Additional Information—Financial Statement Schedule I

Canadian Solar Inc.

Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 4-08(e)(3) of Regulation S-X, which require condensed financial information as to 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 as the restricted net assets of Canadian Solar Inc.'s consolidated and unconsolidated subsidiaries not available for distribution to Canadian Solar Inc. as of December 31, 2017 of $461.8 million, exceeded the 25% threshold.

The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial statements, except that the equity method has been used to account for investments in subsidiaries.

FINANCIAL INFORMATION OF PARENT COMPANY

BALANCE SHEETS

	December 31, 2016			December 31, 2017
	(In Thousands of U.S. Dollars, except share data)
ASSETS
Current assets:
Cash and cash equivalents		21,348			16,957
Accounts receivable trade, net of allowance for doubtful accounts of $3,007 and $3,642 as of December 31, 2016 and 2017, respectively		103			6,207
Amounts due from related parties		419,075			375,843
Derivative assets—current		2,425			—
Advances to suppliers, net of allowance for doubtful accounts of $5,225 and $5,222 as of December 31, 2016 and 2017, respectively		—			60
Prepaid expenses and other current assets		4,871			11,490

Total current assets		447,822			410,557
Investment in subsidiaries		789,633			1,005,176
Deferred tax assets—non-current		22,609			9,185
Other non-current assets		64,903			67,940

TOTAL ASSETS		1,324,967			1,492,858


LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings		10,000			151,000
Accounts payable		3			3
Amounts due to related parties		73,053			139,091
Derivative liabilities—current		1,914			—
Other current liabilities		10,952			36,914

Total current liabilities		95,922			327,008
Accrued warranty costs		2,950			—
Convertible notes		125,569			126,476
Long-term borrowings		190,000			—
Deferred tax liabilities—non-current		20,054			524
Liability for uncertain tax positions		5,791			6,625

TOTAL LIABILITIES		440,286			460,633

Equity:
Common shares—no par value: unlimited authorized shares, 57,830,149 and 58,496,685 shares issued and outstanding at December 31, 2016 and 2017, respectively		701,283			702,162
Additional paid-in capital		(8,897	)		417
Retained earnings		284,109			383,680
Accumulated other comprehensive loss		(91,814	)		(54,034	)

TOTAL EQUITY		884,681			1,032,225

TOTAL LIABILITIES AND EQUITY		1,324,967			1,492,858

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENTS OF OPERATIONS

	Years Ended December 31
	2015			2016			2017
	(In Thousands of U.S. Dollars)
Net revenues		23,302			13,748			35,011
Cost of revenues		15,850			9,657			29,542

Gross profit		7,452			4,091			5,469

Operating expenses:
Selling expenses		3,309			3,727			2,221
General and administrative expenses		29,124			17,167			18,390
Research and development expenses		450			589			645
Other operating loss		—			—			1,173

Total operating expenses		32,883			21,483			22,429

Loss from operations		(25,431	)		(17,392	)		(16,960	)

Other income (expenses):
Interest expense		(17,241	)		(29,032	)		(20,078	)
Interest income		34,471			44,666			42,191
Gain (loss) on change in fair value of derivatives		(13,571	)		30,988			(7,134	)
Foreign exchange gain (loss)		1,324			(3,810	)		(18,110	)
Gain on repurchase of convertible notes		—			2,782			—
Investment loss		—			—			(11,944	)

Other income (expenses), net:		4,983			45,594			(15,075	)

Income (loss) before income taxes and equity in earnings (loss) of subsidiaries and unconsolidated investees		(20,448	)		28,202			(32,035	)
Income tax (expense) benefit		(1,231	)		(6,599	)		1,686
Equity in earnings of subsidiaries		193,813			43,596			130,048
Equity in earnings (loss) of unconsolidated investees		(273	)		50			(127	)

Net income		171,861			65,249			99,572

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Years Ended December 31,
	2015			2016			2017
	(In Thousands of U.S. Dollars)
Net income		171,861			65,249			99,572
Other comprehensive income (loss) (net of tax of nil):
Foreign currency translation adjustment		(79,913	)		(31,958	)		37,780

Comprehensive income		91,948			33,291			137,352

FINANCIAL INFORMATION OF PARENT COMPANY

STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2015			2016			2017
	(In Thousands of U.S. Dollars)
Operating activities:
Net income		171,861			65,249			99,572
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		32			32			33
Loss on disposal of subsidiaries		—			—			9,559
Impairment loss of investment		—			—			3,686
(Gain) loss on change in fair value of derivatives		13,571			(30,988	)		7,134
Gain on repurchase of convertible notes		—			(2,782	)		—
Allowance for doubtful accounts		1,535			(844	)		2,666
Equity in earnings of subsidiaries		(193,813	)		(43,596	)		(130,048	)
Equity in loss (earnings) of unconsolidated investees		273			(50	)		127
Share-based compensation		5,966			7,757			9,314
Changes in operating assets and liabilities:
Inventories		296			146			—
Accounts receivable trade		2,189			3,010			(6,739	)
Amounts due from related parties		228,284			21,731			57,539
Advances to suppliers		(226	)		226			(60	)
Prepaid expenses and other current assets		(7,106	)		6,955			(5,715	)
Other non-current assets		(14,710	)		(2,039	)		1,016
Accounts payable		3			(4	)		—
Advances from customers		1,352			(1,413	)		(1,069	)
Amounts due to related parties		103,348			(129,307	)		66,038
Accrued warranty costs		(2,941	)		(12,381	)		(10,639	)
Other liabilities		4,484			(297	)		23,505
Liability for uncertain tax positions		(1,111	)		(7,413	)		833
Deferred taxes		1,451			199			(6,106	)
Net settlement of derivatives		(3,950	)		17,043			(6,358	)

Net cash provided by (used in) operating activities		310,788			(108,766	)		114,288

Investing activities:
(Increase) decrease in restricted cash		(6,513	)		6,512			—
Investment in subsidiaries		(116,840	)		—			(64,185	)
Proceeds from disposal of subsidiaries		—			—			61,749
Purchase of property, plant and equipment		—			—			(26	)
(Funding) repayment of loans to subsidiaries		(550,776	)		299,578			(74,458	)

Net cash provided by (used in) investing activities		(674,129	)		306,090			(76,920	)

Financing activities:
Proceeds from short-term borrowings		10,000			—			—
Repayment of short-term borrowings		—			(190,000	)		(49,000	)
Proceeds from long-term borrowings		364,680			—			—
Proceeds from issuance of warrant		16,378			—			—
Investment on non-controlling interest		(918	)		—			—
Proceeds from issuance of common shares		—			23,864			—
Issuance costs paid for common shares offering		—			(456	)		—
Payment for repurchase of convertible notes		—			(19,667	)		—
Proceeds from exercise of stock options		1,867			707			879

Net cash provided by (used in) financing activities		392,007			(185,552	)		(48,121	)

Effect of exchange rate changes		2,085			(24,630	)		6,362

Net increase (decrease) in cash and cash equivalents		30,751			(12,858	)		(4,391	)
Cash and cash equivalents at the beginning of the year		3,455			34,206			21,348

Cash and cash equivalents at the end of the year		34,206			21,348			16,957

Supplemental disclosure of cash flow information:
Interest paid (net of amounts capitalized)		15,299			29,288			18,375
Income taxes paid		—			—			—