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UNITED
STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

☒   QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the quarterly period ended June 30, 2016

OR

☐   TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For
the transition period from
to

Commission
File No. 000-12536

China
Recycling Energy Corporation

(Exact
Name of Registrant as Specified in Its Charter)

    Nevada

    90-0093373

    (State
                                         or other jurisdiction of

        incorporation
        or organization)

    (I.R.S.
                                         Employer

        Identification
        No.)

12/F,
Tower A

Chang
An International Building

No.
88 Nan Guan Zheng Jie

Xi’an
City, Shaanxi Province, China

(Address
of Principal Executive Offices, Zip Code)

Registrant’s
Telephone Number, Including Area Code: + 86-29-8765-1097

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes   ☐ No

Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes   ☐ No

Indicate by check mark whether the registrant
is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See definitions of “large accelerated filer,” accelerated filer” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act:

    Large accelerated filer
    ☐
    Accelerated filer
    ☐

    Non-accelerated filer
    ☐
    Smaller reporting company
    ☒

    Emerging growth company
    ☐

If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No

The number of shares outstanding of the registrant’s Common
Stock, as of August 10, 2016 was 8,310,198.

EXPLANATORY NOTE

 In response to
a comment letter received from the Securities and Exchange Commission (the “SEC”), dated December 4, 2018, China Recycling
Energy Corporation (the “Company,” “we,” “us” or “our”) is filing this Amendment
No. 1 on Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, originally filed with the
SEC on August 15, 2016 (the “Original Form 10-Q”) for the following purposes: reevaluate the leases for Erdos TCH
as a result of a supplemental agreement effective on May 1, 2016, wherein Erdos TCH cancelled monthly minimum lease payments from
Erdos, charged Erdos based on actual electricity sold at RMB 0.30 / Kwh, and concluded the lease payments that depend on a factor
directly related to the future use of the leased property were contingent rentals and, accordingly, were excluded from minimum
lease payments in their entirety. The Company therefore wrote off the net investment receivables of these leases on May 1, 2016.

This Form 10-Q/A
should be read in conjunction with the Company’s periodic filings made with the SEC subsequent to the filing date of the
Original Form 10-Q, including any amendments to those filings, as well as any Current Reports, filed on Form 8-K subsequent to
the date of the Original Form 10-Q. In addition, in accordance with applicable rules and regulations promulgated by the SEC, the
Company’s Chief Executive Officer and Chief Financial Officer are providing currently dated certifications in connection
with this Form 10-Q/A. The certifications are filed as Exhibits 31.3, 31.4, 32.3 and 32.4. Because this Form 10-Q/A sets forth
the Original Form 10-Q in its entirety, it includes both items that have been changed as a result of the amended disclosures and
items that are unchanged from the Original Form 10-Q. Other than the revision of the disclosures as discussed above, this Form
10-Q/A speaks as of the original filing date of the Original Form 10-Q and has not been updated to reflect other events occurring
subsequent to the original filing date. This includes forward-looking statements and all other sections of this Form 10-Q/A that
were not directly impacted by this amendment, which should be read in their historical context.

INDEX

    Page No.

    PART
    I - FINANCIAL INFORMATION
    1

    Item
    1.
    Consolidated
    Financial Statements
    1

    Consolidated
    Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015
    1

    Consolidated
    Statements of Income and Comprehensive Income (Loss) (Unaudited) – Three and Six Months Ended June 30, 2016 and June
    30, 2015
    2

    Consolidated
    Statements of Cash Flows (Unaudited) – Three and Six Months Ended June 30, 2016 and June 30, 2015
    3

    Notes
    to Consolidated Financial Statements (Unaudited)
    4

    Item
    2.
    Management’s
    Discussion and Analysis of Financial Condition and Results of Operations
    29

    Item
    3.
    Quantitative
    and Qualitative Disclosures About Market Risk
    47

    Item
    4.
    Controls
    and Procedures
    47

    PART
    II - OTHER INFORMATION

    Item
    1.
    Legal
    Proceedings
    48

    Item
    1A.
    Risk
    Factors
    48

    Item
    2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds
    48

    Item
    3.
    Defaults
    Upon Senior Securities
    48

    Item
    4.
    Mine
    Safety Disclosures
    48

    Item
    5.
    Other
    Information
    48

    Item
    6.
    Exhibits
    49

PART
I – FINANCIAL INFORMATION

Item 1.
Financial Statements

CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS

AS
OF JUNE 30, 2016 (UNAUDITED) AND DECEMBER 31, 2015

     2016 (Restated)
     2015

     ASSETS

     CURRENT ASSETS

     Cash and equivalents
     $   42,736,716
     $   41,749,388

     Restricted cash
         542,888
         1,130,344

     Accounts receivable
         35,289,806
         15,399,778

     Current portion of investment in sales-type leases, net
         5,690,343
         6,679,019

     Interest receivable on sales type leases
         1,258,536
         555,451

     Prepaid expenses
         373,355
         1,179,778

     Other receivables
         238,834
         553,886

     Total current assets
         86,130,478
         67,247,644

     NON-CURRENT ASSETS

     Investment in sales-type leases, net
         54,213,910
         133,079,634

     Long term investment
         1,035,110
         950,470

     Long term deposit
         55,850
         57,033

     Property and equipment, net
         14,249
         17,724

     Construction in progress
         88,629,529
         115,522,068

     Total non-current assets
         143,948,648
         249,626,929

     TOTAL ASSETS
     $   230,079,126
     $   316,874,573

     LIABILITIES AND STOCKHOLDERS' EQUITY

     CURRENT LIABILITIES

     Accounts payable
     $   797,368
     $   427,732

     Notes payable - bank acceptances
         995,295
         1,130,344

     Taxes payable
         1,163,427
         1,058,417

     Accrued liabilities and other payables
         2,596,722
         3,199,395

     Due to related parties
         44,328
         44,059

     Deferred tax liability, net
         1,071,441
         1,538,105

     Loans payable - current
         1,432,622
         6,159,911

     Interest payable on entrusted loans
         239,294
         268,801

     Current portion of entrusted loan payable
         42,224,635
         43,119,379

     Total current liabilities
         50,565,132
         56,946,143

     NONCURRENT LIABILITIES

     Deferred tax liability, net
         3,018,445
         10,771,348

     Refundable deposit from customers for systems leasing
         1,070,696
         1,555,378

     Loans payable
         -
         18,187,138

     Entrusted loan payable
         15,381,831
         15,707,773

     Total noncurrent liabilities
         19,470,972
         46,221,637

     Total liabilities
         70,036,104
         103,167,780

     CONTINGENCIES AND COMMITMENTS

     STOCKHOLDERS' EQUITY

     Common stock, $0.001 par value; 100,000,000 shares authorized, 8,310,159
    shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
         8,310
         8,310

     Additional paid in capital
         111,789,166
         111,789,166

     Statutory reserve
         14,059,947
         13,823,789

     Accumulated other comprehensive income
         (493,581   )
         3,210,315

     Retained earnings
         34,591,218
         84,661,602

     Total Company stockholders' equity
         159,955,060
         213,493,182

     Noncontrolling interest
         87,962
         213,611

     Total equity
         160,043,022
         213,706,793

     TOTAL LIABILITIES AND EQUITY
     $   230,079,126
     $   316,874,573

The
accompanying notes are an integral part of these unaudited consolidated financial statements.

    1

CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES

 CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

     SIX MONTHS ENDED
 JUNE
    30,
     THREE MONTHS ENDED

    JUNE 30,

     2016 (Restated)
     2015
     2016 (Restated)
     2015

     Revenue

     Sales of systems
     $   -
     $   24,474,612
     $   -
     $   24,474,612

     Contingent rental income
         1,107,721
         275,427
         1,100,962
         101,089

     Total revenue
         1,107,721
         24,750,039
         1,100,962
         24,575,701

     Cost of sales

     Cost of systems and contingent rental income
         921
         21,476,876
         --
         21,464,596

     Total cost of sales
         921
         21,476,876
         --
         21,464,596

     Gross profit
         1,106,800
         3,273,163
         1,100,962
         3,111,105

     Interest income on sales-type leases
         8,197,534
         12,821,625
         3,316,004
         6,329,343

     Total operating income
         9,304,334
         16,094,788
         4,416,966
         9,440,448

     Operating expenses

     General and administrative
         1,632,106
         1,256,900
         1,135,489
         552,339

     Impairment loss of net investment receivable
         58,352,244
         -
         58,352,244
         -

     Total operating expenses
         59,984,350
         1,256,900
         59,487,733
         552,339

     Income from operations
         (50,680,016   )
         14,837,888
         (55,070,767   )
         8,888,109

     Non-operating income (expenses)

     Interest income
         63,502
         53,816
         31,814
         21,529

     Interest expense
         (3,381,989   )
         (1,802,684   )
         (2,032,419   )
         (1,308,979   )

     Loss on sale of construction in progress of Xuzhou Zhongtai
         (2,822,679   )
         -
         -
         -

     Loss on systems repurchase from Yida
         (417,952   )
         -
         (417,952   )
         -

     Gain on systems repurchase from Jitie
         -
         4,594,922
         -
         4,594,922

     Other income
         76,418
         14,319
         74,091
         377,268

     Total non-operating income (expenses), net
         (6,482,700   )
         2,860,373
         (2,344,466   )
         3,684,740

     Income (loss) before income tax
         (57,162,716   )
         17,698,261
         (57,415,233   )
         12,572,849

     Income tax expense (benefit)
         (7,181,285   )
         2,299,463
         (7,392,056   )
         1,301,511

     Income (loss) before noncontrolling interest
         (49,981,431   )
         15,398,798
         (50,023,177   )
         11,271,338

     Less: loss attributable to noncontrolling interest
         (147,205   )
         (16,117   )
         (95,925   )
         (7,779   )

     Net income (loss) attributable to China Recycling Energy Corporation
         (49,834,226   )
         15,414,915
         (49,927,252   )
         11,279,117

     Other comprehensive items

     Foreign currency translation
    gain (loss) attributable to China Recycling Energy Corporation
         (3,703,896   )
         219,035
         (4,773,553   )
         1,012,750

     Foreign currency translation
    gain attributable to noncontrolling interest
         21,556
         187
         21,021
         1,151

     Comprehensive income (loss) attributable
    to China Recycling Energy Corporation
     $   (53,538,122   )
     $   15,633,950
     $   (54,700,805   )
     $   12,291,867

     Comprehensive loss attributable to noncontrolling interest
     $   (125,649   )
     $   (15,930   )
     $   (74,904   )
     $   (6,628   )

     Basic and diluted weighted average shares outstanding
         8,310,159
         8,307,823
         8,310,159
         8,308,404

     Basic and diluted earnings per share
     $   (6.00   )
     $   1.86
     $   (6.01   )
     $   1.36

The
accompanying notes are an integral part of these unaudited consolidated financial statements.

    2

CHINA
RECYCLING ENERGY CORPORATION AND SUBSIDIARIES

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

(UNAUDITED)

     SIX MONTHS ENDED
 JUNE
    30,

     2016 (Restated)
     2015

     CASH FLOWS FROM OPERATING ACTIVITIES:

     Income including noncontrolling interest
     $   (49,981,431   )
     $   15,398,798

     Impairment loss of net investment receivable

     Adjustments to reconcile income including noncontrolling
    interest to net cash provided by operating activities:
         58,352,244
         -

     Depreciation and amortization
         3,156
         21,705

     Stock option expense
         -
         13,264

     Investment income
         (105,975   )
         (8,487   )

     Changes in deferred tax
         (8,087,193   )
         (1,436,483   )

     Loss on sale of construction in progress of Xuzhou Zhongtai
         2,822,679
         -

     Changes in assets and liabilities:

     Interest receivable on sales type leases
         (825,579   )
         376,983

     Collection of principal on sales type leases
         19,668,078
         47,907,042

     Prepaid expenses
         794,023
         789,347

     Accounts receivable
         (19,809,195   )
         (7,326,079   )

     Other receivables
         (181,410   )
         (1,213,615   )

     Construction in progress
         22,051,212
         (9,595,562   )

     Accounts payable
         271,044
         1,463,130

     Taxes payable
         128,935
         1,039,073

     Interest payable on entrusted loan
         (24,299   )
         (25,891   )

     Accrued liabilities and other payables
         (1,014,498   )
         394,477

     Net cash provided by operating activities
         24,061,791
         47,797,702

     CASH FLOWS FROM INVESTING ACTIVITIES:

     Changes of restricted cash
         572,715
         -

     Acquisition of property and equipment
         -
         (20,164   )

     Net cash provided by (used in) investing activities
         572,715
         (20,164   )

     CASH FLOWS FROM FINANCING ACTIVITIES:

     Repayment of loans
         (22,755,463   )
         (27,941,848   )

     Long term payable