Guohua Ku - Chief Executive Officer David Chong - Chief Financial Officer Jackie Shi - Assistant Chief Financial Officer

Good morning and welcome to the China Recycling Energy's First Quarter 2015 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Mr. Jackie Shi, Assistant CFO. Please go ahead.

Thank you for joining us on today’s call. Before we start I would like to remind you that management’s prepared remarks contain forward-looking statements that are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today due to such risks, but not limited to fluctuations in customer demand, management of rapid growth, intensity of the competition, general economic conditions, geopolitical events and the regulatory changes and other information detailed from time-to-time in the company’s filings and future filings with the SEC. Accordingly, although the company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. In addition, any projections as to the company’s future performance represents management’s estimates as of today May 15, 2015. The company undertakes no obligation to correct or update any forward-looking statements provided as a result of new information, future events or even changes in our expectations. Joining us on today's conference call are Mr. Ku, CEO of the company; Mr. Chong, our Chief Financial Officer and myself, Assistant Chief Financial Officer. Because there will be some translation during the call, we ask for your patience at that time. Mr. Ku, the CEO of China Recycling Energy Corporation will now deliver his opening remarks and I will translate them thereafter. Please go ahead Mr. Ku.

[Interpreted]: Good morning and for those in China, good evening. Net income increased 32% year-over-year during the first quarter of 2015, thanks to our continued efforts to selectively reduce expenses to the revenues which included the sales of the systems, contingent rental income and interest income on sales-type financial leases, increased slightly by 2.8% year-over-year. Since we received some inquires from investors recently about our business and revenue model, allow me to take a few minutes to explain what we do, how we do it and how we generate revenue for those of you who are not very familiar with our business model. We build waste energy recycling power generating systems and lease them to our customers. During the duration of the lease we charge our customers the minimum monthly rental payments. On the US scale our lease of system to our customers are treated as sales type financial leases, a one-time revenue from sales of systems is recognized as the inception of the lease after the completion of the system. Interest income on sales type financial leases is annotated [ph] and recorded over the duration of the lease. Income from the actual electricity usage in excess of the minimum lease payments for each project is accounted for as contingent rent income, thus total revenue generated from sales type financial leases consists of the sales of systems, contingent rental income and interest income from sales type financing leases. In accordance with U.S. GAAP for the sales type of the financing leases the actual operating cash income is reflected in our cash flow statements. Although we experienced slow growth in the total revenue for the first quarter of 2015, but we didn’t complete our new systems in this quarter. We are making good progress with the development of new projects and expect to complete two of them in the second quarter. Our R&D efforts continue to look for new methods to recycle energy and provide energy, while diversifying into new types of energy intensive industries. Going forward we will continue to manage expenses effectively with a selective cost to reductions and seeking new projects to appeal our future goals. The macro policy environment in China is still positive for the energy recycling sector. The Chinese government aims to cut energy intensity, which the amount of energy used per unit of GDP growth by 3.1% in 2015. For the first quarter of 2015 energy used per unit of GDPs decreased 5.6% year-over-year. Relevant government departments are applying measures for energy conservation and emission reductions for the period 2016 to 2020, where in fact we should see more favorable policies to drive with the environment of the sector reserve. In closing, I’d like to again thank our shareholders and our strategic partners for your support of CREG. We look forward to updating all of you on our success in the future. Now let me turn the call over to our CFO, Mr. David Chong to take you through our first quarter 2015 financial results. After the prepared financial review, I will come back to take your questions. Thank you. David, please go ahead.

I would like to state that all our numbers are presented in U.S. dollars and that all comparisons are between the first quarter of 2015 and the first quarter of 2014, except for balance sheet items. In the first quarter ended March 31, 2015 total sales including the sales of systems and contingent rental income were $0.17 million for the first quarter of 2015, almost in line with the first quarter of 2014. Sales of systems for the first quarter of 2015 was in line with the first quarter of 2014 since no power generation system was completed and sold in the first quarter of 2015 and 2014. For the first quarter of 2015 the company received contingent rental income of $0.17 million from the usage of electricity in addition to the minimum lease payments compared to $0.18 million in the same period of 2014. Cost of sales was $0.01 million as compared to $0.02 million for the same period of 2014. And gross profit was $0.16 million flat to the first quarter 2014 and blended gross margin for the first quarter of 2015 was 93% compared with 88% in the same period of 2014. Interest income and sales type financing leases was $6.49 million up 2.0% from $6.21 million. In the first quarter of 2015 interest income was derived from 13 sales type financing leases, including the BMTG systems and Pucheng Phase I and II, a 15 years and 11.9 year term respectively. The BMTG systems at [Pucheng] Phase I and Phase II with 11 years and 9.5 years term respectively and five power and steam generations systems at Erdos with a 20 year term. The WHPG system of Jitie with 24 years term, two BPRT systems at Datong with 30 years term and the WGPG system at Yida was 15 years term. In comparison, interest income on sales type financing leases was derived from 15 systems in the same period of 2014. Operating expenses totaled $0.7 million, down 16.6% from $0.84 million for the same period. The decrease was mainly due to a decrease in consulting expenses and payroll expense. Non-operating expenses consisted of non-sales type financial lease interest income, interest expenses, bank charges and miscellaneous expenses. For the first quarter of 2014 net non-operating expenses was $0.82 million, decreased by 35.5% – it should it first quarter 2015. Income tax expense was $1 million, down 94% from $1.24 million. Decrease in income tax expense was mainly due to decrease in a consolidated effective income tax rate, which was 90.5% for the first quarter of 2015 compared to 28.5% in the same period of 2014. Net income was $4.14 million up 32.4% from $3.12 million. Increase in net income was mainly due to the decrease in non-operating expenses and a lower income tax expense in the first quarter of 2015. Basic and fully diluted EPS was $0.05 in first quarter 2015, in line with the first quarter 2014. Now let’s discuss our balance sheet highlights. As of March 31, 2015 the company had cash and cash equivalents of $26.65 million. Other current assets were $10.82 million and current liabilities were $21.21 million. Total shareholder equity was $211.2 million compared with $207 million as of December 31, 2014. The net tangible assets per share was $2.55 as at March 31, 2015. Net investment in sales type financial leases consist of the sum of the total minimum lease payments receivable less unearned interest income and estimated [indiscernible] costs and unearned interest income is amortized to income over the lease term so as to produce constant periodic rates of return on the net investment in the leases. As of March 31, 2015 net investment in sales type financial leases was $178.98 million compared with $181 million as of December 31, 2014. The total future minimum lease payments receivable was $572.17 million. And what that lets join Mr. Ku, our CEO to take your questions. Operator, kindly please begin the Q&A.

Thank you operator and thank you for joining us on China Recycling Energy Corporation, first quarter 2015 results conference call. We look forward to updating you on our second quarter 2015 results. Feel free to get in touch with us anytime if you have any future questions, concern or any comments. Have a wonderful day. Thank you very much.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.