SEC Company Response from Smart Powerr Corp. (CREG) (CIK 0000721693) (CREG) — May 22, 2013
Smart Powerr Corp. (CREG) (CIK 0000721693)
Date: May 22, 2013 · CIK: 0000721693 · Accession: 0001144204-13-030965
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-34625
Referenced dates: March 28, 2013
Letter
Via EDGAR United States Securities and Exchange Commission Division of Corporation Finance Tony Watson Re: China Recycling Energy Corporation Form 10-K for Fiscal Year Ended December 31, 2011 File No. 001-34625
Dear Mr. Thompson:
On behalf of our client, China Recycling Energy Corporation (“CREG” or the “Company” and sometimes referred to as “we” or “our”), and pursuant to our phone conferences on April 25, 2013 and May 13, 2013, this firm is filing a response to the SEC Comment Letters, dated December 14, 2012, January 23, 2013, February 7, 2013, March 4, 2013, March 20, 2013, March 28, 2013 and April 17, 2013, in connection with complying with the issues and outstanding disclosure items set forth therein. For convenience of reference, we have included in this response letter the same caption and paragraph number, as well as the text of the comment, set forth in your April 17, 2013 comment letter followed by our response. In addition, attached to this Response Letter are the following Excel spreadsheets: (i) a summary evidencing the effect of the restatements on our financial statements, (ii) analysis as of fiscal quarter ended June 30, 2010, (iii) analysis as of fiscal quarter ended September 30, 2010, (iv) analysis as of fiscal year ended December 31, 2010, (v) analysis as of fiscal quarter ended March 31, 2011, (vi) analysis as of fiscal quarter ended June 30, 2011, (vii) analysis as of fiscal quarter ended September 30, 2011 and (viii) analysis as of fiscal year ended December 31, 2011 (collectively, the "Restatement Spreadsheets").
Upon learning from you that the SEC has no further comment, the Company will promptly file: (i) Amendment No. 1 to the Company’s Form 10-K for fiscal year ended December 31, 2011 with the SEC (as attached to the Company’s Response Letter, filed January 30, 2013 and further revised as disclosed below) and (ii) with respect to the Shareholders' Equity comment below, Amendments to the Company's Form 10-Q reports for fiscal quarters ended March 31, 2011, June 30, 2011 and September 30, 2011.
United States Securities and Exchange Commission
May 22, 2013
Page 2
Form 10-K for Fiscal Year Ended December 31, 2011
Item 8. Financial Statements and Supplementary Data, page
Note 17: Shareholders’ Equity, page 78
Comment 1. We reviewed your response to the comment in our letter dated March 28, 2013. We do not believe the guidance in ASC 450 should be applied to subsequently measure the instrument you initially recorded using the guidance in ASC 480. As such, please revise your financial statements to subsequently measure the instrument in accordance with the measurement guidance in ASC 480-10-35.
Response:
Attached please find the aforementioned Restatement Spreadsheets, in Excel for 2010 and 2011, showing the impact on the financial statements of the issuance of the settlement shares to Mr. Dong pursuant to that certain PuCheng Biomass Asset Transfer Agreement in accordance with ASC 480-10-35.
As reflected in the Restatement Spreadsheets, the first gain is recognized in the quarter ending June 30, 2010 and the total gain recognized in 2010 is $2,809,884. The Restatement Spreadsheets also show the impact of the adjustment to the 2011 and 2010 annual and quarterly income statements and balance sheets. The Company proposes to reflect the recognition of the gain by amending only its 2011 periodic reports which will reflect the changes in the 2010 comparative periods as well. All three quarterly reports for 2011 would be amended as well as the 10-K for 2011. The Company believes that amending its reports in this way and including an explanatory note in the reports will be the best manner to communicate to, and appropriately inform, investors and the market.
I will confirm with you shortly whether our response is satisfactory, and, if so, we will file the amendments noted above. If, before that time, you have any further comments or require any further information or if any questions should arise in connection with this submission, please call me at (404) 527-4990 or Mr. Jay Shah at (404) 527-4593.
Very truly yours,
/s/ Thomas Wardell, Esq.
Show Raw Text
CORRESP
1
filename1.htm
Albany
Northern Virginia
Atlanta
Orange County
Brussels
mckennalong.com
Rancho Santa Fe
Denver
San Diego
Los Angeles
San Francisco
Miami
Seoul
New York
Washington, DC
Thomas Wardell
email address
404.527.4990
twardell@mckennalong.com
May 22, 2013
Via EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, D.C. 20549-0405
Attn:
William H. Thompson, Accounting Branch Chief
Tony Watson
Re: China Recycling Energy Corporation
Form 10-K for Fiscal Year Ended December 31, 2011
File No. 001-34625
Dear Mr. Thompson:
On behalf of our
client, China Recycling Energy Corporation (“CREG” or the “Company” and sometimes referred to as “we”
or “our”), and pursuant to our phone conferences on April 25, 2013 and May 13, 2013, this firm is filing a response
to the SEC Comment Letters, dated December 14, 2012, January 23, 2013, February 7, 2013, March 4, 2013, March 20, 2013, March 28,
2013 and April 17, 2013, in connection with complying with the issues and outstanding disclosure items set forth therein. For convenience
of reference, we have included in this response letter the same caption and paragraph number, as well as the text of the comment,
set forth in your April 17, 2013 comment letter followed by our response. In addition, attached to this Response Letter are the
following Excel spreadsheets: (i) a summary evidencing the effect of the restatements on our financial statements, (ii) analysis
as of fiscal quarter ended June 30, 2010, (iii) analysis as of fiscal quarter ended September 30, 2010, (iv) analysis as of fiscal
year ended December 31, 2010, (v) analysis as of fiscal quarter ended March 31, 2011, (vi) analysis as of fiscal quarter ended
June 30, 2011, (vii) analysis as of fiscal quarter ended September 30, 2011 and (viii) analysis as of fiscal year ended December
31, 2011 (collectively, the "Restatement Spreadsheets").
Upon learning from
you that the SEC has no further comment, the Company will promptly file: (i) Amendment No. 1 to the
Company’s Form 10-K for fiscal year ended December 31, 2011 with the SEC (as attached to the Company’s Response Letter,
filed January 30, 2013 and further revised as disclosed below) and (ii) with respect to the Shareholders' Equity comment below,
Amendments to the Company's Form 10-Q reports for fiscal quarters ended March 31, 2011, June 30, 2011 and September 30, 2011.
United States Securities and Exchange Commission
May 22, 2013
Page 2
Form 10-K for Fiscal Year Ended December 31, 2011
Item 8. Financial Statements and Supplementary Data, page
50
Note 17: Shareholders’ Equity, page 78
Comment 1. We reviewed your response to the comment in our letter
dated March 28, 2013. We do not believe the guidance in ASC 450 should be applied to subsequently measure the instrument you initially
recorded using the guidance in ASC 480. As such, please revise your financial statements to subsequently measure the instrument
in accordance with the measurement guidance in ASC 480-10-35.
Response:
Attached please find the aforementioned Restatement Spreadsheets, in
Excel for 2010 and 2011, showing the impact on the financial statements of the issuance of the settlement shares to Mr. Dong pursuant
to that certain PuCheng Biomass Asset Transfer Agreement in accordance with ASC 480-10-35.
As reflected in the Restatement Spreadsheets, the first gain is recognized in the quarter ending
June 30, 2010 and the total gain recognized in 2010 is $2,809,884. The Restatement Spreadsheets also show the impact of the adjustment
to the 2011 and 2010 annual and quarterly income statements and balance sheets. The Company proposes
to reflect the recognition of the gain by amending only its 2011 periodic reports which will reflect the changes in the 2010 comparative
periods as well. All three quarterly reports for 2011 would be amended as well as the 10-K for 2011. The Company believes that
amending its reports in this way and including an explanatory note in the reports will be the best manner to communicate to, and
appropriately inform, investors and the market.
I will confirm with
you shortly whether our response is satisfactory, and, if so, we will file the amendments noted above. If, before that time, you
have any further comments or require any further information or if any questions should arise in connection with this submission,
please call me at (404) 527-4990 or Mr. Jay Shah at (404) 527-4593.
Very truly yours,
/s/ Thomas Wardell, Esq.
Thomas Wardell, Esq.
cc:
David Chong, CFO, China Recycling Energy Corp.
Jeffrey Li, Esq.
Jay V. Shah, Esq.
CREG
shares issued to Mr. Dong - restatements
Worksheet
Stock price
3.63
3.75
3.13
3.05
2.69
2.02
1.2
1.2
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
Balance sheet impact to liability - share to be issued
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
-
-
For the period ending
Quarter ending
Jun 30, 2010
Quarter ending
Sept 30, 2010
Quarter ending
Dec 31, 2010
for the year
ending
Dec 31, 2010
Quarter ending
Mar 31, 2011
Quarter ending
Jun 30, 2011
Quarter ending
Sept 30, 2011
Quarter ending
Dec 31, 2011
for the year
endind Dec 31, 2011
P&L impact - gain on settlement of Dong's liability
Original
-
-
-
-
-
-
-
-
8,251,060
8,251,060
Restate
-
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 )
China Recyclying Energy
Restatement worksheet
As of June 30, 2010
Consolidated Balance Sheet
As previously reported
Net adjustment
Restated
Shares to be issued
11,780,471
(751,061 )
11,029,410
Retained earnings
7,393,961
751,061
8,145,022
For the six months ended June 30, 2010
Consolidated Statement of Operations and comprehensive income
As previously reported
Net adjustment
Restated
Changes in fair value of the liability
-
751,061
751,061
Total non-operating income (expense), net
(1,170,583 )
751,061
(419,522 )
Income before income tax
10,565,294
751,061
11,316,355
Income from operations
7,667,251
751,061
8,418,312
Net income attributable to China recycling Energy Corp
7,180,678
751,061
7,931,739
Basic net earnings per share
0.19
0.01
0.20
Diluted net earnings per share
0.15
0.01
0.16
For the six months ended June 30, 2010
Cash flows from Operating activities
As previously reported
Net adjustment
Restated
Net income
7,667,251
751,061
8,418,312
Adjustments to reconcile income including noncontrolling interest to net cash provided by (used in) operating activities:
Changes in fair value of the liability
-
(751,061 )
(751,061 )
China Recyclying Energy
Restatement worksheet
As of September 30, 2010
Consolidated Balance Sheet
As previously reported
Net adjustment
Restated
Shares to be issued
12,812,971
(2,574,590 )
10,238,381
Retained earnings
9,922,599
2,574,590
12,497,189
For the nine months ended September 30, 2010
Consolidated Statement of Operations and comprehensive income
As previously reported
Net adjustment
Restated
Changes in fair value of the liability
-
2,574,590
2,574,590
Total non-operating income (expense), net
(1,780,580 )
2,574,590
794,010
Income before income tax
15,067,783
2,574,590
17,642,373
Income from operations
10,817,221
2,574,590
13,391,811
Net income attributable to China recycling Energy Corp
10,227,402
2,574,590
12,801,992
Basic net earnings per share
0.26
0.07
0.33
Diluted net earnings per share
0.21
0.06
0.27
For the nine months ended September 30, 2010
Cash flows from Operating activities
As previously reported
Net adjustment
Restated
Net income
10,817,221
2,574,590
13,391,811
Adjustments to reconcile income including noncontrolling interest to net cash provided by (used in) operating activities:
Changes in fair value of the liability
-
(2,574,590 )
(2,574,590 )
China Recyclying Energy
Restatement worksheet
As of December 31, 2010
Consolidated Balance Sheet
As previously reported
Net adjustment
Restated
Shares to be issued
11,780,471
(2,809,884 )
8,970,587
Retained earnings
14,812,630
2,809,884
17,622,514
For the year ended December 31, 2010
Consolidated Statement of Operations and comprehensive income
As previously reported
Net adjustment
Restated
Changes in fair value of the liability
-
2,809,884
2,809,884
Total non-operating income (expense), net
(2,675,662 )
2,809,884
134,222
Income before income tax
24,692,109
2,809,884
27,501,993
Income from operations
17,826,069
2,809,884
20,635,953
Net income attributable to China recycling Energy Corp
16,032,597
2,809,884
18,842,481
Basic net earnings per share
0.39
0.06
0.45
Diluted net earnings per share
0.31
0.06
0.37
For the year ended December 31, 2010
Cash flows from Operating activities
As previously reported
Net adjustment
Restated
Net income
17,826,069
2,809,884
20,635,953
Adjustments to reconcile income including noncontrolling interest to net cash provided by (used in) operating activities:
Changes in fair value of the liability
-
(2,809,884 )
(2,809,884 )
China Recyclying Energy
Restatement worksheet
As of March 31, 2011
Consolidated Balance Sheet
As previously reported
Net adjustment
Restated
Shares to be issued
11,780,471
(3,868,708 )
7,911,763
Total Noncurrent liability
73,417,554
(3,868,708 )
69,548,846
Total liability
101,481,863
(3,868,708 )
97,613,155
Retained earnings
18,811,698
3,868,708
22,680,406
For
the three months ended March 31, 2011
Consolidated Statement of Operations and comprehensive income
As previously reported
Net adjustment
Restated
Changes in fair value of the liability
-
1,058,823
1,058,823
Total non-operating income (expense), net
304
1,058,823
1,059,127
Income before income tax
6,478,035
1,058,823
7,536,858
Income before noncontrolling interest
5,082,105
1,058,823
6,140,928
Net income attributable to China recycling Energy Corp
4,562,967
1,058,823
5,621,790
Basic net earnings per share
0.12
0.02
0.14
Diluted net earnings per share
0.09
0.02
0.11
For the three months ended March 31, 2011
Cash flows from Operating activities
As previously reported
Net adjustment
Restated
Net income
5,082,105
1,058,823
6,140,928
Adjustments to reconcile income including noncontrolling interest to net cash provided by (used in) operating activities:
Changes in fair value of the liability
-
(1,058,823 )
(1,058,823 )
China Recyclying Energy
Restatement worksheet
As of June 30, 2011
Consolidated Balance Sheet
As previously reported
Net adjustment
Restated
Shares to be issued
16,780,471
(5,839,296 )
10,941,175
Total Noncurrent liability
73,115,306
(5,839,296 )
67,276,010
Total liability
97,035,322
(5,839,296 )
91,196,026
Retained earnings
22,139,584
5,839,296
27,978,880
For the six months ended June 30, 2011
Consolidated Statement of Operations and comprehensive income
As previously reported
Net adjustment
Restated
Changes in fair value of the liability
-
3,029,411
3,029,411
Total non-operating income (expense), net
536,401
3,029,411
3,565,812
Income before income tax
11,120,897
3,029,411
14,150,308
Income before noncontrolling interest
8,941,266
3,029,411
11,970,677
Net income attributable to China recycling Energy Corp
8,257,968
3,029,411
11,287,379
Basic net earnings per share
0.20
0.08
0.28
Diluted net earnings per share
0.16
0.06
0.22
For the six months ended June 30, 2011
Cash flows from Operating activities
As previously reported
Net adjustment
Restated
Net income
8,941,266
3,029,411
11,970,677
Adjustments to reconcile income including noncontrolling interest to net cash provided by (used in) operating activities:
Changes in fair value of the liability
-
(3,029,411 )
(3,029,411 )
China Recyclying Energy
Restatement worksheet
As of September 30, 2011
Consolidated Balance Sheet
As previously reported
Net adjustment
Restated
Shares to be issued
11,780,471
(8,251,060 )
3,529,411
Total Noncurrent liability
72,767,729
(8,251,060 )
64,516,669
Total liability
107,727,016
(8,251,060 )
99,475,956
Retained earnings
30,173,358
8,251,060
38,424,418
For the nine months ended September 30, 2011
Consolidated Statement of Operations and comprehensive income
As previously reported
Net adjustment
Restated
Changes in fair value of the liability
-
5,441,176
5,441,176
Total non-operating income (expense), net
1,871,324
5,441,176
7,312,500
Income before income tax
22,053,728
5,441,176
27,494,904
Income before noncontrolling interest
17,684,471
5,441,176
23,125,647
Net income attributable to China recycling Energy Corp
16,913,200
5,441,176
22,354,376
Basic net earnings per share
0.41
0.13
0.54
Diluted net earnings per share
0.33
0.10
0.43
For the nine months ended September 30, 2011
Cash flows from Operating activities
As previously reported
Net adjustment
Restated
Net income
17,684,471
5,441,176
23,125,647
Adjustments to reconcile income including noncontrolling interest to net cash provided by (used in) operating activities:
Changes in fair value of the liability
-
(5,441,176 )
(5,441,176 )
China Recyclying Energy
Restatement worksheet
As of December 31, 2011
C