UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): April 9, 2010
China
New Energy Group Company
(Exact
name of Registrant as specified in its charter)
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Delaware
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001-32691
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65-0972647
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(State
or other jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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20/F,
Center Plaza, No.188 Jie Fang Road
He
Ping District, Tianjin, 300042
People's
Republic of China
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (011)-86-22-5829 9778
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities
Act(17CFR230.425)
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o
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Soliciting
material pursuant to Rule14a-12 under the Exchange
Act(17CFR240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17CFR240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17CFR240.13e-4(c))
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Explanatory
Note
This
Current Report on Form 8-K/A amends the Current Report on Form 8-K filed on
April 15, 2010 (the “Original Filing”) to (i) provide further information in
point number 1 as set forth below in response to a comment from the SEC and (ii)
to change the date “December 31, 2010,” set forth in the first sentence of the
first paragraph of the Original Filing, to December 31, 2008.
Item 4.02. Non-reliance on
Previously Issued Financial Statements or a Related Audit Report or Completed
Interim Review
On April
9, 2010, the Chief Executive Officer and Chief Financial Officer of China New
Energy Group, Inc. (the “Company or “we”) concluded that the
previously issued audited financial statements for the fiscal year ended
December 31, 2008 included in the Company’s Annual Report on Form 10-K filed on
April, 15, 2009 (the “2008 10-K”) and the unaudited financial statements for the
three months ended March 31, 2009, June 30, 2009 and September 30, 2009 included
in its Quarterly Reports on Form 10-Q filed on May 15, 2009, August 14, 2009 and
November 16, 2009 (collectively, the “2009 10-Qs”) should no longer be relied
upon and that disclosure should be made and action should be taken to prevent
future reliance.
On April
26, 2010, the Company filed an amendment to the 2008 10-K, which filing contains
restated financial statements for the fiscal year ended December 31,
2008. The Company intends to file amendments to the 2009 10-Qs
as soon as is practicable.
The
principal changes in the amendment to the 2008 10-K are as
follows:
1. There
were errors in the recording of the fair value of the assets acquired during the
acquisition of Qinhuangdao Chensheng Gas Co. Ltd.
(“Chensheng”). Therefore, the Group has recorded the increase to the
fair value from the book value of several assets, including $1,036,655 of
Property, plant and equipment, $3,012 of Inventories, and $63,014 of Goodwill
and the decrease in $505,941 in Land use right. Consequently, we recalculated
the $96,489 of the depreciation for such increment of those assets and minority
interest in Chensheng, which caused a decrease to the minority interest by
$77,647 in the consolidated balance sheet and a decrease to the minority
interest’s share of net income by $414,763 in the consolidated statement of
operations and comprehensive income.
The
decrease in minority interests is due to (i) the correction of the errors in
recording the fair value and (ii) the recalculation of 0.5% of minority
interests of Chensheng as the Company
erroneously allocated 51% of Chensheng’s income (instead
of 0.5%) to minority interests in the 2008
10-K.
The
decrease to the minority interest’s share of net income by $414,763 was the net
amount of the correction of errors in recording the fair value of assets
acquired during the acquisition of Chensheng resulting in an adjustment to the
minority interest’s share of both net income AND the exclusion
of 50.5% (51% - 0.5%) of the income.
The
details affecting the calculating the share of minority interest:
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Allocation
of income to Minority Interests
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Share
of income attributable to minority interest as per Statement of operations
included in the 2008 10-K
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$
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438,773
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1)
Adjustment to the minority interest’s share of both net income and
comprehensive income
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(482
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)
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2)
Exclusion of the 50.5% (51% - 0.5%)
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(414,281
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)
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Share
of income attributable to minority interest as per Statement of operations
included in the Restated 10-K
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$
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24,010
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The
adjustment to income/ retained earnings and accumulated other comprehensive
income was appropriate as stated above.
2. There
was an error in the elimination of its intercompany accounts. Therefore, we have
recorded a decrease in the related party receivable balances by $84,120 and an
increase in the general and administrative expenses by $54,196 and the
comprehensive income of $29,924.
3. We
have reassessed the nature of the preferred stock together with warrants and we
reclassified $1,857 and $7,029,961 (total amounting to $7,031,818) from
preferred stock and additional paid in capital. Also, we reclassified
warrant liabilities of $2,952,273 from additional paid in capital and recognized
a $2,553,870 loss from the change in fair value of the warrant liabilities in
the income statement and the total amount of the warrant liabilities was
$5,506,143 as of December 31, 2008. In addition, we have accrued
$900,000 registration right liabilities as of December 31, 2008.
4. There
was an error in recording the pre-acquisition cash flow activities of the newly
acquired subsidiary, Chensheng and the cash flow activities of disposed
subsidiary, Hunchun. We have excluded the cash flow activities of
Chensheng and included the cash flow activities of Hunchun under discontinued
operations in each section of the cashflow activities. As a result, we
made those adjusting entries in the cash flow statement for the year ended
December 31, 2008.
5. We
have some reclassifications in both Consolidated Balance Sheets and Consolidated
Statements of Operations and Comprehensive Income.
Beginning
in November 2009 the Company began reviewing its previously filed reports and
discovered the errors set forth above. Those errors were
discussed with the Board following which the Company determined that a
restatement was necessary and appropriate. The Company discussed the
foregoing matters with the Company’s independent registered public accounting
firm. The Chief Executive Officer has authorized that the appropriate
officers take the appropriate and necessary actions to restate the 2008 10-K and
the 2009 10-Qs.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this current report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date:
April 26, 2010
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CHINA
NEW ENERGY GROUP
COMPANY
(Registrant)
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By:
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/s/ Yangkan
Chong
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Yangkan
Chong
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Chief
Executive Officer
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