,614,299
Total accounts receivable
342,974
48,063,971
Bad debt allowance
(34,297
)
(5,995,210
)
Accounts receivable, net
308,677
$
42,068,761
Interest Receivable on Sales Type Leases
As of December 31, 2020,
the interest receivable on sales type leases was $0. As of December 31, 2019, the interest receivable on sales type leases was $5,245,244,
mainly from recognized but not yet collected interest income for the Pucheng systems. The ownership of Pucheng systems was transferred
to Pucheng as a result of full payment received by Xi'an TCH in January 2020.
Investment in sales-type leases, net
As of December 31, 2020,
the Company had net investment in sales-type leases of $0. As of December 31, 2019, the Company had net investment in sales-type leases
of $8,287,560 (after bad debt allowance for investment in sales-type leases of $24,416,441 for the Pucheng system). The Company maintains
reserves for potential credit losses on receivables. Management reviews the composition of receivables and analyzes historical bad debts,
customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves.
Concentration of Credit Risk
Cash includes cash on hand
and demand deposits in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are
covered by insurance up to RMB 500,000 (US$77,000) per bank. Any balance over RMB 500,000 (US$77,000) per bank in PRC will not be covered.
At December 31, 2020, cash held in the PRC bank of $107,510,548 was not covered by such insurance. The Company has not experienced any
losses in such accounts.
Certain other financial
instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The Company does not
require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers' financial
condition and customer payment practices to minimize collection risk on accounts receivable.
The operations of the Company
are in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political,
economic and legal environments in the PRC.
F-
16
Property and Equipment
Property and equipment
are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals
and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided
using the straight-line method over the estimated lives as follows:
Vehicles
2
                                            - 5 years
Office and Other Equipment
2
                                            - 5 years
Software
2
                                            - 3 years
Impairment of Long-lived Assets
In accordance with FASB
ASC Topic 360,
"Property, Plant, and Equipment
," the Company reviews its long-lived assets, including property
and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be
fully recoverable. If the total expected undiscounted future net cash flows are less than the carrying amount of the asset, a loss is
recognized for the difference between the fair value and carrying amount of the asset. The Company recorded $0 asset impairment loss
for the years ended December 31, 2020 and 2019.
Cost of Sales
Cost of sales consists
primarily of the direct material of the power generating system and expenses incurred directly for project construction for sales-type
leasing and sales tax and additions for contingent rental income.
Income Taxes
Income taxes are accounted
for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years
of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted
tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company follows FASB
ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities,
classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions,
accounting for income taxes in interim periods, and income tax disclosures.
Under the provisions of
FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing
authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would
be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on
all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including
the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax
positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than
50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with
tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in
the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling,
general and administrative expenses in the statement of income. At December 31, 2020 and 2019, the Company did not take any uncertain
positions that would necessitate recording a tax related liability.
F-
17
Statement of Cash Flows
In accordance with FASB
ASC Topic 230,
"Statement of Cash Flows,"
cash flows from the Company's operations are calculated
based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not
necessarily agree with changes in the corresponding balances on the balance sheet.
Fair Value of Financial Instruments
For certain of the Company's
financial instruments, including cash and equivalents, restricted cash, accounts receivable, other receivables, accounts payable, accrued
liabilities and short-term debts, the carrying amounts approximate their fair values due to their short maturities. Receivables on sales-type
leases are based on interest rates implicit in the lease.
FASB ASC Topic 820,
"Fair
Value Measurements and Disclosures,"
requires disclosure of the FV of financial instruments held by the Company. FASB
ASC Topic 825,
"Financial Instruments,"
defines FV, and establishes a three-level valuation hierarchy for
disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported in the consolidated
balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their FV
because of the short period of time between the origination of such instruments and their expected realization and their current market
rate of interest. The three levels of valuation hierarchy are defined as follows:
●
Level 1 inputs to the valuation
    methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●
Level 2 inputs to the valuation
    methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset
    or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●
Level 3 inputs to the valuation
    methodology are unobservable and significant to FV measurement.
Effective on January 1,
2020, the Company adopted ASU 2018-13, Fair Value Measurement: Disclosure Framework-Changes to the Disclosure Requirements for Fair Value
Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the FV hierarchy.
The Company analyzes all
financial instruments with features of both liabilities and equity under FASB ASC 480,
"Distinguishing Liabilities from
Equity,"
and ASC 815,
"Derivatives and Hedging."
As of December 31, 2020
and 2019, the Company did not have any long-term debt obligations; and the Company did not identify any assets or liabilities that are
required to be presented on the balance sheet at FV.
Stock-Based Compensation
The Company accounts for
share-based compensation awards to employees in accordance with FASB ASC Topic 718, "Compensation – Stock Compensation",
which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument
issued and recognized as compensation expense over the requisite service period.
The Company accounts for
share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, "Equity-Based
Payments to Non-employees". Share-based compensation associated with the issuance of equity instruments to non-employees is measured
at the fair value of the equity instrument issued or committed to be issued, as this is more reliable than the fair value of the services
received. The fair value is measured at the date that the commitment for performance by the counterparty has been reached or the counterparty's
performance is complete.
F-
18
Effective on January 1,
2020, the Company adopted ASU 2018-07, "Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting," which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services
from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance on inputs
to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based payment transactions
in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment
awards. The adoption of ASU 2018-07 did not have an impact on the Company's financial statements.
Basic and Diluted Earnings per Share
The Company presents net
income (loss) per share ("EPS") in accordance with FASB ASC Topic 260,
"Earning Per Share."
Accordingly,
basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of
shares outstanding, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income by the weighted-average
number of common shares outstanding as well as common share equivalents outstanding for the period determined using the treasury-stock
method for stock options and warrants and the if-converted method for convertible notes. The Company made an accounting policy election
to use the if-converted method for convertible securities that are eligible to receive common stock dividends, if declared. Diluted EPS
reflect the potential dilution that could occur based on the exercise of stock options or warrants or conversion of convertible securities
using the if-converted method.
For the years ended December
31, 2020 and 2019, the basic and diluted loss per share were the same due to the anti-dilutive features of the warrants and options.
For the years ended December 31, 2020 and 2019, 31,311 shares and 406,764 shares (post-reverse stock split), respectively; purchasable
under warrants and options were excluded from the EPS calculation as these were not dilutive due to the exercise price was more than
the stock market price.
Foreign Currency Translation and Comprehensive Income (Loss)
The Company's functional
currency is the Renminbi ("RMB"). For financial reporting purposes, RMB were translated into United States Dollars ("USD"
or "$") as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet
date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments
arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated
other comprehensive income." Gains and losses resulting from foreign currency transactions are included in income. There was no
significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.
The Company follows FASB
ASC Topic 220,
"Comprehensive Income."
Comprehensive income is comprised of net income and all changes to
the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions
to stockholders.
Segment Reporting
FASB ASC Topic 280,
"Segment
Reporting,"
requires use of the "management approach" model for segment reporting. The management approach
model is based on the way a company's management organizes segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner
in which management disaggregates a company. FASB ASC Topic 280 has no effect on the Company's CFS as substantially all of the
Company's operations are conducted in one industry segment. All of the Company's assets are located in the PRC.
New Accounting Pronouncements
In June 2016, the FASB
issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses
for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.
This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at
amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December
15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS.
F-
19
In December 2019,
the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates
certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application
among reporting entities. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods
within those fiscal years, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard
retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect
adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is evaluating the impact this update
will have on its financial statements.
Other recent accounting
pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants,
and the SEC did not or are not believed by management to have a material impact on the Company's present or future CFS.
3. INVESTMENT IN SALES-TYPE LEASES, NET
Under sales-type leases,
as of December 31, 2019, Xi'an TCH leases BMPG systems to Pucheng (Phase I and II, 15 and 11 year terms, respectively); The components
of the net investment in sales-type leases as of December 31, 2020 and 2019 are as follows:
2020
2019
Total future minimum lease payments receivable
$
-
$
56,477,739
Less: executory cost
-
(3,623,100
)
Less: unearned interest
-
(14,905,393
)
Less: realized interest income but not yet received
-
(5,245,244
)
Less: allowance for net investment receivable
-
(24,416,442
)
Investment in sales-type leases, net
-
8,287,560
Current portion
-
-
Noncurrent portion
$
-
$
8,287,560
The ownership of Pucheng
systems was transferred to Pucheng in January 2020 as a result of receiving full payment from Pucheng to Xi'an TCH.
4. OTHER RECEIVABLES
As of December 31, 2020,
other receivables mainly consisted of (i) advances to third parties of $7,663, bearing no interest, payable upon demand, ii) advance
to employees of $11,011, iii) advance to suppliers of $4,791 and (iv) others of $12,222 including social insurance receivable of $4,579.
As of December 31, 2019, other receivables mainly consisted of (i) advances to third parties of $7,167, bearing no interest, payable
upon demand, (ii) tax and maintenance cost receivable of $1,001,527 for Xi'an TCH, and iii) others of $22,449.
5. ASSET SUBJECT TO BUYBACK AND CONSTRUCTION IN PROGRESS
Asset subject to buyback
As of December 31, 2020
and 2019, the Company had asset subject to buyback of $28.92 million and $27.04 million, respectively, which was for the Chengli project.
The Chengli project finished
construction, and was transferred to the Company's fixed assets at a cost of $35.24 million (without impairment loss) and ready
to be put into operation as of December 31, 2018. On January 22, 2019, Xi'an Zhonghong completed the transfer of Chengli CDQ WHPG
project as the partial repayment for the loan and accrued interest of RMB 188,639,400 ($27.54 million) to HYREF (see Note 9). However,
because the loan was not deemed repaid due to the buyback right (See Note 9 for detail), the Company kept the loan and the Chengli project
in its books as fixed assets for accounting purposes.
F-
20
Construction in Progress
As of December 31, 2020
and 2019, the Company's construction in progress included:
2020
2019
Xuzhou Tian'an
$
-
$
37,759,277
Less: assets impairment allowance
-
(13,935,075
)
Total
$
-
$
23,824,202
On January 10, 2020, Zhonghong,
Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights and interests of Xuzhou Tian'an
Project to Tianyu for RMB 170 million including $0.6 million VAT (total of $24.37 million) in three installment payments. The Company
recorded impairment loss of $13.9 million as of December 31, 2019. The 1st installment payment of RMB 50 million ($7.17 million) was
to be paid within 20 working days after the contract was signed. The 2nd installment payment of RMB 50 million ($7.17 million) was to
be paid within 20 working days after completion of the project construction but no later than July 31, 2020. The final installment payment
of RMB 70 million ($10.03 million) was to be paid before December 31, 2020. As of December 31, 2020, the Company received the payment
in full for Tian'an Project.
6. TAXES PAYABLE
Taxes payable consisted
of the following as of December 31, 2020 and 2019:
2020
2019
Income tax – current
$
2,746,757
$
2,118,432
Value-added tax
322,652
1,708,298
Other taxes
76,203
260,912
Total – current
3,145,612
4,087,642
Income tax – noncurrent
$
5,174,625
$
5,782,625
Income tax payable included
$7.61 million ($2.44 million included in current above and $5.17 million noncurrent) from recording the estimated one-time transition
tax on post-1986 foreign unremitted earnings under the Tax Cut and Jobs Act signed on December 22, 2017. An election is available for
the U.S. shareholders of a foreign company to pay the tax liability in installments over a period of eight years with 8% of net tax liability
in the first five years, 15% in the sixth year, 20% in the seventh year, and 25% in the eighth year. The Company made such an election.
7. ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and
other payables consisted of the following as of December 31, 2020 and 2019:
2020
2019
Education and union fund and social insurance payable
$
373,740
$
843,807
Consulting and legal expenses
31,090
40,602
Accrued payroll and welfare
255,278
254,882
Other
66,588
45,460
Total
$
726,696
$
1,184,751
8. DEFERRED TAX, NET
Deferred tax assets resulted
from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with US GAAP, interest
income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not meet revenue recognition
in accordance with US GAAP, accrued employee social insurance that can be deducted for tax purposes in the future, and the difference
between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part of cost of systems
in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net investment in sales-type
leases.
F-
21
As of December 31, 2020 and
2019, net deferred tax assets consisted of the following:
2020
2019
Non-current deferred tax assets
Accrued expenses
$
70,019
$
189,050
Interest income in sales-type leases on cash basis
-
853,265
Depreciation of fixed assets
-
2,938,605
Assets impairment loss
-
7,537,556
Write-off Erdos TCH net investment in sales-type leases
6,155,300
6,349,604
US NOL
254,035
3,246,655
PRC NOL
10,849,690
10,424,558
Non-current deferred tax liabilities
Net investment in sales-type leases
-
(6,685,021
)
Net non-current deferred tax assets
17,329,044
24,854,272
Less: valuation allowance for deferred tax assets
(17,329,044
)
(24,854,272
)
Non-current deferred tax assets, net
$
-
$
-
9. LOANS PAYABLE
Entrusted Loan Payable (HYREF Loan)
The HYREF Fund was established
in July 2013 with a total fund size of RMB 460 million ($77 million) invested in Xi'an Zhonghong for Zhonghong's three new
CDQ WHPG projects. The HYREF Fund invested RMB 3 million ($0.5 million) as an equity investment and RMB 457 million ($74.5 million) as
a debt investment in Xi'an Zhonghong; in return for such investments, the HYREF Fund was to receive interest from Zhonghong for
the HYREF Fund's debt investment. The loan was collateralized by the accounts receivable and the fixed assets of Shenqiu Phase
I and II power generation systems; the accounts receivable and fixed assets of Zhonghong's three CDQ WHPG systems; and a 27 million
RMB ($4.39 million) capital contribution made by Xi'an TCH in Zhonghong. Repayment of the loan (principal and interest) was also
jointly and severally guaranteed by Xi'an TCH and the Chairman and CEO of the Company. In the fourth quarter of 2015, three power
stations of Erdos TCH were pledged to Industrial Bank as an additional guarantee for the loan to Zhonghong's three CDQ WHPG systems.
In 2016, two additional power stations of Erdos TCH and Pucheng Phase I and II systems were pledged to Industrial Bank as an additional
guarantee along with Xi'an TCH's equity in Zhonghong.
The term of this loan was
for 60 months from July 31, 2013 to July 30, 2018, with an interest rate of 12.5%. On August 6, 2016, Zhonghong was required to repay
principal of RMB 280 million ($42.22 million), of which the Company paid RMB 50 million ($7.54 million); while on August 6, 2017, Zhonghong
was initially supposed to repay principal of RMB 100 million ($16.27 million) and on July 30, 2018, Zhonghong was initially supposed
to repay the remainder of RMB 77 million ($12.52 million). During the term, Zhonghong was to maintain a minimal funding level and capital
level in its designated account with the Supervising Bank to make sure it has sufficient funds to make principal payments when they are
due. Notwithstanding the requirements, the HYREF Fund and Supervising Bank verbally notified Zhonghong from the beginning that it was
unlikely that they would enforce these requirements for the purpose of the efficient utilization of working capital. The Company had
paid RMB 50 million ($7.54 million) of the RMB 280 million ($42.22 million), and on August 5, 2016, the Company entered into a supplemental
agreement with the lender to extend the due date of the remaining RMB 230 million ($34.68 million) of the original RMB 280 million ($45.54
million) to August 6, 2017. During the year ended December 31, 2017, the Company negotiated with the lender again to further extend the
remaining loan balance of RMB 230 million ($34.68 million), RMB 100 million ($16.27 million), and RMB 77 million ($12.52 million) (which
included investment from Xi'an TCH of RMB 75 million and was netted off with the entrusted loan payable of the HYREF Fund in the
balance sheet). The lender had tentatively agreed to extend the remaining loan balance until August 2019 with an adjusted annual interest
rate of 9%, subject to the final approval from its headquarters. The headquarters did not approve the extension proposal with an adjusted
annual interest rate of 9%; however, on December 29, 2018, the Company worked out with the lender an alternative repayment proposal as
described below. As of December 31, 2018, the entrusted loan payable had an outstanding balance of $59.29 million, of which, $10.92 million
was from the investment of Xi'an TCH; accordingly, the Company netted the loan payable of $10.92 million with the long-term investment
to the HYREF Fund made by Xi'an TCH. As of December 31, 2019, the interest payable for this loan was $8.20 million and the outstanding
balance for this loan was $20.77 million including a non-current portion of $0.29 million. As of December 31, 2020, the interest
payable for this loan was $10.14 million and the outstanding balance for this loan was $22.20 million including a non-current portion
of $0.30 million. The Company recorded interest expense of $1.30 million and $1.72 million for the years ended December 31, 2020
and 2019.
F-
22
Repayment of HYREF loan
1. Transfer of Chengli
project as partial repayment
On December 29, 2018, Xi'an
Zhonghong, Xi'an TCH, HYREF, Guohua Ku, and Chonggong Bai entered into a CDQ WHPG Station Fixed Assets Transfer Agreement, pursuant
to which Xi'an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan of RMB 188,639,400 ($27.54 million)
to HYREF, the transfer of which was completed on January 22, 2019.
Xi'an TCH is a secondary limited partner of
HYREF. The fair value of the CDQ WHPG station applied in the transfer was determined by the parties based upon the appraisal report issued
by Zhonglian Assets Appraisal Group (Shaanxi) Co., Ltd. as of August 15, 2018. However, per the discussion below, Xi'an Zhonghong,
Xi'an TCH, Guohua Ku and Chonggong Bai (the "Buyers") entered into a Buy Back Agreement, also agreed to buy back the
Station when conditions under the Buy Back Agreement are met. Due to the Buy Back agreement, the loan was not deemed repaid, the Company
kept the Chengli project in its books as assets subject to buyback and kept the loan payable in its book under ASC 405-20-40-1 as of
December 31, 2020 and 2019.
2. Buy Back Agreement
On December 29, 2018, Xi'an TCH, Xi'an
Zhonghong, HYREF, Guohua Ku, Chonggong Bai and Xi'an Hanneng Enterprises Management Consulting Co. Ltd. ("Xi'an Hanneng")
entered into a Buy Back Agreement.
Pursuant to the Buy Back Agreement, the Buyers jointly
and severally agreed to buy back all outstanding capital equity of Xi'an Hanneng which was transferred to HYREF by Chonggong Bai
(see 5 below), and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi'an Zhonghong. The buy-back price for
the Xi'an Hanneng's equity was based on the higher of (i) the market price of the equity shares at the time of buy-back;
or (ii) the original transfer price of the equity shares plus bank interest. The buy-back price for the Station was based on the higher
of (i) the fair value of the Station on the date transferred; or (ii) the loan balance at the date of the transfer plus interest accrued
through that date. HYREF could request that the Buyers buy back the equity shares of Xi'an Hanneng and/or the CDQ WHPG station
if one of the following conditions is met: (i) HYREF holds the equity shares of Xi'an Hanneng until December 31, 2021; (ii) Xi'an
Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations Co., Ltd., a Chinese over-the-counter trading
system (the "NEEQ"); (iii) Xi'an Huaxin New Energy, or any of the Buyers or its affiliates has a credit problem, including
not being able to issue an auditor report or standard auditor report or any control person or executive of the Buyers is involved in
crimes and is under prosecution or has other material credit problems, to HYREF's reasonable belief; (iv) if Xi'an Zhonghong
fails to timely make repayment on principal or interest of the loan agreement, its supplemental agreement or extension agreement; (v)
the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment Agreement or its related transaction documents,
including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer Agreement, the Entrusted Loan Agreement and their
guarantee agreements and supplemental agreements. Due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report,
on December 19, 2019, Xi'an TCH, Xi'an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all
outstanding capital equity of Xi'an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was
RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi'an TCH
on December 20, 2019.
The
Company might be contingently liable for the difference between the fair value of the transferred asset and the loan and related interest
if the fair value of the transferred asset at the time of the exercise of the buyback option is higher than the loan and related accrued
interest. Based on an appraisal, as of December 31, 2020, the asset was valued at $27.97 million while the loan and related interest
was $32.35 million.
On April 9, 2021, the buyers and HYREF entered
a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement was terminated
upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from
the buyers other than keeping the CDQ WHPG station (also see Note 19).
Due to halted trading of
Huaxin stock by NEEQ for not filing its 2018 annual report, on December 19, 2019, Xi'an TCH, Xi'an Zhonghong, Guohua Ku and
Chonggong Bai jointly and severally agreed to buy back all outstanding capital equity of Xi'an Hanneng which was transferred to
HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506
($2.10 million), and was paid in full by Xi'an TCH.
3. Xi'an TCH transferred
40% ownership in the Fund Management Company to Hongyuan Huifu for partial payment of financial advisory fee
On December 29, 2018, Xi'an
TCH entered into a Share Transfer Agreement with Hongyuan Huifu Venture Capital Co. Ltd ("Hongyuan Huifu"), pursuant to which
Xi'an TCH transferred its 40% ownership in Hongyuan Recycling Energy Investment Management Beijing Co., Ltd. (the "Fund Management
Company") to Hongyuan Huifu for consideration of RMB 3,453,867 ($504,000) (the "Fund Management Company Transfer Price").
On January 22, 2019, Xi'an TCH completed the 40% ownership transfer transaction. The Company had $46,461 loss from the sale of
a 40% equity interest in Fund Management Company during the year ended December 31, 2019.
F-
23
On December 29, 2018, Xi'an
TCH, Hongyuan Huifu and Fund Management Company entered into a supplemental agreement to the Share Transfer Agreement. Xi'an TCH
owes the Fund Management Company RMB 18,306,667 ($2,672,000) in financial advisory fees, and the parties agreed that the Fund Management
Company Transfer Price could be used to offset the outstanding financial advisory fees. Upon the completion of this transaction, the
Fund Management Company owed RMB 3,453,867 ($502,400) to Hongyuan Huifu, and Xi'an TCH owed RMB 14,852,800 ($2,168,000) to the
Fund Management Company. As of December 31, 2020, Xi'an TCH paid in full of $2,168,000 to the Fund Management Company.
4. HYREF Fund transferred
10% ownership in Xi'an Zhonghong to Shanghai TCH (Long-Term Payable)
On December 29, 2018, Shanghai
TCH entered into a Share Transfer Agreement with HYREF, pursuant to which HYREF agreed to transfer its 10% ownership in Xi'an Zhonghong
to Shanghai TCH for RMB 3 million ($460,000), and was recorded as long-term payable in the Company's balance sheet. On January
22, 2019, Hongyuan Huifu completed the transfer of its 10% ownership in Xi'an Zhonghong to Shanghai TCH, Xi'an Zhonghong
then became a 100% subsidiary of the Company. The Company did not record any gain or loss for this purchase as the controlling interest
did not change.
5. Transfer of Xuzhou
Huayu Project and Shenqiu Phase I & II project to Mr. Bai for partial repayment of HYREF loan
On January 4, 2019, Xi'an
Zhonghong, Xi'an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement, pursuant to which Xi'an Zhonghong
transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co., Ltd. ("Xuzhou Huayu Project")
to Mr. Bai for RMB 120,000,000 ($17.52 million) and Xi'an TCH transferred two Biomass Power Generation Projects in Shenqiu ("Shenqiu
Phase I and II Projects") to Mr. Bai for RMB 127,066,000 ($18.55 million). Mr. Bai agreed to transfer all the equity shares of
his wholly owned company, Xi'an Hanneng, to HYREF as repayment for the RMB 247,066,000 ($36.07 million) loan made by Xi'an
Zhonghong to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu Phase I and II Projects.
On February 15, 2019, Xi'an
Zhonghong completed the transfer of the Xuzhou Huayu Project and Xi'an TCH completed the transfer of Shenqiu Phase I and II Projects
to Mr. Bai, and on January 10, 2019, Mr. Bai transferred all the equity shares of his wholly owned company, Xi'an Hanneng, to HYREF
as repayment of Xi'an Zhonghong's loan to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu
Phase I and II Projects.
Xi'an Hanneng is
a holding company and was supposed to own 47,150,000 shares of Xi'an Huaxin New Energy Co., Ltd. ("Huaxin"), so that
HYREF will indirectly receive and own such shares of Xi'an Huaxin as the repayment for the loan of Zhonghong. Xi'an Hanneng
already owned 29,948,000 shares of Huaxin; however, Xi'an Hanneng was not able to obtain the remaining 17,202,000 shares due to
halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report.
On December 19, 2019, Xi'an TCH, Xi'an
Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all outstanding capital equity of Xi'an Hanneng
which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506 ($37.52 million) including accrued
interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi'an TCH on December 20, 2019. On December 20, 2019, Mr. Bai,
Xi'an TCH and Xi'an Zhonghong agreed to have Mr. Bai repay the Company in cash for the transfer price of Xuzhou Huayu and
Shenqiu in five installment payments. The 1
st
payment of RMB 50 million ($7.17 million) is due on January 5, 2020, the
2
nd
payment of RMB 50 million ($7.17 million) was due on February 5, 2020, the 3
rd
payment of RMB 50
million ($7.17 million) was due on April 5, 2020, the 4
th
payment of RMB 50 million ($7.17 million) is due on June 30,
2020, and the final payment of RMB 47,066,000 ($6.75 million) is due on September 30, 2020. As of December 31, 2020, the Company has
received the full payment of RMB 247 million ($36.28 million) from Mr. Bai.
6. The lender agreed to
extend the repayment of RMB 77.00 million ($11.04 million) to July 8, 2023; of which, RMB 75.00 million ($10.81 million) was Xi'an
TCH's investment into the HYREF fund as a secondary limited partner, and the Company netted off the investment of RMB 75 million
($10.81 million) by Xi'an TCH with the entrusted loan payable of the HYREF Fund.
F-
24
A reconciliation of repayment
of HYREF loan (entrusted loan) by three Projects at December 31, 2020 was as follows:
Transfer price for Chengli Project
$
28,910,696
Entrusted loan payable at December 31, 2020, net with Xi'an TCH investment in entrusted
    loan (current and noncurrent)
$
22,203,262
Transfer price for Xuzhou Huayu Project
18,391,086
Interest payable on entrusted loan at December 31, 2020
10,144,228
Transfer price for Shenqiu Phase I and
    II Projects
19,474,015
Add back: Xi'an TCH investment in entrusted loan
11,494,429
Less: interest accrued from September 20, 2018 to December 31, 2020 (cut-off date for interest calculation
    for repayment was September 20, 2018)
(3,130,276
)
Less: portion of loan with repayment due date extended to year 2023
(11,800,947
)
Add back: interest & penalty repaid by Xi'an TCH
9,186,358
Add back: loan principle repaid by Xi'an TCH
28,678,743
$
66,775,797
$
66,775,797
10. REFUNDABLE DEPOSITS FROM CUSTOMERS FOR SYSTEMS LEASING
As of December 31, 2020
and 2019, the balance of refundable deposits from customers for systems leasing was $0 and $544,709 (for Pucheng systems), respectively.
11. RELATED PARTY TRANSACTIONS
As of December 31, 2020
and 2019, the Company had $28,440 and $41,174, respectively, in advances from the Company's management, which bear no interest,
are unsecured, and are payable upon demand.
12. NOTE PAYABLES, NET
Convertible Notes / Promissory Notes in January and February
2019
On January 31, 2019,
the Company entered into a Securities Purchase Agreement with Iliad Research and Trading, L.P., a Utah limited partnership (the "Purchaser"),
pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note of $1,050,000. The Purchaser purchased the
Note with an original issue discount of $50,000. The Note bears interest at 8%. All outstanding principal and accrued interest on the
Note will become due and payable on January 30, 2021, subject to a potential one-year extension period during which interest would not
accrue. The Company's obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would
pay 125% of any amounts outstanding under the Note and being prepaid. Amounts outstanding under the Note may be converted at any time,
at the Lender's option, into shares of the Company's Common Stock at a conversion price of $3.00 per share, subject to certain
adjustments as discussed in the July 2018 Note above. The conversion feature did not require bifurcation and derivative accounting as
the conversion price was greater than the market price of the Company common shares, there was no beneficial conversion feature to recognize.
On February 27, 2019, the
Company entered into a Securities Purchase Agreement with Iliad Research and Trading, L.P., a Utah limited partnership (the "Purchaser"),
pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note of $1,050,000. The Purchaser purchased the
Note with an original issue discount of $50,000. The Note bears interest at 8%. All outstanding principal and accrued interest on the
Note will become due and payable on February 26, 2021, subject to a potential one-year extension period during which interest would not
accrue. The Company's obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would
pay 125% of any amounts outstanding under the Note and being prepaid. Amounts outstanding under the Note may be converted at any time,
at the Lender's option, into shares of the Company's Common Stock at a conversion price of $3.00 per share, subject to certain
adjustments as discussed above in the July 2018 Note. The conversion feature did not require bifurcation and derivative accounting and
as the conversion price was greater than the market value of the Company common shares, there was no beneficial conversion feature to
recognize.
F-
25
Pursuant to an Exchange
Agreement dated April 14, 2019 (the "Exchange Agreement"), the Company and Iliad Research and Trading, L.P. agreed to exchange
the above two notes (the "Original Notes") with two new promissory notes (the "Exchange Notes"). Upon execution
of the agreement, the notes holder surrendered the Convertible Notes to the Company and the Company issued to the holder the Exchange
Notes. Upon surrender, the two Convertible Notes were cancelled and the remaining amount owed to Holder hereafter be evidenced solely
by the Exchange Notes ($1,173,480 and $ 1,165,379 for the January and February 2019 notes, respectively). All outstanding principal and
accrued interest on the Exchange Notes will become due and payable on January 31, 2021 and February 27, 2021, respectively. The Exchange
Notes bore interest at 8% and did not grant conversion options to the Purchaser. The Company's obligations under the Exchange Notes
could be prepaid at any time, provided that in such circumstance the Company would have paid 125% of any amounts outstanding under the
Exchange Notes. Beginning on the date that is six months from the issue date of the respective Original Notes (the "Issue Dates")
and at any time thereafter until the Exchange Notes are paid in full, Purchaser shall have the right to redeem up to $750,000 of the
outstanding balance during months six to eight following the respective Issue Date and any amount thereafter. The exchange of the Convertible
Notes with Promissory Notes did not cause substantially different terms, and did not meet the conditions described in ASC 405-20-40-1,
and therefore was accounted for as a modification and not an extinguishment; accordingly, the Company did not recognize any gain or loss
for the exchange of the notes under ASC 470-50-40-8. During the year ended December 31, 2020, the Company amortized OID of $56,250 and
recorded $80,204 interest expense. During the year ended December 31, 2019, the Company amortized OID of $43,750 and recorded $368,362
interest expense (including $106,680 and $105,944 in exchange fees, respectively) for these two notes.
As a result of default in the
redemption request by the lender made on August 1, 2019, the Company and the lender entered into a forbearance agreement in which the
lender agreed not to enforce its rights under the agreement and agreed not to make any Redemptions pursuant to the Section 4 of the Note
before October 1, 2019. Under the term of the forbearance agreement, in the event Lender delivers after October 1, 2019 a Redemption
Notice to Borrower and the Redemption Amount set forth therein is not paid in cash to Lender within three Trading Days, then the applicable
Redemption Amount shall be increased by 25% (the "First Adjustment," and such increase to the Redemption Amount, the "First
Adjusted Redemption Amount"). In the event the First Adjusted Redemption Amount is not paid within three Trading Days after the
date of First Adjustment, then the First Adjusted Redemption Amount shall be increased in accordance with the following formula: $0.50
divided by the lowest Closing Trade Price of the Common Stock during the 20 Trading Days prior to the date of the Second Adjustment and
the resulting quotient multiplied by the First Adjusted Redemption Amount (the "Second Adjustment," and such increase to
the First Adjusted Redemption Amount, the "Second Adjusted Redemption Amount"), provided, however, that such formula shall
only be applied if the resulting quotient is greater than one and such formula shall in no event be used to reduce the First Adjusted
Redemption Amount.
In 2019, the Company entered
into a series of Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender partitioned
five Promissory Notes in the original total principal amount of $797,000 from a Promissory Note issued by the Company on April 14, 2019.
The Company and Lender exchanged the Partitioned Note for the delivery of total 175,400 shares (post-reverse stock split) of the Company's
Common Stock. The Company recorded $131,740 gain on conversion of these portion of the note. However, on December 16, 2019, the Company
and the lender amended the September 11, 2019 forbearance agreement to increase the adjustment ratio described above from $0.50 to $0.30
(pre-reverse stock split price). The outstanding balance of the Note shall be reduced by an amount equal to the total outstanding balance
of the Partitioned Note. The investor made adjustments of $305,626 to increase the principle of the notes during the year ended December
31, 2019 under the term of the September 11
th
forbearance agreement and the amendment to forbearance agreement dated
on December 16, 2019.
During the first quarter of 2020,
Company entered into three Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender
partitioned three new Promissory Notes in the original total principal amount of $430,000 from a Promissory Note issued by the Company
on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 143,333 shares (post-reverse stock
split) of the Company's Common Stock. The Company recorded $103,167 loss on conversion of these portion of the note.
F-
26
During the second quarter of
2020, Company entered into four Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and
Lender partitioned four new Promissory Notes in the original total principal amount of $819,586 from a Promissory Note issued by the
Company on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 304,710 shares (post-reverse
stock split) of the Company's Common Stock. The Company recorded $49,837 gain on conversion of these portion of the note. In addition,
the investor also made adjustments of $145,000 to increase the principle of the notes during the second quarter of 2020 under the term
of the September 11
th
forbearance agreement and the amendment to forbearance agreement dated on December 16, 2019. These
transactions were recorded as credit to additional paid in capital of $769,749, which was the difference between Note conversion of $819,586
and gain on conversion of $49,837. The $49,837 gain on conversion and $145,000 principal adjustment discussed above resulted in a net
loss on note redemption / conversion of $95,163 in the statement of operations.
On May 15, 2020, the Company
entered into a Forbearance Agreement with the Lender. The Lender had delivered a redemption notice to the Company on November 4, 2019
pursuant to the terms of the Exchange Agreement dated April 14, 2019 and the Company failed to pay the amount provided therein. Accordingly,
the Lender has the right to accelerate the maturity date of the Note and cause the outstanding balance to be increased by 25%. The Lender
agreed with the Company to withdraw the November 4, 2019 redemption notice as if it was never made and agreed that as of May 15, 2020
there is no default under the Note. The Company did not pay any consideration to the Lender for this forbearance. The outstanding balance
of the Note as of May 15, 2020 is $1,271,720, and under the new Forbearance Agreement, if the Lender delivers a redemption notice and
the amount set forth in such notice is not paid in cash to Lender within three trading days, the applicable redemption amount shall be
increased to 25%.
During the third quarter of 2020,
Company entered into three Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreements, the Company and Lender
partitioned three new Promissory Notes in the original total principal amount of $600,000 from a Promissory Note issued by the Company
on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 242,699 shares (post-reverse stock
split) of the Company's Common Stock. The Company recorded $36,023 loss on conversion of these portion of the note. In addition,
under the term of the forbearance agreement, as the investor delivered redemption notices totaling $1,050,000 which were not paid
within 5 days, per the forbearance agreement, adjustments of $262,500 were made to increase the principle of the notes during the third
quarter of 2020. These transactions were recorded as credit to additional paid in capital of $636,023, which was the fair value of the
shares issued based on the stock price on the date of the exchange. The $36,023 loss on conversion and $262,500 principle adjustment
discussed above resulted in a loss on note redemption/ conversion of $298,523 in the statement of operations for the three months ended
September 30,2020.
During the fourth quarter of
2020, Company entered into three Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreements, the Company and
Lender partitioned three new Promissory Notes in the original total principal amount of $600,000 from a Promissory Note issued by the
Company on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of total 175,904 shares (post-reverse
stock split) of the Company's Common Stock. The Company recorded $5,540 loss on conversion of these portion of the note. As of
December 31, 2020, two Notes that were issued in January and February 2019 were repaid in full by the Company's shares.
Promissory Notes in December 2020
On December 4, 2020, the Company
entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company sold and issued to the Purchaser
a Promissory Note of $3,150,000. The Purchaser purchased the Note with an original issue discount of $150,000, which was recognized as
a debt discount and will be amortized using the interest method over the life of the note. The Note bears interest at 8% per annum and
has a term of 24 months. All outstanding principal and accrued interest on the Note will become due and payable on December 3, 2022.
The Company's obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125%
of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date of the Note,
Purchaser shall have the right to redeem any amount of this Note up to $500,000 per calendar month by providing written notice to the
Company. During the year ended December 31, 2020, the Company amortized OID of $5,645 and recorded $18,968 interest expense on this Note.
F-
27
13. SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION
Private Placement in February 2019
On February 13, 2019, CREG entered
into a Securities Purchase Agreement (the "Agreement") with Great Essential Investment, Ltd. a company incorporated in the
British Virgin Islands (the "Purchaser"), pursuant to which the Company sold to the Purchaser in a private placement 1,600,000
shares (pre-reverse stock split) of the Company's common stock, par value $0.001 per share, at $10.13 per share, for $1,620,800.
The Company was required to file a registration statement for the registration of the Shares for their resale by the Purchaser within
100 days from the effective date of this Agreement. The Private Placement was completed pursuant to the exemption from registration provided
by Regulation S promulgated under the Securities Act of 1933, as amended. The Company filed the registration statement on May 24, 2019,
and was declared effective on June 4, 2019.
Registered Direct Offering and Private
Placement in April 2019
On April 15, 2019, the Company
entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain purchasers (the "Purchasers"),
pursuant to which the Company offered to the Purchasers, in a registered direct offering, 2,359,272 shares (pre-reverse stock split)
of common stock. The Shares were sold to the Purchasers at a negotiated purchase price of $0.80 per share, for gross proceeds to the
Company of $1,887,417, before deducting $200,000 in placement agent fees and other estimated offering expenses payable by the Company.
In a concurrent private placement,
the Company also issued to the each of the Purchasers a warrant to purchase 0.75 of a share of the Company's Common Stock for each
share purchased under the Purchase Agreement, or 1,769,454 warrants (pre-reverse stock split). The Warrants are exercisable beginning
on the six month anniversary of the date of issuance at an exercise price of $0.9365 per share, and expire on the five and one-half year
anniversary of the date of issuance.
H.C. Wainwright & Co.,
LLC acted as the Company's exclusive placement agent in connection with the offerings under the Purchase Agreement and received
cash fee of 7% of the gross proceeds received by the Company from the offerings (or $132,119), up to $75,000 for certain expenses, $10,000
for clearing expenses and warrants to purchase the Company's Common Stock in an amount equal to 7% of our Shares sold to the Purchasers
in the offerings, or 165,149 shares of Common Stock, on substantially the same terms as the Warrants, except that the Placement Agent
Warrants have an initial exercise price of $1.00 per share, are exercisable commencing on the later of (i) six months of the issuance
date or (ii) the date on which the Company increases the number of its authorized shares, and expire on April 15, 2024.
The warrants issued in this private
placement were classified as equity instruments. The Company accounted for the warrants issued in the private placement based on the
fair value method under ASC Topic 505, and the FV of the warrants was calculated using the Black-Scholes model under the following assumptions:
estimated life of 5.5 years for Investor Warrants and 5 years for Placement Agent Warrants, volatility of 100%, risk-free interest rate
of 2.41% and dividend yield of 0%. The FV of the warrants issued to investors at grant date was $855,246, and the FV of the warrants
issued to the placement agent at grant date was $75,901.
On November 22, 2019, the Company
entered into an Exchange Agreement (the "First Exchange Agreement") with certain investors who had been party to that certain
Securities Purchase Agreement dated October 29, 2018. Pursuant to the First Exchange Agreement, the Company and the October Investors
agreed to exchange the outstanding warrant issued by the Company to the October Investors pursuant to the October Securities Purchase
Agreement into shares of common stock of the Company, with an exchange ratio of 1 share of October Warrant Stock for 0.5 shares of common
stock, according to the terms and conditions of the First Exchange Agreement.
F-
28
On November 22, 2019, the Company
entered into a Second Exchange Agreement (the "Second Exchange Agreement") with certain investors who had been party to that
certain Securities Purchase Agreement dated April 15, 2019 by and among the Company and such investors. Pursuant to the Second Exchange
Agreement, the Company and the April Investors agreed to exchange the outstanding warrant issued by the Company to the April Investors
pursuant to the April Securities Purchase Agreement into shares of common stock of the Company, with an exchange ratio of 1 share of
April Warrant Stock for 0.6 shares of common stock, according to the terms and conditions of the Second Exchange Agreement.
The Company let the warrant holders
exercised the 375,454 warrants (post-reverse stock split) into 205,421 common shares (post-reverse stock split) of the Company at a cashless
exercise method. The fair value of these shares was the additional cost to the Company for the issuance of the shares under securities
purchase agreements previously entered (described above). However, since the warrants were initially equity classified as they met the
qualifications for equity classification under ASC 815-40, accordingly, the modification upon exercise of these warrants had no impact
to the Company's financial statements.
Following is a summary of the
activities of warrants that were issued from equity financing (post-reverse stock split) for the years ended December 31, 2020 and 2019:
Number of
Warrants
Average
Exercise
Price
(post-reverse
stock split
price)
Weighted
Average
Remaining
Contractual
Term in Years
Outstanding at January 1, 2019
212,404
$
14.1
5.29
Exercisable at January 1, 2019
212,404
$
14.1
5.29
Granted
193,460
9.5
5.25
Exchanged
(375,454
)
-
-
Forfeited
-
-
-
Expired
-
-
-
Outstanding at December 31, 2019
30,411
14.0
4.21
Exercisable at December 31, 2019
30,411
14.0
4.21
Granted
-
-
-
Exercised
-
-
-
Forfeited
-
-
-
Expired
-
-
-
Outstanding at December 31, 2020
30,411
$
14.0
3.21
Exercisable at December 31, 2020
30,411
$
14.0
3.21
Shares Issued for Stock Compensation
On March 16, 2020, the Company's
Board of Director agreed to issue 3,333 shares of the Company's Common Stock (post-reverse stock split) to the Company's
law firm. The shares are earned in full and non-refundable as of March 9, 2020. The FV of these shares are $10,999 on March 9, 2020.
Shares Issued for Equity Financing
On August 24, 2020 and September
28, 2020, the Company entered into Securities Purchase Agreements with the purchaser and offered and sold to such purchaser 265,250 shares
of Common Stock at negotiated purchase prices (132,000 shares at $2.15 per share and 133,250 shares at $2.34 per share) without
reference to the market price and received the net proceeds was $497,187 after deducting the placement agent commission and certain expenses.
 These 265,250 shares were offered and sold in a registered public offering pursuant to the prospectus supplement dated August 24,
2020, and the original prospectus contained in an effective shelf registration statement on Form S-3 (the "Registration Statement"),
which was originally filed with the Securities and Exchange Commission on December 1, 2017, and was declared effective on December 8,
2017 (File No. 333-221868).
F-
29
14. INCOME TAX
The Company's Chinese subsidiaries
are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally subject to tax at 25% on income
reported in the statutory financial statements after appropriate tax adjustments. Under Chinese tax law, the tax treatment of finance
and sales-type leases is similar to US GAAP. However, the local tax bureau continues to treat the Company's sales-type leases as
operating leases. Accordingly, the Company recorded deferred income taxes.
The Company's subsidiaries
generate all of their income from their PRC operations. All of the Company's Chinese subsidiaries' effective income tax rate
for 2020 and 2019 was 25%. Yinghua, Shanghai TCH, Xi'an TCH, Huahong, Zhonghong and Erdos TCH file separate income tax returns.
There is no income tax for companies
domiciled in the Cayman Islands. Accordingly, the Company's CFS do not present any income tax provisions related to Cayman Islands
tax jurisdiction, where Sifang Holding is domiciled.
The US parent company, CREG is
taxed in the US and, as of December 31, 2020, had net operating loss ("NOL") carry forwards for income taxes of $1.21 million;
for federal income tax purposes, the NOL arising in tax years beginning after 2017 may only reduce 80% of a taxpayer's taxable
income, and may be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act ("the CARES Act")
issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily
repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The management believes the realization of benefits from these
losses may be uncertain due to the US parent company's continuing operating losses. Accordingly, a 100% deferred tax asset valuation
allowance was provided.
As of December 31, 2020, the
Company's PRC subsidiaries had $43.40 million NOL that can be carried forward to offset future taxable income for five years from
the year the loss is incurred. The NOL was mostly from Xi'an TCH, Erdos TCH and Zhonghong. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration
of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred
tax assets due to the recurring losses from operations of these entities, accordingly, the Company recorded a 100% deferred tax valuation
allowance for PRC NOL.
The following table reconciles
the U.S. statutory rates to the Company's effective tax rate for the years ended December 31, 2020 and 2019, respectively:
2020
2019
U.S. statutory rates
21.0
%
(21.0
)%
Tax rate difference – current provision
5.1
%
(3.4
)%
Reversal of temporary difference due to disposal of Shenqiu
-
%
(18.8
)%
Permanent differences
2.9
%
2.0
%
Change in valuation allowance
(29.0
)%
15.6
%
Tax (benefit) per financial statements
-
%
(25.6
)%
The provision for income tax
expense for the years ended December 31, 2020 and 2019 consisted of the following:
2020
2019
Income tax expense – current
$
-
$
-
Income tax benefit – deferred
-
(3,024,807
)
Total income tax benefit
$
-
$
(3,024,807
)
F-
30
15. STOCK-BASED COMPENSATION PLAN
Options to Employees and Directors
On June 19, 2015, the stockholders
of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the "Plan") at its annual meeting. The
total shares of Common Stock authorized for issuance during the term of the Plan is 124,626 (post-reverse stock split). The Plan was
effective immediately upon its adoption by the Board of Directors on April 24, 2015, subject to stockholder approval, and will terminate
on the earliest to occur of (i) the 10th anniversary of the Plan's effective date, or (ii) the date on which all shares available
for issuance under the Plan shall have been issued as fully-vested shares. The stockholders approved the Plan at their annual meeting
on June 19, 2015.
The following table summarizes
option activity with respect to employees and independent directors, and the number of options reflects the Reverse Stock Split effective
April 13, 2020:
Number of
Shares
Average
Exercise Price
per Share (post-reverse stock split price)
Weighted
Average
Remaining
Contractual
Term in Years
Outstanding at January 1, 2019
900
$
54.3
5.41
Exercisable at January 1, 2019
900
$
54.3
5.41
Granted
-
-
-
Exercised
-
-
-
Forfeited
-
-
-
Outstanding at December 31, 2019
900
54.3
4.41
Exercisable at December 31, 2019
900
54.3
4.41
Granted
-
-
-
Exercised
-
-
-
Expired
(400
)
102.0
-
Outstanding at December 31, 2020
500
$
16.1
6.32
Exercisable at December 31, 2020
500
$
54.3
6.32
16. STATUTORY RESERVES
Pursuant to the corporate law
of the PRC effective January 1, 2006, the Company is only required to maintain one statutory reserve by appropriating from its after-tax
profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.
Surplus Reserve Fund
The Company's Chinese subsidiaries
are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations, to a statutory surplus reserve
fund until such reserve balance reaches 50% of the Company's registered capital.
The surplus reserve fund is non-distributable
other than during liquidation and can be used to fund previous years' losses, if any, and may be utilized for business expansion
or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the
par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of
the registered capital.
F-
31
During the year ended December
31, 2020, the Company transferred $629,330, which is 10% of Xi'an TCH's net income to the statutory reverse. The maximum
statutory reserve amount has not been reached for any subsidiary. The table below discloses the statutory reserve amount in the currency
type registered for each Chinese subsidiary as of December 31, 2020 and 2019:
Name of Chinese Subsidiaries
Registered
Capital
Maximum
Statutory
Reserve
Amount
Statutory reserve at
December 31,
2020
Statutory
reserve at
December 31,
2019
Shanghai TCH
$
29,800,000
$
14,900,000
¥6,564,303 ($1,003,859)
¥6,564,303 ($1,003,859)
Xi'an TCH
¥
202,000,000
¥
101,000,000
¥73,700,706 ($11,236,314)
¥69,359,820 ($10,606,984)
Erdos TCH
¥
120,000,000
¥
60,000,000
¥19,035,814 ($2,914,869)
¥19,035,814 ($2,914,869)
Xi'an Zhonghong
¥
30,000,000
¥
15,000,000
Did not accrue yet due to accumulated deficit
Did not accrue yet due to accumulated deficit
Shaanxi Huahong
$
2,500,300
$
1,250,150
Did not accrue yet due to accumulated deficit
Did not accrue yet due to accumulated deficit
Zhongxun
¥
35,000,000
¥
17,500,000
Did not accrue yet due to accumulated deficit
Did not accrue yet due to accumulated deficit
Common Welfare Fund
The common welfare fund is a
voluntary fund to which the Company can transfer 5% to 10% of its net income. This fund can only be utilized on capital items for the
collective benefit of the Company's employees, such as construction of dormitories, cafeteria facilities, and other staff welfare
facilities. This fund is non-distributable other than upon liquidation. The Company does not participate in this fund.
17. CONTINGENCIES
China maintains a "closed"
capital account, meaning companies, banks, and individuals cannot move money in or out of the country except in accordance with strict
rules. The People's Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate the flow of foreign exchange
in and out of the country. For inward or outward foreign currency transactions, the Company needs to make a timely declaration to the
bank with sufficient supporting documents to declare the nature of the business transaction. The Company's sales, purchases and
expense transactions are denominated in RMB and all of the Company's assets and liabilities are also denominated in RMB. The RMB
is not freely convertible into foreign currencies under the current law. Remittances in currencies other than RMB may require certain
supporting documentation in order to make the remittance.
The Company's operations
in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency
exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
F-
32
18. COMMITMENTS
Lease Commitment
On November 20, 2017, Xi'an
TCH entered into a lease for its office with a term from December 1, 2017 through November 30, 2020. The monthly rent is RMB 36,536 ($5,600)
with quarterly payment in advance. This lease was expired in November 2020. The Company entered a new lease contract for the same location
for a period from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536 ($5,600), to be paid every half year in advance.
For the years ended December
31, 2020 and 2019, the rental expense of the Company was $61,508 and $86,874 (including Beijing office rent of $19,674), respectively.
The Company adopted ASC 842 on
CFS on January 1, 2019. The components of lease costs, lease term and discount rate with respect of the office lease with an initial
term of more than 12 months are as follows:
Year Ended
December 31,
2020
Operating lease cost – amortization of ROU
$
54,694
Operating lease cost – interest expense on lease liability
$
825
Weighted Average Remaining Lease Term - Operating leases
-
Weighted Average Discount Rate - Operating leases
3
%
Employment Agreement
On May 8, 2020, the Company entered
an employment agreement with Yongjiang Shi, the Company's CFO for a term of 24 months. The monthly salary is RMB 16,000 ($2,300).
The Company will grant the CFO no less than 5,000 shares of the Company's Common Stock annually.
Investment Banking Engagement Agreement
On October 10, 2019, the Company
entered an investment banking engagement agreement with an investment banker firm to engage them as the exclusive lead underwriter for
a registered securities offering of up to $20 million. The Company shall pay to the investment banker an equity retainer fee of 15,000
shares (post-reverse stock split) of the restricted Common Stock of the Company (10,000 shares was issued within 10 business days of
signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). The agreement expired in March 2021.
19. SUBSEQUENT EVENTS
The Company follows the guidance
in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial
statements were issued and determined the Company has the following material subsequent events:
On February 23, 2021, the Company entered into
certain securities purchase agreements with several non-U.S. investors (the "Purchasers"), pursuant to which the Company
agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at $11.522 per share, which
is the five-day average closing price immediately prior to signing the Purchase Agreements. One of the purchaser is the Company's
CEO (also is the Company's Chairman), he purchased 1,000,000 common shares of the Company. On March 11, 2021, the Company received
approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase agreements, there was no any
fees paid in connection with this financing.
On April 2, 2021, the Company entered into a
Note Purchase Agreement with an institutional investor, pursuant to which the Company sold and issued to the Purchaser a Promissory Note
of $5,250,000. The Purchaser purchased the Note with an original issue discount of $250,000, which was recognized as a debt discount
and will be amortized using the interest method over the life of the note. The Note bears interest at 8% per annum and has a term of
24 months. All outstanding principal and accrued interest on the Note will become due and payable on April 1, 2023. The Company's
obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding
under the Note and being prepaid. Beginning on the date that is six months from the issue date of the Note, Purchaser shall have the
right to redeem any amount of this Note up to $825,000 per calendar month by providing written notice to the Company.
On April 9, 20201, Xi'an TCH, Xi'an
Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement (termination agreement). Under the termination
agreement, the original buyback agreement entered on December 19, 2019 shall be terminated upon the effective date of the termination
agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from the buyers other than keeping
the CDQ WHPG station. The Company will record a gain of approximately $4.8 million from transferring the CDP WHPG station to HYREF as
partial repayment of the entrusted loan resulting from the termination of the buy-back agreement.
F-
33
INDEX
TO FINANCIAL STATEMENTS
PAGE
Consolidated
    Balance Sheets
F-35
Consolidated
    Statements of Operations and Comprehensive Loss
F-36
Consolidated
    Statements of Stockholders' Equity
F-37
Consolidated
    Statements of Cash Flows
F-38
Notes
    to Consolidated Financial Statements
F-39 - F-60
F-
34
CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
MARCH 31,
2021
DECEMBER 31,
2020
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash
$
144,071,303
$
107,804,013
Accounts receivable, net
306,498
308,677
VAT receivable
183,978
-
Prepaid expenses
54,225
55,420
Other receivables
30,513
35,687
Total current assets
144,646,517
108,203,797
NON-CURRENT ASSETS
Long term deposit
16,680
16,799
Operating lease right-of-use assets,
    net
173,502
-
Asset subject
    to buyback
28,712,742
28,916,924
Total non-current
    assets
28,902,924
28,933,723
TOTAL ASSETS
$
173,549,441
$
137,137,520
LIABILITIES AND
    STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
75,537
$
76,074
Taxes payable
2,744,649
3,145,612
Accrued interest on notes
81,968
18,968
Notes payable, net of unamortized
    OID of $125,605 and $144,355, respectively
3,024,395
3,005,645
Accrued liabilities and other payables
697,517
726,696
Operating lease liability
96,422
-
Due to related parties
28,466
28,440
Interest payable on entrusted loans
10,072,599
10,144,228
Entrusted loan
    payable
21,742,131
21,896,744
Total current liabilities
38,563,684
39,042,407
NONCURRENT LIABILITIES
Income tax payable
5,174,625
5,174,625
Operating lease liability
60,400
-
Long term payable
456,531
459,777
Entrusted loan
    payable
304,354
306,518
Total noncurrent
    liabilities
5,995,910
5,940,920
Total liabilities
44,559,594
44,983,327
CONTINGENCIES AND COMMITMENTS (NOTE
    15 & 16)
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 10,000,000
    shares authorized, 3,177,050 shares issued and outstanding as of March 31, 2021 and December 31, 2020
3,177
3,177
Shares to be issued
38,253,041
-
Additional paid in capital
119,748,999
119,748,999
Statutory reserve
15,156,580
15,155,042
Accumulated other comprehensive income
    (loss)
(866,723
)
273,440
Accumulated
    deficit
(43,305,227
)
(43,026,465
)
Total Company
    stockholders' equity
128,989,847
92,154,193
TOTAL LIABILITIES
    AND EQUITY
$
173,549,441
$
137,137,520
The accompanying notes are an integral part of
these consolidated financial statements.
F-
35
CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2021
2020
Revenue
Contingent rental income
$
-
$
-
Interest income
    on sales-type leases
-
-
Total operating income
-
-
Operating expenses
General
    and administrative
273,092
154,178
Total operating
    expenses
273,092
154,178
Loss from operations
(273,092
)
(154,178
)
Non-operating income (expenses)
Loss on note conversion
-
(103,167
)
Interest income
83,696
27,006
Interest expense
(82,086
)
(355,244
)
Other expense,
    net
(617
)
(12,968
)
Total non-operating
    income (expenses), net
993
(444,373
)
Loss before income tax
(272,099
)
(598,551
)
Income tax
    expense
5,125
-
Net loss
(277,224
)
(598,551
)
Other comprehensive items
Foreign currency
    translation loss
(1,140,163
)
(1,341,276
)
Comprehensive
    loss
$
(1,417,387
)
$
(1,939,827
)
Basic and
    diluted weighted average shares outstanding
3,177,050
2,135,340
Basic and diluted
    loss per share
$
(0.09
)
$
(0.28
)
The accompanying notes are an integral part of
these consolidated financial statements.
F-
36
CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
THREE
MONTHS ENDED MARCH 31, 2021 AND 2020
(UNAUDITED)
Common Stock
Shares to
Paid in
Statutory
Other Comprehensive (Loss) /
Accumulated
Shares
Amount
be issued
Capital
Reserves
Income
Deficit
Total
Balance at December 31, 2020
3,177,050
$
3,177
$
-
$
119,748,999
$
15,155,042
$
273,440
$
(43,026,465
)
$
92,154,193
Net loss
-
-
-
-
-
-
(277,224
)
(277,224
)
Shares to be issued
-
-
38,253,041
-
-
-
-
38,253,041
Transfer to Statutory Reserves
-
-
-
-
1,538
-
(1,538
)
-
Foreign currency translation loss
-
-
-
-
-
(1,140,163
)
-
(1,140,163
)
Balance at March 31, 2021
3,177,050
$
3,177
$
38,253,041
$
199,748,999
$
15,156,580
$
(866,723
)
$
(43,305,227
)
$
128,989,847
Common Stock
Paid in
Statutory
Other Comprehensive
Accumulated
Shares
Amount
Capital
Reserves
Loss
Deficit
Total
Balance at December 31, 2019
2,032,721
$
2,033
$
116,682,374
$
14,525,712
$
(6,132,614
)
$
(46,447,959
)
$
78,629,546
Net loss
-
-
-
-
-
(598,551
)
(598,551
)
-
Issuance of common stock for stock compensation
3,333
3
10,996
-
-
-
10,999
Conversion of long-term notes into common shares
143,333
143
533,024
-
-
-
533,167
Foreign currency translation loss
-
-
-
-
(1,341,276
)
-
(1,341,276
)
Balance at March 31, 2020
2,179,387
$
2,179
$
117,226,394
$
14,525,712
$
(7,473,890
)
$
(47,046,510
)
$
77,233,885
The accompanying notes are an integral part
of these consolidated financial statements.
F-
37
CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(277,224
)
$
(598,551
)
Adjustments to reconcile net loss to net cash provided
    by (used in) operating activities:
Amortization of OID and debt issuing costs of notes
18,750
12,500
Stock compensation expense
-
10,999
Operating lease expenses
16,903
16,374
Loss on note conversion
-
103,167
Changes in assets and liabilities:
Collection of principal and interest on sales type leases
    for Pucheng systems
-
13,984,746
Accounts receivable
-
25,791,539
Prepaid expenses
2,861
926
Other receivables
2,995
911
Taxes payable
(587,673
)
818
Payment of lease liability
(33,807
)
(15,705
)
Interest payable on entrusted loan
-
320,095
Accrued liabilities and other payables
38,139
22,701
Net cash provided by (used in) operating activities
(819,056
)
39,650,520
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares to be issued
38,253,041
-
Net cash provided by financing activities
38,253,041
-
EFFECT OF EXCHANGE RATE CHANGE
    ON CASH
(1,166,695
)
(843,328
)
NET INCREASE IN CASH
36,267,290
38,807,192
CASH, BEGINNING OF PERIOD
107,804,013
16,221,297
CASH, END OF PERIOD
$
144,071,303
$
55,028,489
Supplemental cash flow data:
Income tax paid
$
-
$
-
Interest paid
$
-
$
-
Supplemental disclosure of non-cash operating activities
Transfer of Tian'an project
    from construction in progress to accounts receivable
$
-
$
23,814,532
Adoption of ASC 842-right-of-use asset
$
190,817
$
-
Adoption of ASC 842-operating lease
    liability
$
190,817
$
-
Supplemental disclosure of non-cash financing activities
Conversion of notes into common shares
$
-
$
430,000
The accompanying notes are an integral part of
these consolidated financial statements.
F-
38
CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2021 (UNAUDITED) AND DECEMBER 31, 2020
1.
ORGANIZATION AND DESCRIPTION OF BUSINESS
China
Recycling Energy Corporation (the "Company" or "CREG") is incorporated in Nevada state. The Company, through
its subsidiaries, provides energy saving solutions and services, including selling and leasing energy saving systems and equipment to
customers, and project investment in the Peoples Republic of China ("PRC").
The
Company's organizational chart as of March 31, 2021 is as follows:
F-
39
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. Erdos contributed 7% of the total investment of the project, and Xi'an
TCH Energy Technology Co., Ltd. ("Xi'an TCH") contributed 93%. 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. Xi'an TCH paid the $1.29 million in July 2013 and, as a result, became the sole
stockholder of the JV. 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 started to charge Erdos
based on actual electricity sold at RMB 0.30 / KWH. The selling price of each KWH is determined annually based on prevailing market conditions.
Since May 2019, Erdos TCH has ceased its operations due to renovations and furnace safety upgrades of Erdos, and the Company initially
expected the resumption of operations in July 2020, but the resumption of operations was further delayed due to government's mandate
for Erdos to significantly lower its energy consumption per unit of GDP. Erdos and the municipal government are currently under discussion
for seeking the solution of achieving the energy saving target. During this period, Erdos will compensate Erdos TCH RMB 1 million ($145,460)
per month, until operations resume.
In
addition, Erdos TCH has 30% ownership in DaTangShiDai (BinZhou) Energy Savings Technology Co., Ltd. ("BinZhou Energy Savings"),
30% ownership in DaTangShiDai DaTong Recycling Energy Technology Co., Ltd. ("DaTong Recycling Energy"), and 40% ownership
in DaTang ShiDai TianYu XuZhou Recycling Energy Technology Co, Ltd. ("TianYu XuZhou Recycling Energy"). These companies were
incorporated in 2012 but there have not been any operations since then nor has any registered capital contribution been made.
Shenqiu
Yuneng Biomass Power Generation Projects
On
September 28, 2011, Xi'an TCH and Shenqiu 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 of $286,000 (RMB 1,800,000)
for 11 years.
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.
As
repayment for a loan made by Xi'an Zhonghong to Beijing Hongyuan Recycling Energy Investment Center, LLP (the "HYREF")
on January 10, 2019 (see further discussion in Note 8); on January 4, 2019, Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong
Bai (or "Mr. Bai"), a resident of China, entered into a Projects Transfer Agreement (the "Agreement"), pursuant
to which Xi'an TCH transferred two BMGP in Shenqiu ("Shenqiu Phase I and II Projects") to Mr. Bai for RMB 127,066,000
($18.55 million). As consideration for the transfer of the Shenqiu Phase I and II Projects to Mr. Bai (Note 8), Mr. Bai transferred all
the equity shares of his wholly owned company, Xi'an Hanneng Enterprises Management Consulting Co. Ltd. ("Xi'an Hanneng")
to Beijing Hongyuan Recycling Energy Investment Center, LLP (the "HYREF") as repayment for a loan made by Xi'an Zhonghong
to HYREF on January 10, 2019. The transfer of the projects was completed on February 15, 2019. The Company recorded $208,359 loss from
the transfer during the year ended December 31, 2019. Xi'an Hanneng was expected to own 47,150,000 shares of Xi'an Huaxin
New Energy Co., Ltd for the repayment of Shenqiu system and Huayu system. However, Xi'an Hanneng was not able to obtain all the
Huaxin shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report. On December 20, 2019, Mr. Bai and
all the related parties therefore agreed to have Mr. Bai instead make a payment in cash for the transfer price of Shenqiu (see Note 8
for detail).
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"),
of which it owns 90% of Zhonghong, with HYREF owning the other 10%. Zhonghong is engaged to provide energy saving solution and services,
including constructing, selling and leasing energy saving systems and equipment to customers. On December 29, 2018, Shanghai TCH entered
into a Share Transfer Agreement with HYREF, pursuant to which HYREF transferred its 10% ownership in Zhonghong to Shanghai TCH for RMB
3 million ($0.44 million). The transfer was completed on January 22, 2019. The Company owns 100% of Xi'an Zhonghong after
the transaction.
F-
40
On
July 24, 2013, Zhonghong entered into a Cooperative Agreement of CDQ and CDQ WHPG Project (Coke Dry Quenching 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").
On
December 29, 2018, Xi'an Zhonghong, Xi'an TCH, HYREF, Guohua Ku, and Mr. Chonggong Bai entered into a CDQ WHPG Station Fixed
Assets Transfer Agreement, pursuant to which Xi'an Zhonghong transferred Chengli CDQ WHPG station ("the Station") as
the repayment for the loan of RMB 188,639,400 ($27.54 million) to HYREF. Xi'an Zhonghong, Xi'an TCH, Guohua Ku and Chonggong
Bai also agreed to a Buy Back Agreement for the Station when certain conditions are met (see Note 8). The transfer of the Station was
completed January 22, 2019, at which time the Company recorded a $624,133 loss from this transfer. Since the original terms of the Buy
Back Agreement are still valid, and the Buy Back possibility could occur; therefore, the loan principal and interest and the corresponding
asset of the Station cannot be derecognized due to the existence of Buy Back clauses (see Note 8 for detail).
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 Projects 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 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 2020. The Xuzhou Huayu Project has been on hold due to a conflict between Xuzhou Huayu Coking Co., Ltd. and
local residents on certain pollution-related issues.
On
January 4, 2019, Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement (the "Agreement"),
pursuant to which Xi'an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking
Co., Ltd. ("Xuzhou Huayu Project") to Mr. Bai for RMB 120,000,000 ($17.52 million). Mr. Bai agreed that as consideration
for the transfer of the Xuzhou Huayu Project to him, as well as Shenqiu discussed above, he would transfer all the equity shares of his
wholly owned company, Xi'an Hanneng, to HYREF as repayment for the loan made by Xi'an Zhonghong to HYREF. (Note 8). The transfer
of the project was completed on February 15, 2019. The Company recorded $397,033 loss from this transfer during the year ended December
31, 2019. On January 10, 2019, Mr. Chonggong Bai transferred all the equity shares of his wholly owned company, Xi'an Hanneng,
to HYREF as repayment for the loan. Xi'an Hanneng was expected to own 47,150,000 shares of Xi'an Huaxin New Energy Co., Ltd
for the repayment of Huayu system and Shenqiu system. As of September 30, 2019, Xi'an Hanneng already owned 29,948,000 shares of
Huaxin, but was not able to obtain the remaining 17,202,000 shares due to halted trading of Huaxin stock by NEEQ for not filing its 2018
annual report. On December 20, 2019, Mr. Bai and all the related parties agreed to have Mr. Bai instead making a payment in cash for
the transfer price of Huayu (see Note 8 for detail).
On
January 10, 2020, Zhonghong, Tianyu and Huaxin signed a transfer agreement to transfer all assets under construction and related rights
and interests of Xuzhou Tian'an Project to Tianyu for RMB 170 million including VAT ($24.37 million) in three installment payments.
The 1st installment payment of RMB 50 million ($7.17 million) to be paid within 20 working days after the contract is signed. The 2nd
installment payment of RMB 50 million ($7.34 million) is to be paid within 20 working days after completion of the project construction
but no later than July 31, 2020. The final installment payment of RMB 70 million ($10.28 million) is to be paid before December 31, 2020.
The Company received the payment in full for Tian'an Project as of December 31, 2020.
Zhongtai
Waste Heat Power Generation Energy Management Cooperative Agreement
On
December 6, 2013, Xi'an TCH 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.
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Pursuant
to the Zhongtai Agreement, Xi'an TCH was to 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 is also to build a furnace to generate steam from the smoke pipeline's waste
heat and sell the steam to Zhongtai.
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 obligations under the EPC Contract to Zhongtai. As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi'an
TCH RMB 167,360,000 ($25.77 million) including (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 to be paid within
20 business days after the Transfer Agreement was signed; (b) RMB 30,000,000 ($4.32 million) was to be paid within 20 business days after
the Project was completed, but no later than July 30, 2016; and (c) RMB 87,360,000 ($13.45 million) was to 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. The Company recorded a $2.82 million loss from this transaction in 2016. In 2016, Xi'an
TCH had received the first payment of $7.70 million and the second payment of $4.32 million. However, the Company received a repayment
commitment letter from Zhongtai on February 23, 2018, in which Zhongtai committed to pay the remaining payment of RMB 87,360,000 ($13.45
million) no later than the end of July 2018; in July 2018, Zhongtai and the Company reached a further oral agreement to extend the repayment
term of RMB 87,360,000 ($13.45 million) by another two to three months. In January 2020, Zhongtai paid RMB 10 million ($1.41 million);
in March 2020, Zhongtai paid RMB 20 million ($2.82 million); in June 2020, Zhongtai paid RMB 10 million ($1.41 million); and in December
2020, Zhongtai paid RMB 30 million ($4.28 million), which was payment in full. Accordingly, the Company reversed the bad debt expense
of $5.80 million in 2020 which had been recorded earlier.
Formation
of Zhongxun
On
March 24, 2014, Xi'an TCH incorporated a 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 nor has any capital contribution been made as of the date of this report.
Formation
of Yinghua
On
February 11, 2015, the Company incorporated a 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 nor
has any capital contribution been made as of the date of this report.
Reverse
Stock Split
On
April 13, 2020, the Company filed a certificate of change ("Certificate of Change") with the Secretary of State of the State
of Nevada, pursuant to which, on April 13, 2020, the Company effected a reverse stock split of its Common Stock, at a rate of 1-for-10,
accompanied by a corresponding decrease in the Company's issued and outstanding shares of Common Stock (the "Reverse Stock
Split"). The accompanying consolidated financial statements and related disclosure in for periods prior to the Reverse Stock Split
have been retroactively restated to reflect this reverse stock split.
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Other
Events
In December 2019, a novel strain of coronavirus
(COVID-19) was reported and the World Health Organization has declared the outbreak to constitute a "Public Health Emergency of
International Concern." This pandemic, which continues to spread to additional countries, and is disrupting supply chains and affecting
production and sales across a range of industries as a result of quarantines, facility closures, and travel and logistics restrictions
in connection with the outbreak. However, as a result of PRC government's effort on disease control, most cities in China were
reopened, the outbreak in China is under the control. As of this report date, there are some new Covid-19 cases discovered in a few provinces
of China, however, the number of new cases is not significant due to PRC government's strict control.
On
December 22, 2020, Shanghai TCH entered into an Equity Acquisition Agreement with Xi'an Taiying Energy Saving Technology Co., Ltd.,
a PRC company ("Xi'an Taiying") and its three shareholders to purchase all of the issued and outstanding shares of
stock of Xi'an Taiying. The purchase price for said shares shall consist of (i) 619,525 shares of common stock at an issuance price
of $4.37 per share, (ii) 60,000,000 shares of Series A convertible stock and (iii) a cash payment of RMB 1,617,867,026 (approximately
$247 million at a conversion rate of 1:6.55). The shares shall be issued within 15 business days after approval by the Board of Directors
and/or shareholders of the Company and Nasdaq approval and the cash shall be paid in three tranches – RMB 390 million (approximately
$59.5 million) within 10 days after the agreement is executed, RMB 300 million (approximately $45.8 million) by March 31, 2021 and RMB
927,867,026 (approximately $141.7 million) within 10 days after the shares of Xi'an Taiying are registered to Buyer. As of the
date of this report, the Company has not obtained and there is no assurance that the Company will be able to obtain necessary approval
to proceed with the transaction. In addition, the Company is currently renegotiating the payment terms with the sellers for paying less
shares but does not know when the renegotiation will be completed.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited financial information as of and for the three months ended March 31, 2021 and 2020 has been prepared in accordance
with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Quarterly Report
on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting
only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position
at such date and the operating results and cash flows for such periods. Operating results for the three months ended March 31, 2021 are
not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. The interim
consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, previously filed with the SEC on April 15, 2021.
Basis
of Consolidation
The
CFS include the accounts of CREG and its subsidiaries, Shanghai Yinghua Financial Leasing Co., Ltd. ("Yinghua") and Sifang
Holdings; Sifang Holdings' wholly owned subsidiaries, Huahong New Energy Technology Co., Ltd. ("Huahong") and Shanghai
TCH Energy Tech Co., Ltd. ("Shanghai TCH"); Shanghai TCH's wholly-owned subsidiary, Xi'an TCH Energy Tech Co.,
Ltd. ("Xi'an TCH"); and Xi'an TCH's subsidiaries, 1) Erdos TCH Energy Saving Development Co., Ltd ("Erdos
TCH"), 100% owned by Xi'an TCH, 2) Zhonghong, 90% owned by Xi'an TCH and 10% owned by Shanghai TCH, and 3) Zhongxun,
100% owned by Xi'an TCH. Substantially all the Company's revenues are derived from the operations of Shanghai TCH and its
subsidiaries, which represent substantially all the Company's consolidated assets and liabilities as of March 31, 2021. However,
there was no revenue for the Company for the three months ended March 31, 2021. All significant inter-company accounts and transactions
were eliminated in consolidation.
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Uses
and Sources of Liquidity
For the three months ended March 31, 2021, the
Company had a net loss of $0.28 million. For the three months ended March 31, 2020, the Company had net loss of $0.60 million. The Company
had an accumulated deficit of $43.31 million as of March 31, 2021. The Company disposed all of its systems and currently holds only five
power generating systems through Erdos TCH, the five power generating systems are currently ceased production for seeking the solution
of meeting the energy saving target. The Company is in the process of transforming and expanding into an energy storage integrated solution
provider. The Company plans to pursue disciplined and targeted expansion strategies for market areas the Company currently does not serve.
The Company actively seeks and explores opportunities to apply energy storage technologies to new industries or segments with high growth
potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations, remote islands
without electricity, and smart energy cities with multi-energy supplies. The Company had cash of $144.07 million as of March
31, 2021. The Company's cash flow forecast indicate it will have sufficient cash to fund its operations for the next 12 months
from the date of issuance of these financial statements.
The historical operating results indicate the
Company has recurring losses from operations which rise the question related to the Company's ability to continue as a going concern.
However, the Company had $144.07 million cash on hand at March 31, 2021 as a result of collections of the full payments from all the
projects that had been disposed earlier.
The
ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business
plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering, or debt financing
including bank loans. The consolidated financial statements do not include any adjustments that might result from the outcome of these
uncertainties.
Use
of Estimates
In
preparing these CFS in accordance with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets
and liabilities in the balance sheets as well as revenues and expenses during the period reported. Actual results may differ from these
estimates. On an on-going basis, management evaluates their estimates, including those related to allowances for bad debt and inventory
obsolescence, impairment loss on fixed assets and construction in progress, income taxes, and contingencies and litigation. Management
bases their estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other resources.
Revenue
Recognition
A)
Sales-type
Leasing and Related Revenue Recognition
On
January 1, 2019, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial
application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC Topic
842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under
Topic 840. (See Operating lease below as relates to the Company as a lessee). The Company's sales type lease contracts for revenue
recognition fall under ASC 842. During the three months ended March 31, 2021 and 2020, the Company did not sell any new power generating
projects.
The
Company constructs and leases waste energy recycling power generating projects to its customers. The Company typically transfers legal
ownership of the waste energy recycling power generating projects to its customers at the end of the lease. Prior to January 1, 2019,
the investment in these projects was recorded as investment in sales-type leases in accordance with ASC Topic 840
, "Lease
s
,"
and
its various amendments and interpretations.
The
Company finances construction of waste energy recycling power generating projects. The sales and cost of sales are recognized at the
inception of the lease, which is when the control is transferred to the lessee. The Company accounts for the transfer of control as a
sales type lease in accordance with ASC 842-10-25-2. The underlying asset is derecognized, and revenue is recorded when collection of
payments is probable. This is in accordance with the revenue recognition principle in ASC 606 - Revenue from contracts with customers.
The investment in sales-type leases consists of the sum of the minimum lease payments receivable less unearned interest income and estimated
executory cost. Minimum lease payments are part of the lease agreement between the Company (as the lessor) and the customer (as the lessee).
The discount rate implicit in the lease is used to calculate the present value of minimum lease payments. The minimum lease payments
consist of the gross lease payments net of executory costs and contingent rentals, if any. Unearned interest is amortized to income over
the lease term to produce a constant periodic rate of return on net investment in the lease. While revenue is recognized at the inception
of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income and reduction
of receivables. Revenue is recognized net of value-added tax.
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B)
Contingent
Rental Income
The Company records income from actual electricity
generated of each project in the period the income is earned, which is when the electricity is generated. Contingent rent is not part
of minimum lease payments.
Operating
Leases
The
Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on
the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the
rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate
based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use
("ROU assets") assets represent the Company's right to control the use of an identified asset for the lease term and
lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets are generally recognized
based on the amount of the initial measurement of the lease liability. The lease has remaining lease term of approximately 2.75 years.
Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted
under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated
with the Company's office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize
the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
ROU
assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject
to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.
ROU
assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent
from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used,
which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets
and liabilities. At March 31, 2021, the ROU was $173,502.The Company recognized no impairment of ROU assets as of March 31, 2021.
Operating
leases are included in operating lease right-of-use assets and operating lease liabilities (current and non-current), on the consolidated
balance sheets.
Cash
Cash
include cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original
maturity of three months or less as of the purchase date.
Accounts
Receivable
The
Company's policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition
of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends
and changes in customer payment patterns to evaluate the adequacy of these reserves.
As of March 31, 2021 and December 31, 2020, the
Company had gross accounts receivable of $340,553 and $342,974 of Erdos TCH for electricity sold, respectively. As of March 31, 2021
and December 31, 2020, the Company had bad debt allowance of $34,055 and $34,297 for Erdos TCH due to the customer not making the payments
as scheduled, respectively.
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Concentration
of Credit Risk
Cash includes cash on hand and demand deposits
in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are covered by insurance
up to RMB 500,000 (US$76,000) per bank. Any balance over RMB 500,000 (US$76,000) per bank in PRC will not be covered. At March 31, 2021,
cash held in the PRC bank of $143,935,525 was not covered by such insurance. The Company has not experienced any losses in such accounts.
Certain
other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The
Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers'
financial condition and customer payment practices to minimize collection risk on accounts receivable.
The
operations of the Company are in the PRC. Accordingly, the Company's business, financial condition and results of operations may
be influenced by the political, economic and legal environments in the PRC.
Property
and Equipment
Property
and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred;
additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method over the estimated lives as follows:
Vehicles
2
    - 5 years
Office and Other Equipment
2
    - 5 years
Software
2
    - 3 years
Impairment
of Long-lived Assets
In
accordance with FASB ASC Topic 360,
"Property, Plant, and Equipment
," the Company reviews its long-lived assets, including
property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may
not be fully recoverable. If the total expected undiscounted future net cash flows are less than the carrying amount of the asset, a
loss is recognized for the difference between the fair value and carrying amount of the asset. The Company recorded $0 asset impairment
loss for the three months ended March 31, 2021 and 2020.
Cost
of Sales
Cost
of sales consists primarily of the direct material of the power generating system and expenses incurred directly for project construction
for sales-type leasing and sales tax and additions for contingent rental income.
Income
Taxes
Income
taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences
in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The
Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets
and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated
with tax positions, accounting for income taxes in interim periods, and income tax disclosures.
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Under
the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination
by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position
that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more
than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits
in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling,
general and administrative expenses in the statement of income. At March 31, 2021 and December 31, 2020, the Company did not take
any uncertain positions that would necessitate recording a tax related liability.
Statement
of Cash Flows
In
accordance with FASB ASC Topic 230,
"Statement of Cash Flows,"
cash flows from the Company's operations
are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash
flows may not necessarily agree with changes in the corresponding balances on the balance sheet.
Fair
Value of Financial Instruments
For
certain of the Company's financial instruments, including cash and equivalents, restricted cash, accounts receivable, other receivables,
accounts payable, accrued liabilities and short-term debts, the carrying amounts approximate their fair values due to their short maturities.
Receivables on sales-type leases are based on interest rates implicit in the lease.
FASB
ASC Topic 820,
"Fair Value Measurements and Disclosures,"
requires disclosure of the FV of financial instruments
held by the Company. FASB ASC Topic 825,
"Financial Instruments,"
defines FV, and establishes a three-level
valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The carrying amounts reported
in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable
estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and
their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
●
Level
    1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●
Level
    2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
    are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●
Level
    3 inputs to the valuation methodology are unobservable and significant to FV measurement.
Effective
on January 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement: Disclosure Framework-Changes to the Disclosure Requirements
for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in
the FV hierarchy.
The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC 480,
"Distinguishing
Liabilities from Equity,"
and ASC 815,
"Derivatives and Hedging."
As
of March 31, 2021 and December 31, 2020, the Company did not have any long-term debt obligations; and the Company did not identify any
assets or liabilities that are required to be presented on the balance sheet at FV.
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Stock-Based
Compensation
The
Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, "Compensation –
Stock Compensation", which requires that share-based payment transactions with employees be measured based on the grant-date fair
value of the equity instrument issued and recognized as compensation expense over the requisite service period.
The
Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50,
"Equity-Based Payments to Non-employees". Share-based compensation associated with the issuance of equity instruments to
non-employees is measured at the fair value of the equity instrument issued or committed to be issued, as this is more reliable than
the fair value of the services received. The fair value is measured at the date that the commitment for performance by the counterparty
has been reached or the counterparty's performance is complete.
Effective
on January 1, 2020, the Company adopted ASU 2018-07, "Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting," which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods
and services from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance
on inputs to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based payment
transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based
payment awards. The adoption of ASU 2018-07 did not have an impact on the Company's financial statements.
Basic
and Diluted Earnings per Share
The
Company presents net income (loss) per share ("EPS") in accordance with FASB ASC Topic 260,
"Earning Per Share."
Accordingly,
basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of
shares outstanding, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income by the weighted-average
number of common shares outstanding as well as common share equivalents outstanding for the period determined using the treasury-stock
method for stock options and warrants and the if-converted method for convertible notes. The Company made an accounting policy election
to use the if-converted method for convertible securities that are eligible to receive common stock dividends, if declared. Diluted EPS
reflect the potential dilution that could occur based on the exercise of stock options or warrants or conversion of convertible securities
using the if-converted method.
For
the three months ended March 31, 2021 and 2020, the basic and diluted loss per share were the same due to the anti-dilutive features
of the warrants and options. For the three months ended March 31, 2021 and 2020, 31,311 shares purchasable under warrants and options
were excluded from the EPS calculation as these were not dilutive due to the exercise price was more than the stock market price.
Foreign
Currency Translation and Comprehensive Income (Loss)
The
Company's functional currency is the Renminbi ("RMB"). For financial reporting purposes, RMB were translated into United
States Dollars ("USD" or "$") as the reporting currency. Assets and liabilities are translated at the exchange
rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the
reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component
of stockholders' equity as "Accumulated other comprehensive income." Gains and losses resulting from foreign currency
transactions are included in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after
the balance sheet date.
The
Company follows FASB ASC Topic 220,
"Comprehensive Income."
Comprehensive income is comprised of net income
and all changes to the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders.
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48
Segment
Reporting
FASB
ASC Topic 280,
"Segment Reporting,"
requires use of the "management approach" model for segment
reporting. The management approach model is based on the way a company's management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. FASB ASC Topic 280 has no effect on the Company's CFS
as substantially all of the Company's operations are conducted in one industry segment. All of the Company's assets are located
in the PRC.
New
Accounting Pronouncements
In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial
assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS.
In
January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill
impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting
unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on
a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting
periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting
this standard on its consolidated financial statements.
In
March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"). ASU 2020-04 contains
practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance
in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate
the impact of the guidance and may apply the elections as applicable as changes in the market occur.
In
August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives
and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's
Own Equity ("ASU 2020-06"), which simplifies the accounting for certain financial instruments with characteristics of
liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing
the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial
conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises
the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both
indexed to the issuer's own stock and classified in stockholders' equity, by removing certain criteria required for equity
classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per
share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes
of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies,
ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective
for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance
as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently
evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.
Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public
Accountants, and the SEC did not or are not believed by management to have a material impact on the Company's present or future
CFS.
F-
49
3.
OTHER RECEIVABLES
As
of March 31, 2021, other receivables mainly consisted of (i) advances to third parties of $7,609, bearing no interest, payable upon demand,
ii) advance to employees of $7,584, iii) advance to suppliers of $2,737 and (iv) others of $12,583 including social insurance receivable
of $5,083.
As
of December 31, 2020, other receivables mainly consisted of (i) advances to third parties of $7,663, bearing no interest, payable upon
demand, ii) advance to employees of $11,011, iii) advance to suppliers of $4,791 and (iv) others of $12,222 including social insurance
receivable of $4,579.
4.
ASSET SUBJECT TO BUYBACK
As
of March 31, 2021 and December 31, 2020, the Company had asset subject to buyback of $28.71 million and $28.92 million, respectively,
which was for the Chengli project.
The Chengli project finished construction, and
was transferred to the Company's fixed assets at a cost of $35.24 million (without impairment loss) and ready to be put into operation
as of December 31, 2018. On January 22, 2019, Xi'an Zhonghong completed the transfer of Chengli CDQ WHPG project as the partial
repayment for the loan and accrued interest of RMB 188,639,400 ($27.54 million) to HYREF (see Note 8). However, because the loan was
not deemed repaid due to the buyback provision (See Note 8 for detail), the Company kept the loan and the Chengli project recognized
in its CFS as of March 31, 2021 and December 31, 2020.
5.
TAXES PAYABLE
Taxes
payable consisted of the following as of March 31, 2021 and 2020:
2021
2020
Income tax – current
$
2,744,539
$
2,746,757
Value-added tax
-
322,652
Other taxes
111
76,203
Total – current
2,744,649
3,145,612
Income tax –
    noncurrent
$
5,174,625
$
5,174,625
Income
tax payable included $7.61 million ($2.44 million included in current above and $5.17 million noncurrent) from recording the estimated
one-time transition tax on post-1986 foreign unremitted earnings under the Tax Cut and Jobs Act signed on December 22, 2017. An election
is available for the U.S. shareholders of a foreign company to pay the tax liability in installments over a period of eight years with
8% of net tax liability in the first five years, 15% in the sixth year, 20% in the seventh year, and 25% in the eighth year. The Company
made such an election.
6.
ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued
liabilities and other payables consisted of the following as of March 31, 2021 and December 31, 2020:
2021
2020
Education and union fund
    and social insurance payable
$
371,102
$
373,740
Consulting and legal expenses
31,090
31,090
Accrued payroll and welfare
253,597
255,278
Other
41,728
66,588
Total
$
697,517
$
726,696
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7.
DEFERRED TAX, NET
Deferred
tax assets resulted from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with
US GAAP, interest income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not
meet revenue recognition in accordance with US GAAP, accrued employee social insurance that can be deducted for tax purposes in the future,
and the difference between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part
of cost of systems in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net
investment in sales-type leases.
As
of March 31, 2021 and December 31, 2020, deferred tax assets consisted of the following:
2021
2020
Accrued expenses
$
69,525
$
70,019
Write-off Erdos TCH net investment
    in sales-type leases
5,954,586
6,155,300
US NOL
310,424
254,035
PRC NOL
10,934,511
10,849,690
Total deferred tax assets
17,269,047
17,329,044
Less: valuation
    allowance for deferred tax assets
(17,269,047
)
(17,329,044
)
Deferred tax
    assets, net
$
-
$
-
8.
LOAN PAYABLE
Entrusted
Loan Payable (HYREF Loan)
The
HYREF Fund was established in July 2013 with a total fund size of RMB 460 million ($77 million) invested in Xi'an Zhonghong for
Zhonghong's three new CDQ WHPG projects. The HYREF Fund invested RMB 3 million ($0.5 million) as an equity investment and RMB 457
million ($74.5 million) as a debt investment in Xi'an Zhonghong; in return for such investments, the HYREF Fund was to receive
interest from Zhonghong for the HYREF Fund's debt investment. The loan was collateralized by the accounts receivable and the fixed
assets of Shenqiu Phase I and II power generation systems; the accounts receivable and fixed assets of Zhonghong's three CDQ WHPG
systems; and a 27 million RMB ($4.39 million) capital contribution made by Xi'an TCH in Zhonghong. Repayment of the loan (principal
and interest) was also jointly and severally guaranteed by Xi'an TCH and the Chairman and CEO of the Company. In the fourth quarter
of 2015, three power stations of Erdos TCH were pledged to Industrial Bank as an additional guarantee for the loan to Zhonghong's
three CDQ WHPG systems. In 2016, two additional power stations of Erdos TCH and Pucheng Phase I and II systems were pledged to Industrial
Bank as an additional guarantee along with Xi'an TCH's equity in Zhonghong.
The term of this loan was for 60 months from
July 31, 2013 to July 30, 2018, with an interest rate of 12.5%. On August 6, 2016, Zhonghong was required to repay principal of RMB 280
million ($42.22 million), of which the Company paid RMB 50 million ($7.54 million); while on August 6, 2017, Zhonghong was initially
supposed to repay principal of RMB 100 million ($16.27 million) and on July 30, 2018, Zhonghong was initially supposed to repay the remainder
of RMB 77 million ($12.52 million). During the term, Zhonghong was to maintain a minimal funding level and capital level in its designated
account with the Supervising Bank to make sure it has sufficient funds to make principal payments when they are due. Notwithstanding
the requirements, the HYREF Fund and Supervising Bank verbally notified Zhonghong from the beginning that it was unlikely that they would
enforce these requirements for the purpose of the efficient utilization of working capital. The Company had paid RMB 50 million ($7.54
million) of the RMB 280 million ($42.22 million), and on August 5, 2016, the Company entered into a supplemental agreement with the lender
to extend the due date of the remaining RMB 230 million ($34.68 million) of the original RMB 280 million ($45.54 million) to August 6,
2017. During the year ended December 31, 2017, the Company negotiated with the lender again to further extend the remaining loan balance
of RMB 230 million ($34.68 million), RMB 100 million ($16.27 million), and RMB 77 million ($12.52 million) (which included investment
from Xi'an TCH of RMB 75 million and was netted off with the entrusted loan payable of the HYREF Fund in the balance sheet). The
lender had tentatively agreed to extend the remaining loan balance until August 2019 with an adjusted annual interest rate of 9%, subject
to the final approval from its headquarters. The headquarters did not approve the extension proposal with an adjusted annual interest
rate of 9%; however, on December 29, 2018, the Company worked out with the lender an alternative repayment proposal as described below.
As of December 31, 2018, the entrusted loan payable had an outstanding balance of $59.29 million, of which, $10.92 million was from the
investment of Xi'an TCH; accordingly, the Company netted the loan payable of $10.92 million with the long-term investment to the
HYREF Fund made by Xi'an TCH. As of March 31, 2021, the interest payable for this loan was $10.07 million and the outstanding balance
for this loan was $22.05 million including a non-current portion of $0.30 million. As of December 31, 2020, the interest payable for
this loan was $10.14 million and the outstanding balance for this loan was $22.20 million including a non-current portion of $0.30 million.
F-
51
Repayment
of HYREF loan
1. Transfer
of Chengli project as partial repayment
On
December 29, 2018, Xi'an Zhonghong, Xi'an TCH, HYREF, Guohua Ku, and Chonggong Bai entered into a CDQ WHPG Station Fixed
Assets Transfer Agreement, pursuant to which Xi'an Zhonghong transferred Chengli CDQ WHPG station as the repayment for the loan
of RMB 188,639,400 ($27.54 million) to HYREF, the transfer of which was completed on January 22, 2019.
Xi'an TCH is a secondary limited partner
of HYREF. The fair value of the CDQ WHPG station applied in the transfer was determined by the parties based upon the appraisal report
issued by Zhonglian Assets Appraisal Group (Shaanxi) Co., Ltd. as of August 15, 2018. However, per the discussion below, Xi'an
Zhonghong, Xi'an TCH, Guohua Ku and Chonggong Bai (the "Buyers") entered into a Buy Back Agreement, also agreed to
buy back the Station when conditions under the Buy Back Agreement are met. Due to the Buy Back agreement, the loan was not deemed repaid,
and therefore the Company recognized Chengli project as assets subject to buyback and kept the loan payable remained recognized under
ASC 405-20-40-1 as of March 31, 2021 and December 31, 2020.
2. Buy
Back Agreement
On
December 29, 2018, Xi'an TCH, Xi'an Zhonghong, HYREF, Guohua Ku, Chonggong Bai and Xi'an Hanneng Enterprises Management
Consulting Co. Ltd. ("Xi'an Hanneng") entered into a Buy Back Agreement.
Pursuant to the Buy Back Agreement, the Buyers
jointly and severally agreed to buy back all outstanding capital equity of Xi'an Hanneng which was transferred to HYREF by Chonggong
Bai (see 3 below), and a CDQ WHPG station in Boxing County which was transferred to HYREF by Xi'an Zhonghong. The buy-back price
for the Xi'an Hanneng's equity was based on the higher of (i) the market price of the equity shares at the time of buy-back;
or (ii) the original transfer price of the equity shares plus bank interest. The buy-back price for the Station was based on the higher
of (i) the fair value of the Station on the date transferred; or (ii) the loan balance at the date of the transfer plus interest accrued
through that date. HYREF could request that the Buyers buy back the equity shares of Xi'an Hanneng and/or the CDQ WHPG station
if one of the following conditions is met: (i) HYREF holds the equity shares of Xi'an Hanneng until December 31, 2021; (ii) Xi'an
Huaxin New Energy Co., Ltd., is delisted from The National Equities Exchange And Quotations Co., Ltd., a Chinese over-the-counter trading
system (the "NEEQ"); (iii) Xi'an Huaxin New Energy, or any of the Buyers or its affiliates has a credit problem, including
not being able to issue an auditor report or standard auditor report or any control person or executive of the Buyers is involved in
crimes and is under prosecution or has other material credit problems, to HYREF's reasonable belief; (iv) if Xi'an Zhonghong
fails to timely make repayment on principal or interest of the loan agreement, its supplemental agreement or extension agreement; (v)
the Buyers or any party to the Debt Repayment Agreement materially breaches the Debt Repayment Agreement or its related transaction documents,
including but not limited to the Share Transfer Agreement, the Pledged Assets Transfer Agreement, the Entrusted Loan Agreement and their
guarantee agreements and supplemental agreements. Due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report,
on December 19, 2019, Xi'an TCH, Xi'an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all
outstanding capital equity of Xi'an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was
RMB 261,727,506 ($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi'an TCH
on December 20, 2019.
The Buy Back agreement related to the CDQ WHPG
station is still outstanding as of March 31, 2021. The Company might be contingently liable for the difference between the fair value
of the transferred asset and the loan and related interest if the fair value of the transferred asset at the time of the exercise of
the buyback option is higher than the loan and related accrued interest. Based on an appraisal, as of March 31, 2021, the asset was valued
at $27.77 million while the loan and related interest was $32.12 million.
On April 9, 2021, the Buyers and HYREF entered
a Termination of Fulfillment Agreement (termination agreement). Under the termination agreement, the original buyback agreement was terminated
upon signing of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional payment from
the buyers other than keeping the CDQ WHPG station (also see Note 17).
F-
52
3.Transfer of Xuzhou Huayu
Project and Shenqiu Phase I & II project to Mr. Bai for partial repayment of HYREF loan
On
January 4, 2019, Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong Bai entered into a Projects Transfer Agreement, pursuant to
which Xi'an Zhonghong transferred a CDQ WHPG station (under construction) located in Xuzhou City for Xuzhou Huayu Coking Co., Ltd.
("Xuzhou Huayu Project") to Mr. Bai for RMB 120,000,000 ($17.52 million) and Xi'an TCH transferred two Biomass Power
Generation Projects in Shenqiu ("Shenqiu Phase I and II Projects") to Mr. Bai for RMB 127,066,000 ($18.55 million). Mr. Bai
agreed to transfer all the equity shares of his wholly owned company, Xi'an Hanneng, to HYREF as repayment for the RMB 247,066,000
($36.07 million) loan made by Xi'an Zhonghong to HYREF as consideration for the transfer of the Xuzhou Huayu Project and Shenqiu
Phase I and II Projects.
On
February 15, 2019, Xi'an Zhonghong completed the transfer of the Xuzhou Huayu Project and Xi'an TCH completed the transfer
of Shenqiu Phase I and II Projects to Mr. Bai, and on January 10, 2019, Mr. Bai transferred all the equity shares of his wholly owned
company, Xi'an Hanneng, to HYREF as repayment of Xi'an Zhonghong's loan to HYREF as consideration for the transfer
of the Xuzhou Huayu Project and Shenqiu Phase I and II Projects.
Xi'an
Hanneng is a holding company and was supposed to own 47,150,000 shares of Xi'an Huaxin New Energy Co., Ltd. ("Huaxin"),
so that HYREF will indirectly receive and own such shares of Xi'an Huaxin as the repayment for the loan of Zhonghong. Xi'an
Hanneng already owned 29,948,000 shares of Huaxin; however, Xi'an Hanneng was not able to obtain the remaining 17,202,000 shares
due to halted trading of Huaxin stock by NEEQ for not filing its 2018 annual report.
On
December 19, 2019, Xi'an TCH, Xi'an Zhonghong, Guohua Ku and Chonggong Bai jointly and severally agreed to buy back all outstanding
capital equity of Xi'an Hanneng which was transferred to HYREF by Chonggong Bai earlier. The total buy back price was RMB 261,727,506
($37.52 million) including accrued interest of RMB 14,661,506 ($2.10 million), and was paid in full by Xi'an TCH on December 20,
2019. On December 20, 2019, Mr. Bai, Xi'an TCH and Xi'an Zhonghong agreed to have Mr. Bai repay the Company in cash for the
transfer price of Xuzhou Huayu and Shenqiu in five installment payments. The 1
st
payment of RMB 50 million ($7.17 million)
is due on January 5, 2020, the 2
nd
payment of RMB 50 million ($7.17 million) was due on February 5, 2020, the 3
rd
payment
of RMB 50 million ($7.17 million) was due on April 5, 2020, the 4
th
payment of RMB 50 million ($7.17 million) is due
on June 30, 2020, and the final payment of RMB 47,066,000 ($6.75 million) is due on September 30, 2020. As of March 31, 2020, the Company
has received the full payment of RMB 247 million ($36.28 million) from Mr. Bai.
4.
The lender agreed to extend the repayment of RMB 77.00 million ($11.04 million) to July 8, 2023; of which, RMB 75.00 million ($10.81
million) was Xi'an TCH's investment into the HYREF fund as a secondary limited partner, and the Company netted off the investment
of RMB 75 million ($10.81 million) by Xi'an TCH with the entrusted loan payable of the HYREF Fund.
F-
53
9.
RELATED PARTY TRANSACTIONS
As
of March 31, 2021 and December 31, 2020, the Company had $28,466 and $28,440, respectively, in advances from the Company's management,
which bear no interest, are unsecured, and are payable upon demand.
On February 23, 2021, the Company entered into
certain securities purchase agreements with several non-U.S. investors (the "Purchasers"), pursuant to which the Company
agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at $11.522 per share. One
of the purchaser is the Company's CEO (also is the Company's Chairman), he purchased 1,000,000 common shares of the Company.
In April 2021, the Company's CEO amended the number of shares that he would purchase from 1,000,000 shares to 940,000 shares. The
Company returned $691,320 extra proceeds that were received earlier to the Company's CEO in April 2021 (see Note 11).
10.
NOTE PAYABLE, NET
Promissory
Notes in December 2020
On
December 4, 2020, the Company entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company sold
and issued to the Purchaser a Promissory Note of $3,150,000. The Purchaser purchased the Note with an original issue discount of $150,000,
which was recognized as a debt discount and will be amortized using the interest method over the life of the note. The Note bears interest
at 8% per annum and has a term of 24 months. All outstanding principal and accrued interest on the Note will become due and payable on
December 3, 2022. The Company's obligations under the Note may be prepaid at any time, provided that in such circumstance the Company
would pay 125% of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date
of the Note, Purchaser shall have the right to redeem any amount of this Note up to $500,000 per calendar month by providing written
notice to the Company. During the three months ended March 31, 2021, the Company amortized OID of $18,750 and recorded $63,000 interest
expense on this Note.
F-
54
11.
SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION
Shares to be Issued for Equity Financing
in 2021
On February 23, 2021, the Company entered into
certain securities purchase agreements with several non-U.S. investors (the "Purchasers"), pursuant to which the Company
agreed to sell to the Purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at $11.522 per share, which
is the five-day average closing price immediately prior to signing the Purchase Agreements. One of the purchaser is the Company's
CEO (also is the Company's Chairman), he purchased 1,000,000 common shares of the Company. On March 11, 2021, the Company received
approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase agreements, there anywhere
no fees paid in connection with this financing. In April 2021, the Company's CEO amended the number of shares that he would purchase
from 1,000,000 shares to 940,000 shares; accordingly, total number of shares sold in this offering became 3,260,000 shares. The Company
returned $691,320 extra proceeds that were received earlier to the Company's CEO in April 2021.
Shares Issued for Equity Financing in 2020
On August 24, 2020 and September 28, 2020, the
Company entered into Securities Purchase Agreements with the purchaser and offered and sold to such purchaser 265,250 shares of Common
Stock at negotiated purchase prices (132,000 shares at $2.15 per share and 133,250 shares at $2.34 per share) without reference
to the market price and received the net proceeds was $497,187 after deducting the placement agent commission and certain expenses. These
265,250 shares were offered and sold in a registered public offering pursuant to the prospectus supplement dated August 24, 2020, and
the original prospectus contained in an effective shelf registration statement on Form S-3 (the "Registration Statement"),
which was originally filed with the Securities and Exchange Commission on December 1, 2017, and was declared effective on December 8,
2017 (File No. 333-221868).
Warrants
Following
is a summary of the activities of warrants that were issued from equity financing (post-reverse stock split) for the three months ended
March 31, 2021
Number of
Warrants
Average
Exercise
Price
(post-reverse
stock split
price)
Weighted
Average
Remaining
Contractual
Term in
Years
Outstanding
    at January 1, 2021
30,411
$
14.0
3.21
Exercisable
    at January 1, 2021
30,411
$
14.0
3.21
Granted
-
-
-
Exchanged
-
-
-
Forfeited
-
-
-
Expired
-
-
-
Outstanding
    at March 31, 2021
30,411
$
14.0
2.96
Exercisable
    at March 31, 2021
30,411
$
14.0
2.96
Shares
Issued for Stock Compensation
On
March 16, 2020, the Company's Board of Director agreed to issue 3,333 shares of the Company's Common Stock (post-reverse
stock split) to the Company's law firm. The shares are earned in full and non-refundable as of March 9, 2020. The FV of these shares
are $10,999 on March 9, 2020.
F-
55
12.
INCOME TAX
The
Company's Chinese subsidiaries are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally
subject to tax at 25% on income reported in the statutory financial statements after appropriate tax adjustments. Under Chinese tax law,
the tax treatment of finance and sales-type leases is similar to US GAAP. However, the local tax bureau continues to treat the Company's
sales-type leases as operating leases. Accordingly, the Company recorded deferred income taxes.
The
Company's subsidiaries generate all of their income from their PRC operations. All of the Company's Chinese subsidiaries'
effective income tax rate for 2021 and 2020 was 25%. Yinghua, Shanghai TCH, Xi'an TCH, Huahong, Zhonghong and Erdos TCH file separate
income tax returns.
There
is no income tax for companies domiciled in the Cayman Islands. Accordingly, the Company's CFS do not present any income tax provisions
related to Cayman Islands tax jurisdiction, where Sifang Holding is domiciled.
The
US parent company, CREG is taxed in the US and, as of March 31, 2021, had net operating loss ("NOL") carry forwards for income
taxes of $1.48 million; for federal income tax purposes, the NOL arising in tax years beginning after 2017 may only reduce 80% of a taxpayer's
taxable income, and may be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act ("the CARES
Act") issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period
and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The management believes the realization of benefits
from these losses may be uncertain due to the US parent company's continuing operating losses. Accordingly, a 100% deferred tax
asset valuation allowance was provided.
As
of March 31, 2021, the Company's PRC subsidiaries had $43.74 million NOL that can be carried forward to offset future taxable income
for five years from the year the loss is incurred. The NOL was mostly from Xi'an TCH, Erdos TCH and Zhonghong. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
After consideration of all the information available, management believes that significant uncertainty exists with respect to future
realization of the deferred tax assets due to the recurring losses from operations of these entities, accordingly, the Company recorded
a 100% deferred tax valuation allowance for PRC NOL.
The
following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three months ended March 31, 2021
and 2020, respectively:
2021
2020
U.S. statutory rates
(21.0
)%
(21.0
)%
Tax rate difference – current
    provision
0.2
%
(2.3
)%
Permanent differences
1.4
%
4.0
%
Change in valuation allowance
21.3
%
19.30
%
Tax expense per financial statements
1.9
%
-
%
The
provision for income tax expense for the three months ended March 31, 2021 and 2020 consisted of the following:
2021
2020
Income tax expense –
    current
$
5,125
$
-
Income tax benefit – deferred
-
-
Total income tax expense
$
5,125
$
-
F-
56
13.
STOCK-BASED COMPENSATION PLAN
Options
to Employees and Directors
On
June 19, 2015, the stockholders of the Company approved the China Recycling Energy Corporation Omnibus Equity Plan (the "Plan")
at its annual meeting. The total shares of Common Stock authorized for issuance during the term of the Plan is 124,626 (post-reverse
stock split). The Plan was effective immediately upon its adoption by the Board of Directors on April 24, 2015, subject to stockholder
approval, and will terminate on the earliest to occur of (i) the 10th anniversary of the Plan's effective date, or (ii) the date
on which all shares available for issuance under the Plan shall have been issued as fully-vested shares. The stockholders approved the
Plan at their annual meeting on June 19, 2015.
The
following table summarizes option activity with respect to employees and independent directors for the three months ended March 31, 2021,
and the number of options reflects the Reverse Stock Split effective April 13, 2020:
Number of
Shares
Average
Exercise Price
per Share (post-reverse stock split price)
Weighted
Average
Remaining
Contractual
Term in
Years
Outstanding
    at January 1, 2021
500
$
16.1
6.32
Exercisable
    at January 1, 2021
500
$
54.3
6.32
Granted
-
-
-
Exercised
-
-
-
Forfeited
-
-
-
Outstanding
    at March 31, 2021
500
$
16.1
6.07
Exercisable
    at March 31, 2021
500
$
54.3
6.07
14.
STATUTORY RESERVES
Pursuant
to the corporate law of the PRC effective January 1, 2006, the Company is only required to maintain one statutory reserve by appropriating
from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.
Surplus
Reserve Fund
The
Company's Chinese subsidiaries are required to transfer 10% of their net income, as determined under PRC accounting rules and regulations,
to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company's registered capital.
The
surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years' losses, if any,
and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion
to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance
after such issue is not less than 25% of the registered capital.
F-
57
During
the three months ended March 31, 2021, the Company transferred $1,538, which is 10% of Xi'an TCH's net income to the statutory
reverse. The maximum statutory reserve amount has not been reached for any subsidiary. The table below discloses the statutory reserve
amount in the currency type registered for each Chinese subsidiary as of March 31, 2021 and December 31, 2020:
Name of Chinese Subsidiaries
Registered
Capital
Maximum
Statutory
Reserve
Amount
Statutory
reserve at
March 31,
2021
Statutory
reserve
    at
December 31,
2020
Shanghai TCH
$
29,800,000
$
14,900,000
¥6,564,303 ($1,003,859)
¥6,564,303 ($1,003,859)
Xi'an TCH
¥
202,000,000
¥
101,000,000
¥73,710,678 ($11,237,852)
¥73,700,706 ($11,236,314)
Erdos TCH
¥
120,000,000
¥
60,000,000
¥19,035,814 ($2,914,869)
¥19,035,814 ($2,914,869)
Xi'an Zhonghong
¥
30,000,000
¥
15,000,000
Did not accrue yet due to accumulated deficit
Did not accrue yet due to accumulated deficit
Shaanxi Huahong
$
2,500,300
$
1,250,150
Did not accrue yet due to accumulated deficit
Did not accrue yet due to accumulated deficit
Zhongxun
¥
35,000,000
¥
17,500,000
Did not accrue yet due to accumulated deficit
Did not accrue yet due to accumulated deficit
Common
Welfare Fund
The
common welfare fund is a voluntary fund to which the Company can transfer 5% to 10% of its net income. This fund can only be utilized
on capital items for the collective benefit of the Company's employees, such as construction of dormitories, cafeteria facilities,
and other staff welfare facilities. This fund is non-distributable other than upon liquidation. The Company does not participate in this
fund.
15.
CONTINGENCIES
China
maintains a "closed" capital account, meaning companies, banks, and individuals cannot move money in or out of the country
except in accordance with strict rules. The People's Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) regulate
the flow of foreign exchange in and out of the country. For inward or outward foreign currency transactions, the Company needs to make
a timely declaration to the bank with sufficient supporting documents to declare the nature of the business transaction. The Company's
sales, purchases and expense transactions are denominated in RMB and all of the Company's assets and liabilities are also denominated
in RMB. The RMB is not freely convertible into foreign currencies under the current law. Remittances in currencies other than RMB may
require certain supporting documentation in order to make the remittance.
The
Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies
in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments
and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among
other things.
F-
58
16.
COMMITMENTS
Lease
Commitment
On
November 20, 2017, Xi'an TCH entered into a lease for its office with a term from December 1, 2017 through November 30, 2020. The
monthly rent is RMB 36,536 ($5,600) with quarterly payment in advance. This lease was expired in November 2020. The Company entered a
new lease contract for the same location for a period from January 1, 2021 through December 31, 2023 with monthly rent of RMB 36,536
($5,600), to be paid every half year in advance.
For
the three months ended March 31, 2021 and 2020, the rental expense of the Company was $16,903 and $16,374, respectively.
The
components of lease costs, lease term and discount rate with respect of the office lease with an initial term of more than 12 months
are as follows:
Three Months Ended
March 31,
2021
Operating lease cost
    – amortization of ROU
$
14,989
Operating lease cost – interest
    expense on lease liability
$
1,914
Weighted Average Remaining Lease
    Term - Operating leases
2.75 years
Weighted Average Discount Rate -
    Operating leases
5
%
Three Months Ended
March 31,
2020
Operating lease cost
    – amortization of ROU
$
15,987
Operating lease cost – interest
    expense on lease liability
$
387
Weighted Average Remaining Lease
    Term - Operating leases
0.67
                                            years
Weighted Average Discount Rate -
    Operating leases
3
%
The
following is a schedule, by years, of maturities of the office lease liabilities as of March 31, 2021
Operating
Leases
For the years ended March
    31, 2022,
$
66,720
For the years ended March 31, 2023
66,720
For the years ended March 31, 2024
33,360
Total undiscounted cash flows
166,800
Less: imputed interest
(9,978
)
Present value of lease liabilities
$
156,822
F-
59
Employment
Agreement
On
May 8, 2020, the Company entered an employment agreement with Yongjiang Shi, the Company's CFO for a term of 24 months. The monthly
salary is RMB 16,000 ($2,300). The Company will grant the CFO no less than 5,000 shares of the Company's Common Stock annually.
Investment
Banking Engagement Agreement
On
October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm to engage them as the
exclusive lead underwriter for a registered securities offering of up to $20 million. The Company shall pay to the investment banker
an equity retainer fee of 15,000 shares (post-reverse stock split) of the restricted Common Stock of the Company (10,000 shares was issued
within 10 business days of signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). The agreement
expired in March 2021.
17.
SUBSEQUENT EVENTS
The
Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the
date the financial statements were issued and determined the Company has the following material subsequent events:
On
April 2, 2021, the Company entered into a Note Purchase Agreement with an institutional investor, pursuant to which the Company sold
and issued to the Purchaser a Promissory Note of $5,250,000. The Purchaser purchased the Note with an original issue discount of $250,000,
which was recognized as a debt discount and will be amortized using the interest method over the life of the note. The Note bears interest
at 8% per annum and has a term of 24 months. All outstanding principal and accrued interest on the Note will become due and payable on
April 1, 2023. The Company's obligations under the Note may be prepaid at any time, provided that in such circumstance the Company
would pay 125% of any amounts outstanding under the Note and being prepaid. Beginning on the date that is six months from the issue date
of the Note, Purchaser shall have the right to redeem any amount of this Note up to $825,000 per calendar month by providing written
notice to the Company.
On
April 9, 2021, Xi'an TCH, Xi'an Zhonghong, Guohua Ku, Chonggong Bai and HYREF entered a Termination of Fulfillment Agreement
(termination agreement). Under the termination agreement, the original buyback agreement entered on December 19, 2019 shall be terminated
upon the effective date of the termination agreement. HYREF will not execute the buy-back option and will not ask for any additional
payment from the buyers other than keeping the CDQ WHPG station. The Company will record a gain of approximately $3.1 million from transferring
the CDP WHPG station to HYREF as partial repayment of the entrusted loan resulting from the termination of the buy-back agreement.
In April 2021, the Company's CEO amended
the number of shares that he would purchase from 1,000,000 shares (under the securities purchase agreement entered on February 23, 2021)
to 940,000 shares. The Company returned $691,320 extra proceeds that were received earlier to the Company's CEO in April 2021 (see
Note 11).
On
May 2, 2021, the Company entered an agreement with an investment banker with the intension to raise approximately $10,000,000 from either
a public offering or a private placement.
F-
60
CHINA
RECYCLING ENERGY CORPORATION
Shares
of Common Stock
Warrants
to Purchase          Shares of Common Stock
PROSPECTUS
,
2021
Through
and including
,
2021 (the
25
th
day after the date of this offering), all dealers effecting transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or subscription.
PART
II — INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
Set forth below is an itemization
of the total expenses, excluding underwriter' discounts, that we expect to incur in connection with this offering. With the exception
of the SEC registration fee, the FINRA filing fee and the Nasdaq listing fee, all amounts are estimates.
Securities
    and Exchange Commission Registration Fee
$
Nasdaq
    Listing Fee
$
FINRA
$
Legal
    Fees and Expenses
$
Accounting
    Fees and Expenses
$
Printing
    and Engraving Expenses
$
Miscellaneous
    Expenses
$
Total
$
All
amounts are estimates other than the SEC's registration fee. We are paying all expenses of the offering listed above.
Item
14. Indemnification of Directors and Officers.
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.
II-
1
Item
15. Recent Sales of Unregistered Securities.
The
following list sets forth information regarding all unregistered securities sold or issued by us in the three years preceding the date
of this registration statement. In each of the transactions described below the recipients of securities represented their intention
to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate
legends were affixed to the securities issued in these transactions.
On
July 11, 2018, China Recycling Energy Corporation, a Nevada corporation (the "Company"), entered into a Securities Purchase
Agreement (the "Purchase Agreement") with Iliad Research and Trading, L.P., a Utah limited partnership (the "Purchaser"),
pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note (the "Note") in the amount of
$1,070,000. The Purchaser purchased the Note with an original issue discount of $50,000, and the Company agreed to pay to the Purchaser
$20,000 for fees and costs incurred by Purchaser in connection with the consummation of the Purchase Agreement. The Note was sold to
the Purchaser pursuant to an exemption from registration under Regulation D, promulgated under the Securities Act of 1933, as amended.
The
Note bears interest at the rate of 8% per annum. All outstanding principal and accrued interest on the Note will become due and payable
on July 11, 2020, subject to a potential one-year extension period during which interest would not accrue. The Company's obligations
under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding under
the Note. Amounts outstanding under the Note may be converted at any time, at the Lender's option, into shares of the Company's
common stock at a conversion price of $3.00 per share, subject to certain adjustments. During the term of the Note, the Company shall
not, without the prior written consent of the Purchaser, enter into or effect certain fundamental business transactions. The Purchaser
has the option to redeem the Note at any time after the six month anniversary of the date when the purchase price is delivered to the
Company ("Purchase Price Date") in the amounts of up to 50% of the amount outstanding during the nine month period after
Purchase Price Date or any percentage of the amount outstanding under the Note at any time after the nine month anniversary of Purchase
Price Date, with such redemption amounts paid in cash or shares of the Company's common stock, or a combination thereof, at the
Company's election.
On
October 29, 2018, China Recycling Energy Corporation (the "Company") entered into a Securities Purchase Agreement with certain
purchasers (the "Purchasers"), pursuant to which the Company issued to the Purchasers 1,985,082 warrants in the aggregate
(each, a "October Warrant", and collectively, the "October Warrants"), for a purchase price of $0.125 per October
Warrant and aggregate gross proceeds to the Company of approximately $250,000, before deducting fees to the placement agent and other
estimated offering expenses payable by the Company. The October Warrants are exercisable on the date of issuance at an initial exercise
price of $1.3725 per share and expire on the five and a half year anniversary of the date of issuance.
The
October Warrants and the shares of the Company's common stock issuable upon the exercise of the October Warrants (the "October
Warrant Shares") were not registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to the Company's Registration Statement, and were instead offered pursuant to the exemption provided in Section 4(a)(2) under the
Securities Act. Each Purchaser is either (i) an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
or (a)(8) under the Securities Act or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under the Securities
Act. Each Purchaser, either alone or together with its representatives, has enough knowledge and experience to be considered a sophisticated
investor, has access to the type of information normally provided in a prospectus for a registered securities offering, and has agreed
not to resell or distribute the October Warrants or the October Warrant Shares to the public except pursuant to sales registered or exempted
under the Securities Act.
H.C.
Wainwright & Co., LLC acted as the Company's exclusive placement agent in connection with the offerings under the Purchase
Agreement and received warrants to purchase our common stock in an amount equal to 138,956 shares, on substantially the same terms as
the October Warrants, with an initial exercise price of $1.875 per share and expiration date of October 29, 2023 (the "October
Placement Agent Warrants").
On
February 13, 2019, the Company entered into a Securities Purchase Agreement (the "Agreement") with Great Essential Investment,
Ltd., a company incorporated in the British Virgin Islands (the "Purchaser"), pursuant to which the Company agreed to sell
to the Purchaser in a private placement 1,600,000 shares (the "Shares") of the Company's common stock, par value $0.001
per share, at a purchase price of $1.013 per share for an aggregate offering price of $1,620,800 (the "Private Placement").
II-
2
On
each of January 31, 2019 and February 27, 2019, the Company entered into a Securities Purchase Agreement (together, the "Purchase
Agreements") with Iliad Research and Trading, L.P., a Utah limited partnership (the "Purchaser"), pursuant to which
the Company sold and issued to the Purchaser an aggregate of two Convertible Promissory Notes (the "Original Notes"), each
in the principal amount of $1,050,000. The Purchaser purchased each of the Original Notes with an original issue discount of $50,000.
The Original Notes were sold to the Purchaser pursuant to an exemption from registration under Regulation D, promulgated under the Securities
Act of 1933, as amended.
The
Original Notes bore interest at the rate of 8% per annum. All outstanding principal and accrued interest on the Original Notes would
have become due and payable on January 31, 2021 and February 27, 2021, respectively, in each case subject to a potential one-year extension
period during which interest would not accrue. The Company's obligations under the Original Notes could be prepaid at any time,
provided that in such circumstance the Company would have paid 125% of any amounts outstanding under the Original Notes. Amounts outstanding
under the Original Notes could have been converted at any time, at the Lender's option, into shares of the Company's common
stock at a conversion price of $3.00 per share, subject to certain adjustments. During the terms of the Original Notes, the Company could
not, without the prior written consent of the Purchaser, enter into or effect certain fundamental business transactions. The Purchaser
had the option to redeem the Original Notes at any time after the six month anniversary of the date when the purchase price for an Original
Note is delivered to the Company (each, a "Purchase Price Date") in the amounts of up to 50% of the amount outstanding during
the nine month period after the applicable Purchase Price Date or any percentage of the amount outstanding under such Original Note at
any time after the nine month anniversary of the applicable Purchase Price Date, with such redemption amounts paid in cash or shares
of the Company's common stock, or a combination thereof, at the Company's election.
Pursuant
to an Exchange Agreement dated April 14, 2019 (the "Exchange Agreement"), the Company and the Purchaser agreed to exchange
the Original Notes with two new promissory notes with a principal amount of $1,173,480 and $1,165,379.18, respectively (the "Exchange
Notes"). All outstanding principal and accrued interest on the Exchange Notes will become due and payable on January 31, 2021 and
February 27, 2021, respectively. The Exchange Notes bear interest at the rate of 8% per annum and do not have conversion options in favor
of the Purchaser. The Company's obligations under the Exchange Notes may be prepaid at any time, provided that in such circumstance
the Company must pay 125% of any amounts outstanding under the Exchange Notes. Beginning on the date that is six (6) months from the
issue date of the respective Original Notes (the "Issue Dates") and at any time thereafter until the Exchange Notes are paid
in full, Purchaser shall have the right to redeem up to $750,000 of the outstanding balance during months six to eight following the
respective Issue Date and any amount thereafter.
On
April 15, 2019, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain purchasers
(the "Purchasers"), pursuant to which the Company issued 1,769,454 warrants in the aggregate (each, a "April Warrant",
and collectively, the "April Warrants") to the Purchaser. The April Warrants are exercisable beginning on the six month anniversary
of the date of issuance at an initial exercise price of $0.9365 per share and expire on the five and one-half year anniversary of the
date of issuance.
The
April Warrants and the shares of the Company's common stock issuable upon the exercise of the April Warrants (the "Warrant
Shares") were not registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the Company's
Registration Statement, and were instead offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act. Each
Purchaser was either (i) an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under the Securities Act. Each Purchaser,
either alone or together with its representatives, had sufficient knowledge and experience to be considered a sophisticated investor,
had access to the type of information normally provided in a prospectus for a registered securities offering, and agreed not to resell
or distribute the April Warrants or the April Warrant Shares to the public except pursuant to sales registered or exempted under the
Securities Act.
H.C.
Wainwright & Co., LLC acted as the Company's exclusive placement agent in connection with the offerings under the Purchase
Agreement and received warrants to purchase our common stock in an amount equal to 165,149 shares of common stock (the "April Placement
Agent Warrants"), on substantially the same terms as the April Warrants, except that the Placement Agent Warrants have an initial
exercise price of $1.00 per share, are exercisable commencing on the later of (i) six months of the issuance date or (ii) the date on
which the Company increases the number of its authorized shares, and expire on April 15, 2024.
II-
3
On
October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm, engaging that firm as
the exclusive lead underwriter for a registered securities offering. Pursuant to the terms of this engagement agreement, the Company
issued 10,000 shares of its unregistered and restricted common stock to an investment banker firm within 10 days from the date of the
execution of the engagement agreement, and the remaining 5,000 shares will be paid upon completion of the offering.
On
October 11, 2019, the Company entered a consulting agreement with a consulting company to advise the Company on an acquisition project.
Pursuant to the terms of this consulting agreement, the Company issued 31,250 shares of the Company's unregistered and restricted
common stock to this consulting company.
On March 16, 2020, the Company's
Board of Director agreed to issue 3,333 shares of the Company's common stock (post-reverse stock split) to the Company's
law firm. The shares are earned in full and non-refundable as of March 9, 2020. The fair value of these shares was $10,999 on March 9,
2020.
On
August 24, 2020 and September 28, 2020, the Company entered into Securities Purchase Agreements with the purchaser and offered and sold
to such purchaser 265,250 shares of common stock at negotiated purchase prices (132,000 shares at $2.15 per share and 133,250 shares
at $2.34 per share) without reference to the market price and received the net proceeds was $497,187 after deducting the placement
agent commission and certain expenses. These 265,250 shares were offered and sold in a registered public offering pursuant to the prospectus
supplement dated August 24, 2020, and the original prospectus contained in an effective shelf registration statement on Form S-3 (the
"Registration Statement"), which was originally filed with the Securities and Exchange Commission on December 1, 2017, and
was declared effective on December 8, 2017 (File No. 333-221868).
On
February 23, 2021, the Company entered into certain securities purchase agreements with several non-U.S. investors, pursuant to which
the Company agreed to sell to the purchasers, an aggregate of up to 3,320,000 shares of common stock of the Company, at $11.522
per share, which is the five-day average closing price immediately prior to signing the Purchase Agreements. One of the purchasers
is the Company's CEO (also is the Company's Chairman), he purchased 1,000,000 common shares of the Company. On March 11,
2021, the Company received approximately $38.25 million proceeds from the issuance of 3,320,000 shares under the securities purchase
agreements, there anywhere no fees paid in connection with this financing. In April 2021, the Company's CEO amended the number
of shares that he would purchase from 1,000,000 shares to 940,000 shares; accordingly, total number of shares sold in this offering became
3,260,000 shares. The Company returned $691,320 extra proceeds that were received earlier to the Company's CEO in April 2021.
On July 16, 2021, the Company
issued 31,250 shares of the Company's common stock to the Company's investor relationship management firm as compensation
for the advisory service the firm provided to the company. The shares were valued at $100,000 in total.
Warrants
Following
is a summary of the activities of warrants that were issued from equity financing (post-reverse stock split) for the three months ended
March 31, 2021
Number of
Warrants
Average
Exercise
Price
(post-reverse
stock split
price)
Weighted
Average
Remaining
Contractual
Term in
Years
Outstanding
    at January 1, 2021
30,411
$
14.0
3.21
Exercisable
    at January 1, 2021
30,411
$
14.0
3.21
Granted
-
-
-
Exchanged
-
-
-
Forfeited
-
-
-
Expired
-
-
-
Outstanding
    at March 31, 2021
30,411
$
14.0
2.96
Exercisable
    at March 31, 2021
30,411
$
14.0
2.96
II-
4
Item
16. Exhibits.
Exhibit
Number
Description
1.1*
Underwriting
    Agreement
3.1
Articles
    of Incorporation (filed as Exhibit 3.05 to the Company's Form 10-KSB for the fiscal year ended December 31, 2001).
3.2
Fourth
    Amended and Restated Bylaws (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated November 25, 2009).
3.3
Certificate
    of Change (filed as Exhibit 3.6 to the Company's Current Report on Form 8-K dated May 24, 2016).
3.4
Certificate of Change (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 28, 2021)
4.1*
Specimen
    Common Stock Certificate
4.2*
Specimen
    Warrant Certificate
4.3*
Specimen
    Underwriter Warrant Certificate
5.1*
Opinion
    of Ortoli Rosenstadt LLP, as to the validity of the common stock and the warrants
10.1
Supplementary
    Agreement by and between Inner Mongolia Erdos TCH Energy Saving Development Co., Ltd. And Inner Mongolia Erdos Metallurgy Co., Ltd.,
    dated December 1, 2009 (filed as Exhibit 10.27 to the Company's Form 10-K for the year ended December 31, 2009).
10.2
Joint
    Operation Agreement by and between Xi'an TCH Energy Technology Co., Ltd., a wholly owned subsidiary of the Company, and Inner
    Mongolia Erdos Metallurgy Co., Ltd., dated January 20, 2009 (filed as Exhibit 10.1 to the Company's Form 10-Q for the quarterly
    period ended June 30, 2009).
10.3
Form
    of Independent Director Agreement. (filed as Exhibit 10.28 on the Company's Registration Statement on Form 10, filed on February
    5, 2010).
10.4
Employment
    Agreement between the Company and Guohua Ku (filed as Exhibit 10.29 on the Company's Registration Statement on Form 10, filed
    on February 5, 2010).
10.5
Biomass
    Power Generation Asset Transfer Agreement (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated September
    16, 2013).
10.6
Biomass
    Power Generation Project Lease Agreement (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated September
    16, 2013).
10.7
Partnership
    Agreement of Beijing Hongyuan Recycling Energy Investment Center, LLP, dated July 18, 2013 (filed as Exhibit 10.1 to the Company's
    Form 10-Q for the quarterly period ended September 30, 2013).
10.8
EPC
    Contract for Boxing CDQ Waste Heat Power Generation Project, dated July 22, 2013, by and between Xi'an Zhonghong New Energy
    Technology Co., Ltd and Xi'an Huaxin New Energy Co., Ltd (filed as Exhibit 10.3 to the Company's Form 10-Q for the quarterly
    period ended September 30, 2013).
10.9
EPC
    Contract for CDQ Power Generation Project of Xuzhou Tianyu Group, dated July 22, 2013, by and between Xi'an Zhonghong New Energy
    Technology Co., Ltd and Xi'an H201uaxin New Energy Co., Ltd. (filed as Exhibit 10.4 to the Company's Form 10-Q for the
    quarterly period ended September 30, 2013).
II-
5
10,10
Cooperation
    Agreement, dated July 22, 2013, by and between Xi'an Zhonghong New Energy Technology Co., Ltd. And Jiangsu Tianyu Energy and
    Chemical Group Co., Ltd (filed as Exhibit 10.5 to the Company's Form 10-Q for the quarterly period ended September 30, 2013).
10.11
Waste
    Heat Power Generation Energy Management Cooperative Agreement with Zhongtai (filed as Exhibit 10.1 to the Company's Current
    Report on Form 8-K dated December 6, 2013).
10.12
CDQ
    Power Generation Energy Management Cooperative Agreement with Rongfeng (filed as Exhibit 10.1 to the Company's Current Report
    on Form 8-K dated December 17, 2013).
10.13
China
    Recycling Energy Corporation Omnibus Equity Plan (Incorporated by reference from Appendix A to the Company's Definitive Schedule
    14A filed on April 30, 2015).
10.14
Transfer
    Agreement of CDQ & Waste Heat Power Generation, dated November 16, 2015, by and between Xi'an TCH Energy Technology
    Co., Ltd and Tangshan Rongfeng Iron & Steel Co., Ltd. And Xi'an Huaxin New Energy Co., Ltd. (filed as Exhibit 10.1
    to the Company's Current Report on Form 8-K dated November 20, 2015).
10.15
Xuzhou
    Zhongtai CDQ and Waste Heat Power Generation System Transfer Agreement, dated March 14, 2016, by Xi'an TCH Energy Technology
    Co., Ltd, Xuzhou Zhongtai Energy Technology Co., Ltd. And Xi'an Huaxin New Energy Co., Ltd. (filed as Exhibit 10.1 to the Company's
    Current Report on Form 8-K dated March 18, 2016).
10.16
Repurchase
    Agreement for Coking Coal Gas Power Generation Project, dated June 22, 2016, by and between Xi'an TCH Energy Technology Co.,
    Ltd., and Qitaihe City Boli Yida Coal Selection Co., Ltd. (filed as Exhibit 10.1 to the Company's Quarterly Report on Form
    10-Q dated August 15, 2016).
10.17
Securities
    Purchase Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P., dated July 11, 2018 (filed
    as Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 17, 2018).
10.18
Convertible
    Promissory Note, issued by China Recycling Energy Corporation to Iliad Research and Trading, L.P., dated July 11, 2018 (filed as
    Exhibit 10.2 to the Company's Current Report on Form 8-K dated July 17, 2018).
10.19
Equity
    Purchase Agreement by and between Shanghai TCH Energy Technology Co., Ltd. And Jinhua Wang, dated September 30, 2018 (filed as Exhibit
    10.1 to the Company's Current Report on Form 8-K dated September 30, 2018).
10.20
Agreement
    of Supplementary and Amendment by and between Shanghai TCH Energy Technology Co., Ltd. And Jinhua Wang, dated November 21, 2018 (filed
    as Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 26, 2018).
10.21
CDQ
    WHPG Station Fixed Assets Transfer Agreement, dated December 29, 2018, by and among Xi'an Zhonghong, Xi'an TCH, the HYREF,
    Guohua Ku and Chonggong Bai (filed as Exhibit 10.21 to the Company's Annual Report on Form 10-K dated for the year ended December
    31, 2018 filed on March 16, 2019).
10.22
Buy-Back
    Agreement, dated December 29, 2018, by and among HYREF, Xi'an Zhonghong, Xi'an TCH, Guohua Ku, Chonggong Bai and Xi'an
    Hanneng (filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K dated for the year ended December 31, 2018 filed
    on March 16, 2019).
10.23
Equity
    Transfer Agreement, dated December 29, 2018, by and between Xi'an TCH and Hongyuan Huifu. (filed as Exhibit 10.23 to the Company's
    Annual Report on Form 10-K dated for the year ended December 31, 2018 filed on March 16, 2019)†
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10.24
Equity
    Transfer Agreement, dated December 29, 2018, by and between Shanghai TCH and HYREF. (filed as Exhibit 10.24 to the Company's
    Annual Report on Form 10-K dated for the year ended December 31, 2018 filed on March 16, 2019)†
10.25
Supplementary
    Agreement of Equity Transfer Agreement, dated December 29, 2018, by and among Xi'an TCH, Hongyuan Huifu, and the Fund Management
    Company. (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K dated for the year ended December 31, 2018
    filed on March 16, 2019)†
10.26
Projects
    Transfer Agreement by and among Xi'an Zhonghong, Xi'an TCH, and Mr. Chonggong Bai, dated January 4, 2019 (filed as Exhibit
    10.26 to the Company's Annual Report on Form 10-K dated for the year ended December 31, 2018 filed on March 16, 2019).†
10.27
Securities
    Purchase Agreement by and between China Recycling Energy Corporation and Great Essential Investment, Ltd, dated February 13, 2019
    (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated February 19, 2019).
10.28
Termination
    of Equity Purchase Agreement and Supplementary Amendment Agreement by and between Shanghai TCH and Mr. Jihua Wang, dated March 29,
    2019 (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated February 19, 2019).
10.29
Forebearance
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated September 11, 2019 (filed
    as Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 11, 2019).
10.30
Forebearance
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated September 19, 2019 (filed
    as Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 19, 2019).
10.31
Termination
    Agreement of Lease Agreement of Biomass Power Generation Project by and between Xi'an TCH Energy Technology Co., Ltd. And Pucheng
    Xin Heng Yuan Biomass Power Generation Co., Ltd. Dated September 29, 2019 (filed as Exhibit 10.1 to the Company's Current Report
    on Form 8-K dated September 29, 2019).
10.32
Exchange
                                            Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading,
                                            L.P. dated October 16, 2019 (filed as Exhibit 10.1 to the Company's Current Report
                                            on Form 8-K dated October 16, 2019).
10.33
Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated October 16, 2019 (filed as
    Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 16, 2019).
10.34
Amendment
    to Forebearance Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated December 16,
    2019 (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 16, 2019).
10.35
Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated January 3, 2020 (filed as
    Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 3, 2020).
10.36
Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated January 13, 2020 (filed as
    Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 13, 2020).
10.37
Exchange
    Agreement by and between China Recycling Energy Corporation and Iliad Research and Trading, L.P. dated May 4, 2020 (filed as Exhibit
    10.30 to the Company's Current Report on Form 8-K, dated May 4, 2020).
10.38
Employment Agreement by and between China Recycling Energy Corporation and Yongjiang (Jackie) Shi, dated May 8, 2020 (filed as Exhibit 10.38 to the Company's annual report on Form 10-K, dated May 14, 2020)
10.39
Exchange
    Agreement dated as of May 15, 2020 by and between China Recycling Energy Corporation and Lliad Research and Trading, L.P. (filed
    as Exhibit 10.39 to the Company's Current Report on Form 8-K, dated May 21, 2020).
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10.40
Forbearance
    Agreement dated as of May 15, 2020 by and between China Recycling Energy Corporation and Lliad Research and Trading, L.P. (filed
    as Exhibit 10.40 to the Company's Current Report on Form 8-K, dated May 21, 2020).
10.41
Exchange
    Agreement dated as of May 29, 2020 by and between China Recycling Energy Corporation and Lliad Research and Trading, L.P. (filed
    as Exhibit 10.41 to the Company's Current Report on Form 8-K, dated June 4, 2020).
10.42
Equity
    Acquisition Agreement dated as of December 22, 2020 by and between China Recycling Energy Corporation and Shanghai TCH Energy Technology
    Co., Ltd., Zheng Feng, Yinhua Zhang, Weidong Xu and Xi'an Taiying Energy Saving Technology Co., Ltd. (filed as Exhibit 10.43
    to the Company's Current Report on Form 8-K, dated December 29, 2020).
14.1
Code
    of Ethics (filed as Exhibit 14.1 to the Company's Current Report on Form 8-K dated December 2, 2009).
21.1
Subsidiaries
    (filed as Exhibit 21.1 to the Company's Annual Report on Form 10-K dated May 14, 2020).
23.1†
Consent of Prager Metis
23.2*
Consent
    of Ortoli Rosenstadt LLP (included in Exhibit 5.1).
†
Filed
    herewith.
*
To
    be filed by amendment.
Item
17. Undertakings.
The
undersigned Registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
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 foregoing provisions, 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.
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 of 1933;
(ii)
To
    reflect in the prospectus any facts or events arising after the effective date of the 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 the registration statement. Notwithstanding the foregoing, any increase or decrease in 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 a 20 percent change in the maximum aggregate offering
    price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
(iii)
To
    include any material information with respect to the plan of distribution not previously disclosed in the registration statement
    or any material change to such information in the registration statement;
(2)
That
    for the purpose of determining any liability under the Securities Act of 1933 each such 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 that 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.
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(4)
That,
    for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule
    424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other
    than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of
    the date it is first used after effectiveness. 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 first use, 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 date of first use.
(5)
That,
    for the purpose of determining liability of the registrant under the Securities Act of 1933 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 to provide to the underwriter at the closing specified in the underwriting agreement certificates
    in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(7)
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 provisions described in Item 14 above, 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.
(8)
The
    undersigned Registrant hereby undertakes:
(1)
That
    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.
(2)
That
    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 this offering of such securities
    at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Shanghai, China on July 28, 2021.
China
    Recycling Energy Corporation
Date:
    July 28, 2021
By:
/s/
    Guohua Ku
Guohua
    Ku
Chairman
    of the Board and Chief Executive Officer
(Principal Executive Officer)
Date:
    July 28, 2021
By:
/s/
    Yongjiang Shi
Yongjiang
    Shi
Chief
    Financial Officer
(Principal Financial and Accounting Officer)
Pursuant
to the requirements of the Exchange Act, this registration statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature
Title
Date
/s/
    Guohua Ku
Chairman
    of the Board of Directors and Chief Executive Officer
July
                                            28, 2021
Guohua
    Ku
(Principal
    Executive Officer)
/s/
                                            Yongjiang Shi
Chief
    Financial Officer
July
                                            28, 2021
Yongjiang
    Shi
(Principal
    Financial and Accounting Officer)
/s/
    Xiaoping Guo
Director
July
                                            28, 2021
Xiaoping
    Guo
/s/
    Yan Zhan
Director
July
                                            28, 2021
Yan
    Zhan
/s/
    LuLu Sun
Director
July
                                            28, 2021
LuLu
    Sun
/s/
    Zhongli Liu
Director
July
                                            28, 2021
Zhongli
    Liu
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