Note Regarding Forward-Looking Statements





This quarterly report on Form 10-Q and other reports filed by the Company from
time to time with the SEC (collectively the "Filings") contain 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



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.



                                       27





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 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 six months ended June 30, 2021 and 2020, the Company had a net loss of
$1,943,347 and $395,389, respectively. For the three months ended June 30, 2021
and 2020, the Company had a net loss of $2,220,571 and $993,940, respectively.
The Company has an accumulated deficit of $41.10 million as of June 30, 2021.
The Company is in the process of transforming and expanding into an energy
storage integrated solution provider as described above.



The historical operating results indicate substantial doubt exists related to
the Company's ability to continue as a going concern. However, the Company had
$150.99 million cash on hand at June 30, 2021 as a result of collection the full
payment from all the projects that were disposed earlier, this satisfies 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.



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.



                                       28





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 June 30, 2020. 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.



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.



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.



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,
"Leases," and its various amendments and interpretations.



                                       29





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.

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 Results of Operations for the six months ended June 30, 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 expenses (income)                384,152               - %     (1,258,758 )             - %
Income (Loss) from operations                   (384,152 )             - %      1,258,758               - %
Total non-operating income (expenses), net     2,229,546               - % 

     (863,369 )             - %
Income before income tax                       1,845,394               - %        395,389                 %
Income tax benefit                               (97,953 )             - %              -               - %
Net loss                                     $ 1,943,347               - %   $    395,389               - %




SALES. Total sales for the six months ended June 30, 2021 and 2020 were $0.




                                       30




COST OF SALES. Cost of sales ("COS") for the six months ended June 30, 2021 and 2020 were $0.

GROSS PROFIT. Gross income for the six months ended June 30, 2021 and 2020 were $0 with gross margin of 0%.





OPERATING EXPENSES. Operating expenses consisted of general and administrative
expenses, bad debt expense reversal totaling $384,152 for the six months ended
June 30, 2021, compared to operating income $1,258,758 for the six months ended
June 30, 2020, an increase of $1,642,910 or 131%. The increase in operating
expenses was mainly due to decreased bad debt expense reversal by $1,615,043.



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 six months ended June 30, 2021, net
non-operating income was $2,229,546 compared to non-operating expense of
$863,369 for the six months ended June 30, 2020. For the six months ended June
30, 2021, we had $193,157 interest income and gain on termination of buy-back
agreement of Chengli project of $3,155,959 (see Note 8), but the amount was
offset by $227,701 interest expense on note payable, loss on note conversion of
$2,719 and interest expense on failure of note redemption on time of $818,914
and other expenses of $70,236. For the six months ended June 30, 2020, we had
$72,617 interest income, but the amounts were offset by a $697,028 interest
expense on entrusted loan and note payable, $198,330 loss on note conversion and
other expenses of $40,628.


INCOME TAX BENEFIT. Income tax benefit was $97,953 for the six months ended June 30, 2021, compared with $0 for the six months ended June 30, 2020. The consolidated effective income tax rates for the six months ended June 30, 2021and 2020 were (5.3)% and 0%, respectively.





NET INCOME. Net income for the six months ended June 30, 2021 was $1,943,347
compared to net income of $395,389 for the six months ended June 30, 2020, an
increase of income of $1,547,958. This increase in net income was mainly due to
gain on termination of buy-back agreement of Chengli project by $3,155,959, but
was partly offset by decreased bad debt expense reversal by $1,615,043 as
describe above.



Comparison of Results of Operations for the three months ended June 30, 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 expenses (income)                111,060                 - %     (1,412,936 )              - %
Income (loss) from operations                   (111,060 )               - %      1,412,936                - %
Total non-operating income (expenses), net     2,228,553                 -

%       (418,996 )              - %
Income before income tax                       2,117,493                 - %        993,940                  %
Income tax benefit                              (103,078 )               - %              -                - %
Net income                                   $ 2,220,571                 - %   $    993,940                - %



SALES. Total sales for the three months ended June 30, 2021 and 2020 were $0.

COST OF SALES. Cost of sales ("COS") for the three months ended June 30, 2021 and 2020 were $0.

GROSS PROFIT. Gross income for the three months ended June 30, 2021 and 2020 were $0 with gross margin of 0%.





                                       31





OPERATING EXPENSES. Operating expenses consisted of general and administrative
expenses and bad debt expense reversal, totaling $111,060 for the three months
ended June 30, 2021, compared to operating income $1,412,936 for the three
months ended June 30, 2020, an increase of $1,523,996 or 108%. The increase was
mainly due to decreased bad debt expense reversal by $1,615,043 which was partly
offset by decreased G&A expenses by $91,047.



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 June 30, 2021, net
non-operating income was $2,228,553 compared to non-operating expenses of
$418,996 for the three months ended June 30, 2020. For the three months ended
June 30, 2021, we had $109,461 interest income and gain on termination of
buy-back agreement of Chengli project $3,155,959 (see Note 8), but the amount
was offset by $145,615 interest expense on note payable, loss on note conversion
of 2,719 and interest expense on failure of note redemption on time of $818,914,
and other expenses of $69,619. For the three months ended June 30, 2020, we had
$45,611 interest income, but the amounts were offset by a $341,784 interest
expense on entrusted loan and note payable, $95,163 loss on note conversion

and
other expenses of $27,660.



INCOME TAX BENEFIT. Income tax benefit was $103,078 for the three months ended
June 30, 2021, compared with $0 for the three months ended June 30, 2020. The
consolidated effective income tax rates for the three months ended June 30,
2021and 2020 were (4.9)% and 0%, respectively.



NET INCOME. Net income for the three months ended June 30, 2021 was $2,220,571
compared to net income of $993,940 for the three months ended June 30, 2020, an
increase of income of $1,226,631. This increase in net income was mainly due to
gain on termination of buy-back agreement of Chengli project by $3,155,959,
increased interest income by $63,850, increased income tax benefit by $103,078
and decreased interest expense by $196,169, which was partly offset by decreased
bad debt expense reversal by $1,615,043 and increased loss on note conversion by
$726,470.


LIQUIDITY AND CAPITAL RESOURCES

Comparison of six months Ended June 30, 2021 and 2020





As of June 30, 2021, the Company had cash and equivalents of $150.99 million,
other current assets of $253,098, current liabilities of $11.99 million, working
capital of $139.26 million, a current ratio of 12.61:1 and a liability-to-equity
ratio of 0.13:1.


The following is a summary of cash provided by or used in each of the indicated types of activities during the six months ended June 30, 2021 and 2020:





                                  2021             2020
Cash provided by (used in):
Operating Activities          $   (681,465 )   $ 46,996,596
Investing Activities                     -                -
Financing Activities          $ 42,561,721     $          -




Net cash used in operating activities was $681,465 during the six months ended
June 30, 2021, compared to $47.00 million cash provided by operating activities
for the six months ended June 30, 2020. The decrease in net cash inflow for the
six months ended June 30, 2021 was mainly due to our cash collection of sales
type leases of Pucheng systems by $13.88 million, and cash collection of
accounts receivable by $35.21 million for selling / disposing Huayu, Shenqiu,
Zhongtai and Tian'an systems that were occurred in the six months ended June 30,
2020.


Net cash provided by (used in) investing activities was $0 and $0, respectively, for the six months ended June 30, 2021 and 2020.





Net cash provided by financing activities was $42,561,721 compared to net cash
used in financing activities of $0 during the six months ended June 30, 2021 and
2020, respectively. The cash inflow for the six months ended June 30, 2021 was
the proceeds from a private placement of $37,561,721 and issuance of notes

payable of $5,000,000.



                                       32





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 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 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.

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.



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
           stockholders; 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.




                                       33





If, for the reasons noted above, our subsidiaries are unable to pay stockholder
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.


Chart of the Company's Statutory Reserve

Pursuant to PRC corporate law, effective January 1, 2006, the Company is required to maintain a statutory 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
                                                                 June 30,        December 31,
                                                                   2021

2020


Unrestricted retained earnings (accumulated deficit)           $ (41,099,430 )   $ (43,026,465 )
Restricted retained earnings (surplus reserve fund)               15,171,354        15,155,042
Total retained earnings (accumulated deficit)                  $ 

(25,928,076 ) $ (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 June 30, 2021 are as follows:





                                                      1 year or      More than          See Note
Contractual Obligation                                  less           1 year         (for details)
Notes payable including accrued interest of
$227,222, net of unamortized OID of $325,605         $ 8,620,531     $     

  -                    10
Entrusted loan                                       $         -     $  309,593                     8
Total                                                $ 8,620,531     $  309,593




The Company believes it has sufficient cash in bank of $151 million as of June
30, 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.



                                       34

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