April 28, 2010
Karl Hiller
Jennifer Gallagher
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-4628
RE: | China Prosperous Clean Energy Corporation |
Form 10-K for the Fiscal Years Ended December 31, 2008 and Ended December 31, 2009 | |
File No. 000-53224 |
Dear Sir or Madam,
In response to your comment regarding the footnote 19 of the financial statements in the Form 10-K year ended December 31, 2009, we will amend the said footnote 19 as follows:
Note 19 – Segment Information
ASC 280-10 (formerly SFAS 131), “Disclosure about Segments of an Enterprise and Related Information” requires that companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance.
The Company has re-evaluated the structure of its organization and has determined, based on the requirements of SFAS 131, that the Company has the following three reportable segments, identified based on the nature of products, the type or class of customers, and the methods used to distribute the Company’s products:
▪ | Retail sales of Compressed Natural Gas (“CNG”) through operation of CNG filling stations; |
▪ | Retail sales of Liquefied Petroleum Gas (“LPG”) through operation of LPG filling stations; and |
▪ | Wholesale of CNG and LPG |
During the years ended December 31, 2009, all of the Company’s operations were carried out in one geographical segment – China.
The following table sets out the Company’s segment information. The "Unallocated" column in the following table contains the reconciliation between the amounts for reportable segments and the consolidated amounts, which consists primarily of corporate items not allocated to the operating segments, intersegment eliminations. Intersegment sales are accounted for at fair value as if sales were to third parties.
For the year ended December 31, 2009 and 2008
For the Years Ended December 31, | ||||||||
Revenue from external customers | 2009 | 2008 | ||||||
CNG Retail | $ | 3,938,599 | $ | 3,190,609 | ||||
LPG Retail | 947,065 | 2,708,421 | ||||||
CNG and LPG Wholesale | 17,904,095 | 34,725,063 | ||||||
Unallocated | 994,678 | 1,037,229 | ||||||
Consolidated | $ | 23,784,437 | $ | 41,661,322 | ||||
For the Years Ended December 31, | ||||||||
Net income | 2009 | 2008 | ||||||
CNG Retail | $ | (170,350 | ) | $ | 704,776 | |||
LPG Retail | (188,758 | ) | (214,792 | ) | ||||
CNG and LPG Wholesale | (47,478 | ) | 723,022 | |||||
Unallocated | 159,448 | (159,188 | ) | |||||
Consolidated | $ | (247,138 | ) | $ | 1,053,818 | |||
For the Years Ended December 31, | ||||||||
Investment income from non-consolidated entities | 2009 | 2008 | ||||||
Consolidated | $ | 313,709 | $ | 308,337 | ||||
For the Years Ended December 31, | ||||||||
Interest expenses | 2009 | 2008 | ||||||
Consolidated | $ | (88,444 | ) | $ | (34,931 | ) | ||
For the Years Ended December 31, | ||||||||
Income before noncontrolling interest and income taxes | 2009 | 2008 | ||||||
Consolidated | $ | (108,568 | ) | $ | 1,419,839 | |||
For the Years Ended December 31, | ||||||||
Segment assets | 2009 | 2008 | ||||||
CNG Retail | $ | 1,895,854 | $ | 1,114,178 | ||||
LPG Retail | 46,804 | 52,318 | ||||||
CNG and LPG Wholesale | 1,088,154 | 1,241,858 | ||||||
Unallocated | 25,277,520 | 12,778,793 | ||||||
Consolidated | $ | 28,308,333 | $ | 15,187,148 |
In response to your comments regarding the statement of stockholder equity in the Form 10-K for year ended December 31, 2008, we will amend the Statement of Shareholders’ Equity in Form 10-K for year ended December 31, 2008 as follows:
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2008 and 2007
Accumulated | ||||||||||||||||||||||||||||
other | Total | |||||||||||||||||||||||||||
Additional | Compre- | Stock- | ||||||||||||||||||||||||||
Common Stock | Paid in | Statutory | Retained | hensive | Holders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Reserve | Earnings | Income | Equity | ||||||||||||||||||||||
Balance at December 31, 2006 | 5,865,000 | $ | 59 | $ | (59 | ) | $ | - | $ | (292 | ) | $ | 76 | $ | (215 | ) | ||||||||||||
Net income | - | - | - | - | 1,242,327 | - | 1,242,327 | |||||||||||||||||||||
Statutory reserve | - | - | - | 120,511 | (120,511 | ) | - | - | ||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 38,639 | 38,563 | |||||||||||||||||||||
Balance at December 31, 2007 | 5,865,000 | $ | 59 | $ | (59 | ) | $ | 120,511 | $ | 1,121,524 | $ | 38,639 | $ | 1,280,675 | ||||||||||||||
Effect of reverse merger | 6,135,000 | 60 | (60 | ) | - | - | - | - | ||||||||||||||||||||
Additional paid-in capital contributed by shareholders | - | - | 8,055,381 | - | - | - | 8,055,381 | |||||||||||||||||||||
Net income | - | - | - | - | 1,053,818 | - | 1,053,818 | |||||||||||||||||||||
Statutory reserve | - | - | - | 105,382 | (105,382 | ) | - | - | ||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 372,194 | 372,194 | |||||||||||||||||||||
Balance at December 31, 2008 | 12,000,000 | $ | 120 | $ | 8,055,262 | $ | 225,893 | $ | 2,069,960 | $ | 410,833 | $ | 10,762,068 |
Acknowledgement Statement
In connection to responding to all the comments of the Securities and Exchange Commission, China Prosperous Clean Energy Corporation (“Company”) hereby acknowledges that:
1. The Company is responsible for the adequacy and accuracy of the disclosure in the filings;
2. Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and
3. The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
We greatly appreciate your assistance. If you have any questions or comments regarding the foregoing, please do not hesitate to contact us via phone: 86-372-3166864, also with copy to our legal counsel’s office at Bernard & Yam, LLP, Attn: Bin Zhou, Esq., 401 Broadway Suite 1708, New York, NY 10013, phone: 212-219-7783, facsimile: 212-219-3604.
Truly yours
/s/ Hongjie Zhou
_________________________
Hongjie Zhou
Acting Chief Financial Officer
China Prosperous Clean Energy Corporation