China Recycling Energy Corporation Files Restatement of Certain Liability to Marked to Market

China Recycling Energy Corp.

, a leading industrial waste-to-energy solution provider in China, wishes to make the following announcement with regard to the scope and impact of its recent restatement of its financial statements. Restatement of certain liability to marked to market share price and its related restatement of income statements for fiscal quarters ended June 30, 2010 and 2011, September 30, 2010 and 2011, March 31, 2011 ; and fiscal year ended December 31, 2010 and 2011. On June 29, 2010, our wholly owned subsidiary, Xi'an TCH entered into a Biomass Power Generation Asset Transfer Agreement (the "Transfer Agreement") with Xueyi Dong. Under the Transfer Agreement, Mr. Dong transferred ownership of the Biomass Systems to Xi'an TCH, and Xi'an TCH agreed to pay Mr. Dong $14,705,900 (RMB 100,000,000) for the systems, including RMB 20,000,000 in cash and RMB 80,000,000 in shares of our common stock. As of September 30, 2011, the Company paid the cash portion in full to Mr. Dong and had shares to be issued of $11,780,471 in connection with this transaction. On November 22, 2011, our Board of Directors approved the issuance of 2,941,176 shares of the Company's common stock to Mr. Dong at $4 per share pursuant to the terms of the agreement. The Company recorded a gain on settlement of debt of $8,251,060 for the financial year ended December 31, 2011. From June 29, 2010 until settlement of debt on November 22, 2011, we recorded the liability at $11,780,471 pursuant to the terms of the agreement, without marking to market the price of the shares to be issued to Mr. Dong. After review by the SEC, it was agreed that we should have marked to market the shares issued to Mr. Dong, and this is the reason we filed restatements of our Form 10-Qs and Form 10-K that were previously filed from June 2010 to December 2011. The following table sets out the relevant figures of the restatement and its impact on our financial statements, which is ultimately 'Nil' when taken as a whole between financial years ended December 2010 and 2011. Balance sheet impact to liability - shares to be issued to Dong Stock price of CREG:$ 3.63 3.75 3.13 3.05 2.69 2.02 1.20 1.20 Balance sheet date, as of 6/29/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 11/22/2011 12/31/2011 Original 11,780,471 11,780,471 11,780,471 11,780,471 11,780,471 11,780,471 11,780,471 - - Restate - marked to market liability 11,780,471 11,029,410 9,205,881 8,970,587 7,911,763 5,941,176 3,529,411 - - Difference - 751,061 2,574,590 2,809,884 3,868,708 5,839,295 8,251,060 - - Profit / Loss impact - gain on settlement of Dong's liability Quarter ending : $ FY ending : $ Quarter ending : $ as at FY ending : $ For the period ending 6/30/2010 9/30/2010 12/31/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 11/22/2011 12/31/2011 Original - - - - - - - - 8,251,060 8,251,060 Restate - Profit (Loss) Adjustment amount - 751,061 1,823,529 235,294 2,809,884 1,058,823 1,970,588 2,411,764 - 5,441,176 Difference - 751,061 1,823,529 235,294 2,809,884 1,058,823 1,970,588 2,411,764 (8,251,060) (2,809,884)