FINANCIAL STATEMENT SCHEDULE I

12 Months Ended

Dec. 31, 2016

FINANCIAL STATEMENT SCHEDULE I [Abstract]

FINANCIAL STATEMENT SCHEDULE I

FINANCIAL STATEMENT SCHEDULE I

DAQO NEW ENERGY CORP.

FINANCIAL INFORMATION OF PARENT COMPANY

BALANCE SHEET

DECEMBER 31, 2015 AND 2016

(In U.S. dollars, except share and per share data)

	December 31,
	2015		2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,563,083	$	2,943,502
Prepaid expenses and other current assets		193,583		223,559

Total current assets		2,756,666		3,167,061
Investments in subsidiaries		238,112,877		267,322,549

TOTAL ASSETS	$	240,869,543	$	270,489,610

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accrued expenses and other current liabilities	$	406,088	$	389,849
Amount due to a related party		-		—
Income tax payable		108,992		—

Total current liabilities		515,080		389,849

EQUITY
Ordinary shares ($0.0001 per value 500,000,000 shares authorized as of December 31, 2015 and 2016; 279,214,103 and 279,214,103 shares issued as of December 31, 2015 and 2016, respectively and 260,836,578 and 262,956,278 shares outstanding as of December 31, 2015 and 2016, respectively)		26,320		26,532
Additional paid in capital		236,358,070		240,111,533
Retained Earnings (accumulated deficit)		(3,061,404)		40,432,352
Accumulated other comprehensive income (loss)		8,780,313		(8,721,820)
Treasury stock		(1,748,836)		(1,748,836)

Total shareholders’ equity		240,354,463		270,099,761

TOTAL LIABILITIES AND EQUITY	$	240,869,543	$	270,489,610

FINANCIAL STATEMENT SCHEDULE I

DAQO NEW ENERGY CORP.

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2014, 2015 AND 2016

(In U.S. dollars)

	Year ended December 31,
	2014		2015		2016
OPERATING EXPENSES
General and administrative	$	(2,738,085)	$	(4,142,634)	$	(3,175,482)
Research and development		(12,310)		-		-

Total operating expenses		(2,750,395)		(4,142,634)		(3,175,482)

LOSS FROM OPERATION		(2,750,395)		(4,142,634)		(3,175,482)
Interest income		8,144		1,641		-
Exchange gain		-		118,679		-
Income tax expense		-		(108,992)		-
Other income		-		-		-

NET LOSS BEFORE SHARE OF RESULTS OF SUBSIDIARIES		(2,742,251)		(4,131,306)		(3,175,482)
Equity in earnings of subsidiaries		19,391,427		17,088,195		46,669,238

Net income attributable to Daqo New Energy Corporation ordinary shareholders	$	16,649,176	$	12,956,889	$	43,493,756

Other comprehensive (loss) income:
Foreign currency translation adjustments		(3,662,013)		(11,256,870)		(17,502,133)
Total other comprehensive loss		(3,662,013)		(11,256,870)		(17,502,133)
Comprehensive income	$	12,987,163	$	1,700,019	$	25,991,623

FINANCIAL STATEMENT SCHEDULE I

DAQO NEW ENERGY CORP.

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENT OF CHANGES IN EQUITY

FOR YEARS ENDED DECEMBER 31, 2014, 2015 AND 2016

(In U.S. dollars, except share and per share data)

											Accumulated
									Retained		other
							Additional		earnings (accumulated)		comprehensive
	Ordinary shares				Treasury Stock		paid in capital		losses)		income (loss)		Total
	Number		$

Balance at January 1, 2014		173,427,853	$	17,343	$	(398,672)	$	146,676,163	$	(32,667,469)	$	23,699,196	$	137,326,561

Net income										16,649,176				16,649,176
Other comprehensive loss												(3,662,013)		(3,662,013)
Share-based compensation								1,792,819						1,792,819
Option Exercised		150,000		15				37,065						37,080
Follow-on equity offering, net of issuance cost of $3,375,553		50,000,000		5,000				54,619,447						54,624,447

Balance at December 31, 2014		223,577,853		22,358		(398,672)		203,125,494		(16,018,293)		20,037,183		206,768,070

Net income										12,956,889				12,956,889
Other comprehensive loss												(11,256,870)		(11,256,870)
Share-based compensation								3,687,951						3,687,951
Option Exercised		1,115,625		112				275,671						275,783
Follow-on equity offering, net of issuance costs of $2,033,041		38,500,000		3,850				27,993,109						27,996,959
Repurchase of Stock		(2,356,900)				(1,350,164)								(1,350,164)
Capital injection from noncontrolling shareholders								1,275,845						1,275,845

Balance at December 31, 2015		260,836,578		26,320		(1,748,836)		236,358,070		(3,061,404)		8,780,313		240,354,463

Net income										43,493,756				43,493,756
Other comprehensive loss												(17,502,133)		(17,502,133)
Share-based compensation								2,702,089						2,702,089
Option Exercised		2,119,700		212				1,051,374						1,051,586

Balance at December 31, 2016		262,956,278		26,532		(1,748,836)		240,111,533		40,432,352		(8,721,820)		270,099,761

FINANCIAL STATEMENT SCHEDULE I

DAQO NEW ENERGY CORP.

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2014, 2015 AND 2016

(In U.S. dollars)

	Year ended December 31,
	2014		2015		2016
OPERATING ACTIVITIES
Net (loss) income	$	16,649,176	$	12,956,889	$	43,493,756
Share of results of subsidiaries		(19,391,427)		(17,088,195)		(46,669,238)
Share-based compensation		1,792,819		3,687,951		2,702,089
Adjustments to reconcile net income to net cash used in operating activities:
Prepaid expenses and other current assets		(27,195)		11,099		(29,976)
Changes in other current liabilities		(26,901)		(96,166)		(58,806)
Amount due to a related party		286,526		(286,526)		—
Income tax payable		—		108,992		(108,992)
Net cash used in operating activities		(717,002)		(705,956)		(671,167)
INVESTING ACTIVITIES
Capital contributed to subsidiaries		(54,638,421)		(33,256,774)		—
Cash collected from subsidiaries when liquidation		—		—		—
Disposition of minority interest in subsidiary		—		5,110,085		—
Net cash used in investing activities		(54,638,421)		(28,146,689)		—
FINANCING ACTIVITIES
Repurchase of ordinary shares		—		(1,350,164)		—
Proceeds from follow-on equity offering		58,000,000		30,030,000		—
Insurance cost for follow-on equity offering		(3,375,553)		(2,033,041)		—
Proceeds from options exercised		37,080		275,783		1,051,586
Net cash provided by financing activities		54,661,527		26,922,578		1,051,586
NET DECREASE IN CASH AND CASH EQUIVALENTS		(693,896)		(1,930,067)		380,419
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		5,187,046		4,493,150		2,563,083
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	4,493,150	$	2,563,083	$	2,943,502

FINANCIAL STATEMENT SCHEDULE I

DAQO NEW ENERGY CORP.

Notes to Schedule I

Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

The condensed financial information of Daqo New Energy Corp has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the Consolidated Financial Statements of the Group. No dividend was paid by the Company's subsidiaries to their parent company in 2016.

As of December 31, 2016, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company, except for those which have been separately disclosed in the Consolidated Financial Statement, if any.

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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