Consideration of thermal power generation project

11 years

Total cost of project

$ 11,100,000

$ 225

Consideration of power generation project

$ 70

Tianyu Waste Heat Power Generation Project [Member]

Organization and Description of Business (Textual)

Contract price for materials equipment

$ 66,680,000

Description of long-term contract for purchase of electric power

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 operating time will be based upon an average 8,000 hours annually for each of Xuzhou Tian'an and Xuzhou Huayu. If the operating time is less than 8,000 hours per year due to a reason attributable to Tianyu, then time charged will be 8,000 hours a year.

Project agreement terms

20 years

Formation of Zhongxun [Member]

Organization and Description of Business (Textual)

100.00%

Chengli Waste Heat Power Generation Projects [Member]

$ 5,695,502

Organization and Description of Business (Textual)

Description of long-term contract for purchase of electric power

The watt hours generated by the Chengli Project will be charged at RMB 0.42 ($0.068) per kilowatt hour (excluding tax). The operating time shall be based upon an average 8,000 hours annually. If the operating time is less than 8,000 hours per year due to a reason attributable to Chengli, then time charged shall be 8,000 hours a year, and if it is less than 8,000 hours due to a reason attributable to Zhonghong, then it shall be charged at actual operating hours. The construction of the Chengli Project was completed in the second quarter of 2015 and the project successfully completed commissioning tests in the first quarter of 2017. The Chengli Project is now operational, however, due to intensifying environmental protection, the local environmental authorities required the project owner constructing CDQ sewage treatment to complete supporting works, which were completed and passed through acceptance inspection during the quarter ended September 30, 2018. However, the owner of Chengli Project changed from Chengli to Shandong Boxing Shengli Technology Company Ltd. ("Shengli"). This change resulted from transfer of the equity ownership of Chengli to Shengli (a private company). Chengli, as a state-owned enterprise that is 100% owned by the local Power Supply Bureau, is not allowed to carry out the tertiary industry, and Shengli, the new owner, is not entitled to the high on-grid prices, and thus demanded a renegotiation of the settlement terms for the project. At present, the Company is negotiating with the new project owner on the lease term, settlement method and settlement price, but no agreement has been reached.

Project agreement terms

20 years

Hongyuan Huifu [Member]

Organization and Description of Business (Textual)

Shenqiu Systems [Member] | Xi’an TCH [Member]

80.00%

Organization and Description of Business (Textual)

Payment of transfer price

$ 10,937,500

Zhongtai Waste Heat Power Generation Energy Management Cooperative Agreement [Member] | Zhongtai [Member]

Organization and Description of Business (Textual)

Description of long-term contract for purchase of electric power

The construction period of the Project is expected to be 18 months from the date when conditions are ready for construction to begin. Zhongtai will 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 RMB 0.534 ($0.089) 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 RMB 0.402 ($0.067) 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 RMB 100 ($16.67) 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 RMB 1 ($0.16). 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).

Biomass Power Generation Asset Transfer Agreement [Member]

Organization and Description of Business (Textual)

Purchase price for power generation systems

$ 16,480,000

Common stock issuable for power generation systems | shares

8,766,547

Common stock issuable per share for power generation systems | $ / shares

$ 1.87

Lease amount per month

$ 38

Biomass Power Generation Project Lease Agreement [Member]

Organization and Description of Business (Textual)

Leasing fees

$ 279,400

Subsequent Event [Member] | Biomass Power Generation Project Lease Agreement [Member]

15 years

Organization and Description of Business (Textual)

Payment of transfer price

$ 18,550,000

Xi'an Zhonghong New Energy Technology Co [Member]

Organization and Description of Business (Textual)

Contribution percentage in total investment

$ 4,850,000

90.00%

Energy saving solution and services cost

$ 4,370,000

Xi'an Zhonghong New Energy Technology Co [Member] | Subsequent Event [Member]

Organization and Description of Business (Textual)

Xi'an Tch Limited Partner [Member]

100.00%

Organization and Description of Business (Textual)

$ 65

20.00%

Boxing County Chengli Gas Supply Co Ltd [Member] | EPC General Contractor Agreement [Member]

$ 650,000

Organization and Description of Business (Textual)

Contract price for materials equipment

$ 33,340,000

RMB [Member] | Shenqiu Project [Member]

Organization and Description of Business (Textual)

Leasing fees | ¥

¥ 1,800,000

Total cost of project | ¥

¥ 68,000,000

RMB [Member] | Tianyu Waste Heat Power Generation Project [Member]

Organization and Description of Business (Textual)

Contract price for materials equipment | ¥

¥ 400,000,000

RMB [Member] | Formation of Zhongxun [Member]

Organization and Description of Business (Textual)

RMB [Member] | Shenqiu Systems [Member] | Xi’an TCH [Member]

¥ 35,000,000

Organization and Description of Business (Textual)

Payment of transfer price | ¥

¥ 70,000,000

RMB [Member] | Biomass Power Generation Asset Transfer Agreement [Member]

Organization and Description of Business (Textual)

Purchase price for power generation systems | ¥

¥ 100,000,000

RMB [Member] | Biomass Power Generation Project Lease Agreement [Member]

Organization and Description of Business (Textual)

Leasing fees | ¥

¥ 1,900,000

RMB [Member] | Subsequent Event [Member] | Biomass Power Generation Project Lease Agreement [Member]

Organization and Description of Business (Textual)

Payment of transfer price | ¥

¥ 127,066,000

RMB [Member] | Xi'an Zhonghong New Energy Technology Co [Member]

Organization and Description of Business (Textual)

Energy saving solution and services cost | ¥

$ 30,000,000

¥ 27,000,000

RMB [Member] | Boxing County Chengli Gas Supply Co Ltd [Member] | EPC General Contractor Agreement [Member]

Organization and Description of Business (Textual)

Contract price for materials equipment | ¥

¥ 200,000,000

ShengYa Energy [Member]

Organization and Description of Business (Textual)

ShengYa Energy [Member] | RMB [Member]

$ 29,420,000

Organization and Description of Business (Textual)

Organization and Description of Business (Textual)

¥ 200,000,000

Da Tang Shi Dai [Member]

DaTong Recycling Energy [Member]

30.00%

Organization and Description of Business (Textual)

TianYu XuZhou Recycling Energy [Member]

30.00%

Organization and Description of Business (Textual)

Organization and Description of Business (Textual)

40.00%

Erdos TCH [Member]

Contribution percentage in total investment

7.00%

Sale of amount to erdos

$ 1,290,000

Accumulated profit

$ 226,000

Description of long-term contract for purchase of electric power

Erdos TCH and Erdos entered into a supplemental agreement, effective May 1, 2016, whereby Erdos TCH cancelled monthly minimum lease payments from Erdos, and now charges Erdos based on actual electricity sold at RMB 0.30 / KWH.

Erdos TCH [Member] | Initial Investment [Member]

Organization and Description of Business (Textual)

Erdos TCH [Member] | After Return Of Initial Investment [Member]

20.00%

Organization and Description of Business (Textual)

Erdos TCH [Member] | RMB [Member]

40.00%

Organization and Description of Business (Textual)

Sale of amount to erdos | ¥

¥ 8,000,000

Yinghua [Member]

Organization and Description of Business (Textual)

100.00%

$ 30,000,000

Erdos Metallurgy Company Limited [Member]

10 years

Organization and Description of Business (Textual)

Term of joint ventures

20 years

Investment cost

$ 79,000,000

Erdos Metallurgy Company Limited [Member] | Initial Investment [Member]

Organization and Description of Business (Textual)

Investment cost

$ 17,550,000

Erdos Metallurgy Company Limited [Member] | RMB [Member]

Organization and Description of Business (Textual)

Investment cost | ¥

¥ 500,000,000

Erdos Metallurgy Company Limited [Member] | RMB [Member] | Initial Investment [Member]

Organization and Description of Business (Textual)

Investment cost | ¥

¥ 120,000,000

Xi’an TCH [Member]

Organization and Description of Business (Textual)

Contribution percentage in total investment

93.00%

Percentage of accumulated profit

20.00%

20.00%

Minority interest decrease from redemptions

$ 1,290,000

Xi’an TCH [Member] | Biomass Power Generation System [Member]

Organization and Description of Business (Textual)

Leasing fees

$ 239,000

Xi’an TCH [Member] | Hongyuan Huifu [Member]

9 years 6 months

Organization and Description of Business (Textual)

Xi’an TCH [Member] | Zhongtai Waste Heat Power Generation Energy Management Cooperative Agreement [Member]

$ 650,000

Organization and Description of Business (Textual)

Initial payments to Xi'an TCH

$ 770

Description of waste heat power generation energy management cooperative agreement

As consideration for the transfer of the Project, Zhongtai agreed to pay to Xi'an TCH an aggregate transfer price of RMB 167,360,000 ($25.77 million) including payments of: (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 is 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 August 2018, the Company received $1,070,000 from Zhongtai; as of December 31, 2018, the Company had receivable from Zhongtai for $11.66 million (with bad debt allowance of $3.50 million). Zhongtai provided an acknowledgement letter to the Company stating they expect to repay the remaining balance of $11.66 million by the end of 2019 once they resume normal production.

Payments to Xi'an TCH

$ 167,360,000

Loss from transaction

282,000

First payment received

$ 50,000,000

770

Second payment received

432

Xi’an TCH [Member] | Transfer Agreement [Member]

Organization and Description of Business (Textual)

Payments to Xi'an TCH

$ 1,345

Xi’an TCH [Member] | Initial Investment [Member]

Organization and Description of Business (Textual)

Xi’an TCH [Member] | After Return Of Initial Investment [Member]

80.00%

Organization and Description of Business (Textual)

Xi’an TCH [Member] | RMB [Member] | Biomass Power Generation System [Member]

60.00%

Organization and Description of Business (Textual)

Leasing fees | ¥

¥ 1,500,000

Xi’an TCH [Member] | RMB [Member] | Hongyuan Huifu [Member]

Organization and Description of Business (Textual)

Organization and Description of Business (Textual)

¥ 4,000,000

HYREF Fund [Member]

10.00%

$ 440,000

$ 830,000

Total fund capital contribution

77,000,000

$ 460,000,000

Partnership expiration

Jul. 18, 2019

Fund Management, description

The HYREF Fund has three limited partners: (1) China Orient Asset Management Co., Ltd., which made an initial capital contribution of RMB 280 million ($46.67 million) to the HYREF Fund and is a preferred limited partner; (2) HongyuanHuifu, which made an initial capital contribution of RMB 100 million ($16.67 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. In addition, Xi'an TCH and HongyuanHuifu formed Beijing Hongyuan Recycling Energy Investment Management Company Ltd. to manage this Fund, which also subscribed in the amount of RMB 5 million ($830,000) from the Fund. The term of the HYREF Fund's partnership is six years from the date of its establishment, expiring July 18, 2019. 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 total size of the HYREF Fund is RMB 460 million ($77 million). The HYREF Fund was formed for the purpose of investing in Xi'an Zhonghong New Energy Technology Co., Ltd., a 90% owned subsidiary of Xi'an TCH, for the construction of two coke dry quenching ("CDQ") 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").

HYREF Fund [Member] | Hongyuan Huifu [Member]

Organization and Description of Business (Textual)

HYREF Fund [Member] | China Orient Asset Management Co., Ltd [Member]

$ 100

Organization and Description of Business (Textual)

HYREF Fund [Member] | RMB [Member]

280

Organization and Description of Business (Textual)

Hongyuan Recycling Energy Investment Management Beijing Co Ltd [Member]

¥ 3,000,000

¥ 5,000,000

Organization and Description of Business (Textual)

40.00%

Total fund capital contribution

$ 1,450,000

830,000

Hongyuan Recycling Energy Investment Management Beijing Co Ltd [Member] | RMB [Member]

Organization and Description of Business (Textual)

Organization and Description of Business (Textual)

¥ 10,000,000

Hongyuan Huifu [Member]

Fund Management, description

80.00%

Xi'an TCH entered into a Share Transfer Agreement with Hongyuan Huifu, pursuant to which Xi'an TCH agreed to transfer its 40% ownership in the Fund Management Company to Hongyuan Huifu for consideration of RMB 3,453,867.31 ($0.53 million). The transfer was completed on January 22, 2019.

Hongyuan Huifu [Member] | Xi'an Tch Limited Partner [Member]

Organization and Description of Business (Textual)

Hongyuan Huifu [Member] | RMB [Member] | Xi'an Tch Limited Partner [Member]

16,670,000

Organization and Description of Business (Textual)